A Fresno man who spent 15 years trying to clear his name after his supervisors accused him of financial misconduct has reached an $825,000 settlement with his employer – the federal government.
Toulu Thao received the settlement after a U.S. District Court judge in Fresno ruled back in September 2012 that Thao could go forward with his civil rights case against Department of Housing and Urban Development officials for arresting Thao without probable cause in 2006, fabricating evidence against him and maliciously prosecuting him.
Instead, the federal agency settled with Thao, who finally received his share of the settlement this month because it had been tied up in bankruptcy proceedings as a result of his legal ordeal, said Fresno attorney Jacob “Jack” Weisberg, who represented Thao in his civil rights lawsuit against HUD.
Thao, now 58, was reinstated as a HUD employee in 2009 after his criminal case was dismissed. Now a senior management analyst for HUD, Thao declined to comment.
“He was indicted on false information and it deeply affected his life,” Weisberg said. “He is relieved that case is over and is pleased that he was vindicated.”
He was indicted on false information and it deeply affected his life.
Fresno attorney Jacob Weisberg, speaking about Toulu Thao
In an email statement, First Assistant U.S. Attorney Philip A. Ferrari in Sacramento said, “the United States is frequently required to weigh the risks of contesting allegations and facing increased liability or settling claims for lesser amounts. The fact that a claim is settled is not an admission that the claim has merit.”
In this case, Ferrari said, “the United States entered the settlement agreement based upon a determination that it was in the government’s best interest to do so, and as the agreement itself states, both parties decided to settle the matter ‘for the purposes of compromising disputed claims without protracted legal proceedings and avoiding the expense and risk of such litigation.’ ”
He said the agreement also makes explicit the fact that the settlement “is not intended and shall not be deemed an admission by either party of the merit or lack of merit of the opposing part’s claims and defenses.” Moreover, the court never made findings that any of the allegations in the complaint were true, Ferrari said. Instead, the court dismissed one of the defendant’s claims at the government’s request and allowed Thao to proceed with his case on his remaining claims.
Before his highly publicized arrest and prosecution, Thao was well-known in the local Hmong community and a policymaker and opinion-shaper in the Valley and nationally, hobnobbing with then-President Bill Clinton and with Alan Greenspan, then chairman of the Federal Reserve.
“That prestige, and the potential it carried, can never be restored,” Weisberg said. “He lost them, irretrievably, due to federal enforcement officials’ intentional and flagrant falsehoods and a subsequent cover-up of their criminal actions.”
The arrest, prosecution, dismissal of charges, and filing of the lawsuit happened under former HUD Secretary Shaun Donovan. Efforts to get comment from current HUD Secretary Julián Castro or his staff in Washington, D.C., were unsuccessful.
Thao’s personal story is extraordinary, Weisberg said. Thao was born in Laos and as a teen fought alongside his father and others for the United States during the Vietnam War. When America lost the war, he and his family were forced to flee to Thailand, crossing the Mekong River by boat at night. They spent two years in a crowded refugee camp before coming to the United States when Thao was 18 years old.
He learned English, passed several academic tests and was admitted to the University of Wisconsin. In 1982, He became one of the first Hmong refugees to graduate from an American university, receiving a degree in mechanical engineering from the University of Wisconsin. A year later, he moved to Fresno, working as an engineer and advocating for economic advancement on behalf of the Hmong people, Weisberg said.
Back in California, Thao, a naturalized citizen, earned a doctorate in educational leadership, Weisberg said.
Thao’s activities in Fresno soon captured the attention of HUD officials who recruited Thao in 1998 to be one of the first of 200 Community Builders employed by the agency to advance its goals.
Before his highly-publicized arrest in 2006, Toulu Thao was well-known in the Hmong community and a policy maker and opinion-shaper in the Valley and nationally, hobnobbing with then President Bill Clinton and with Alan Greenspan, then chairman of the Federal Reserve.
In his first week at HUD, a supervisor instructed Thao to fill out a confidential ethics disclosure form.
In 2001, the supervisor initiated an investigation against Thao, accusing him of failing to report on the form that his nonprofit Hmong American Community was receiving a grant from HUD. He was placed on indefinite suspension.
In 2006, a federal indictment charged Thao with four felony counts for making false statements on economic disclosure forms that were required for his HUD employment.
Prosecutors contended that Thao failed to report $5,200 in income he received from the Hmong Economic Development Corp. Prosecutors also said Thao should have reported money his son received from the Hmong American Community, which prosecutors say did business with HUD.
Thao, who was represented by Fresno defense lawyer Jeff Hammerschimdt in the criminal proceedings, argued that the $5,200 was not income, but reimbursement for money he had fronted for a Hmong Economic Development Corp. event.
Thao also argued that the Hmong American Community never received money from HUD, and thus there was no conflict and no need to report his son’s income from the organization.
Weisberg said it was later learned that HUD gave money to another organization also with the acronym HAC – the Housing Assistance Corp.
In July 2008, Thao signed an agreement with federal prosecutors that resulted in the charges being dismissed. Three years later, he sued Donovan, the former HUD secretary, as well as a host of former HUD officials.
The civil rights lawsuit claimed HUD officials continued to press an investigation against Thao even after they knew the Hmong American Community allegation was untrue.
Thao’s lawsuit claimed HUD officials continued to press an investigation against him even after they knew the Hmong American Community allegation was untrue. The suit further claimed that HUD’s investigative arm received “numerous confirmations” that parts of Thao’s alleged crimes were untrue, but did not investigate.
In a September 2012 ruling, U.S. District Court Judge Anthony Ishii set the groundwork for the settlement, saying the criminal action against Thao “was both instituted and maintained in substantial reliance on fraudulent or perjured testimony.”
Though HUD argued that Thao’s agreement with prosecutors constituted an admission of guilt, Ishii ruled that it did not. “The court concludes that the agreement rather pointedly avoided any admission of culpable behavior on plaintiff’s part,” Ishii said.
Weisberg said to his knowlege no HUD official was ever charged for lying to the federal grand jury. He also said Thao’s case was not only complex, but rare – he was the first HUD employee ever to be prosecuted for allegedly filling out a government ethics form incorrectly.
But Thao had actually filled out the ethics form correctly, Weisberg said.