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A Piece of the Action 

How a bright and beguiling budget analyst allegedly fleeced a showcase minority aid program at SFSU

Wednesday, Mar 8 2000
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ANTHONY HANG HAS BETTER THINGS TO DO ON his daughter's birthday than talk about an old girlfriend and her devious ways. He has a centipede of little girls following him down the sidewalk, on their way to root beer and pizza at Chuck E. Cheese's, and it's time to get in the car before it starts raining. Towers of cumulus clouds loom over the washed-out neighborhood running parallel to the Bayshore Freeway. Hang stops for a moment, allowing the girls to fall out of their line and play.

"Yeah, I accepted a check from Nancy," he says. "It looks like a scam to me now, but I didn't know where the check came from. It had my name on it, so I cashed it."

As he thinks about the woman whose actions landed him in jail for cashing fraudulent checks, he folds his arms across his chest and looks away. He appears younger than his 35 years, with wide, almond eyes and a patchy line of stubble along his chin. "She's got a big heart," he says, reflecting on the days when he knew Nancy Luu and her brothers from Lincoln High School in the Sunset. "Sure, she got me in trouble, but I don't blame her. She'll do anything for her friends. You ask for $3,000, she'll give it to you."

He begins leading his daughter and her friends across the street to his car. He says he hasn't seen Nancy for a long time. His lawyer has told him not to talk to her. The conversation has clearly soured his mood, but suddenly a smile flickers across his face. The kind of smile a lot of men seem to get when they think about Nancy Luu.

Indeed, Nancy Luu has an impact on men. Three of her male co-defendants described themselves as her boyfriend. A male business acquaintance became flustered when testifying about his relationship with her, repeatedly blushing. And she certainly seemed to cast a spell over her bosses, who either ignored, or just didn't notice, that Luu was spending enormous amounts of San Francisco State University money in very strange ways.

To those who knew her at State, Luu was a smart, attractive budget analyst working for the Educational Opportunity Program, a department that teaches young people from disadvantaged backgrounds how to succeed at the college level. She was considered a success story, the type of person who would be held up as an example for the students her department was trying to help.

Luu came to the university from a working-class family of Southeast Asian immigrants. A one-time contestant for the Miss Chinatown USA title, Luu excelled at academics, earning a bachelor's degree with a double major in international business and marketing in four years, and later a master's degree in education. During her first year at SFSU, she took a job as a student assistant and quickly climbed the administrative ladder until, at a relatively young age, she had almost complete control of the EOP's $1 million annual budget, and the respect and trust of her superiors. "People would always tell me how lucky I was to have such a qualified person," her supervisor recently said.

There aren't very many people making those kinds of comments now, because Luu has been charged with relieving the university of money in a variety of sophisticated and felonious ways. According to a grand jury indictment, she looted the university till to support a karaoke bar in the Tenderloin called Cafe Dang (or, sometimes, Cafe Thuy Duong), which evidently was a hangout for a fast crowd. Police say the place, open only at night, was a well-known haunt for Asian gang members, and had been busted for illegal gambling. The indictment also alleges Luu submitted hundreds of false claims for reimbursement, raided a petty cash fund, abused a university credit card, and put her mother, brother, and three boyfriends on the school's payroll.

In all, a grand jury has indicted Luu, her brother, and friends on 279 counts of forgery, fraud, misappropriation of funds, and credit card abuse. The District Attorney's Office has officially alleged that approximately $140,000 was taken, but university officials say the damage was more than $200,000. If convicted, Luu faces the possibility of serving up to 10 years in prison. (She is now out of jail on $100,000 bail; attempts to contact her for this story were unsuccessful.)

On its surface, the grand jury indictment charges Luu with multiple felonies; by implication, it also raises questions about her superiors' competence and/or complicity.

Years before she was indicted, Luu was sued by Wells Fargo Bank for defaulting on a loan she'd used to buy a 1987 Camaro. The bank eventually collected its money by garnishing Luu's wages from the university. A university auditor revoked Luu's office credit card for surpassing the university's purchasing limits six months before a formal investigation of her spending habits began. And Luu's immediate supervisors, Morris Head and Paul Mendez, signed off on every bill she asked the Educational Opportunity Program to pay, including dozens relating to items that the department would obviously never need, such as beer steins and ashtrays.

Luu has been fired, and faces possible imprisonment, but her bosses have avoided prosecution and continue to work as administrators at the university. So far, the District Attorney's Office seems convinced that her two immediate superiors simply placed too much trust in their employee. Luu was vested with an "extraordinarily strong degree of trust by her superiors," Assistant District Attorney Albert Murray told the grand jury, "maybe unreasonable."

The Educational Opportunity Program celebrated its 30th anniversary last year with a big party honoring the actor Danny Glover, a former student and an emblem of what can become of a poor black kid given the chance to succeed in college. The program had good reason to be proud: It has served as a prime source for the university's multicultural blend of students, considered by many to be the school's greatest asset.

San Francisco State has prided itself on the diversity of its student body for decades, dating back to a faculty/student strike that shut down the college for four months in 1968 and 1969 over the suspension of a black teaching assistant who told his students to "kill all the slave masters." The nation's first black studies department was born from that period, as was the college's School of Ethnic Studies and the Educational Opportunity Program. Today, the university has one of the most diverse student populations among California colleges, with minorities making up 68 percent of the student body.

The Educational Opportunity Program doesn't just make it easier for minorities to gain entrance to the university. Once a year it hosts a workshop called "Summer Bridge," a five-week academic boot camp. The university pays for room, board, and materials for 120 incoming freshmen; these students take classes in English and math, as well as seminars on study skills. The program also supports "U-Can," an effort to actively recruit minority students from local high schools.

Like many other affirmative-action bureaucracies, the program is awash with a feel-good argot. In a 1996 newsletter, the program's tutoring center is called "A Special Place," and a graduate school seminar is called "Graduate Exploration." Morris Head, the program's former director, seemed particularly fond of exercising the touchy-feely jargon -- over and over again. In the newsletter, he writes: "I am very proud of the efforts being made by EOP staffpersons and students to enhance the educational empowerment of our communities. ... It is important that our communities join forces so that no one is denied an opportunity to empower themselves, their families and their communities."

The Educational Opportunity Program was no mere bureaucracy; it was a crusade, and both Morris Head and his deputy, Paul Mendez, in testimony before the grand jury, portrayed themselves as big-picture guys with little grasp of the department's budget or financial dealings. Head told the grand jury that Luu handled virtually all his paperwork, preparing the department's budget and controlling all money flowing in and out of the office.

Luu began at the EOP office in 1992 as a senior secretary, and became a budget analyst in 1994. When she took that job, she was just 25 years old, but had already worked in the school's bureaucracy for six years -- two in the university's budget office -- and was quite familiar with how the system operated. "She had received excellent recommendations," Donna Ryan, the university's human resources manager, told the jury. "Her work was good quality ... and her reviews were good."

Luu was so sharp, she was frequently asked to train budget analysts in other departments. "She impressed me as highly competent, efficient, organized ... a very strong person in that position," Head told the grand jury.

Every couple of days, Luu would bring Head or Mendez large piles of paperwork to sign, usually after lunch, when bureaucrats (and other people) tend to sink into sated dazes. Head and Mendez found themselves signing off on requisitions for catering or printing that carried descriptions such as "Refreshments for U-Can" or "Materials for Summer Bridge." These requests required invoices that would document the expenditure. But if Head asked for receipts, he clearly was not scrutinizing them very closely. Had he glanced at the requests, he should have noticed that many of them broke with the most basic office practices; others were simply ridiculous.

Luu turned in one bill for $1,398 of Chinese food. If Head had looked closely, he might have noticed that the time on the receipt was 9 p.m.

"Is it ordinary, that an event of the EOP go to a restaurant and spend almost $1,400?" Albert Murray asked Head during his appearance at the grand jury.

"No. Ha. That was something that was not done."

Another receipt submitted by Luu documents the purchase of a fruitcake -- for $84. Yet another included cookies, pizza, corn, margarine, and mustard -- groceries the office would never need.

Luu submitted dozens of these requests, ostensibly providing food for orientation programs for Summer Bridge and U-Can. If Head had thought about it for a minute, he might have remembered that food had not been served at such orientations for years.

Many of the requisitions turned in by Luu asked for payment to be made to a Tenderloin restaurant known as Cafe Dang. Head approved the payments, even though university protocol requires the use of campus vendors for food served at university events. Other checks went directly to Luu, as if she had spent thousands of dollars of her own money for EOP events.

If prosecutors are to be believed, Luu was both creative and prolific in her looting.

She submitted numerous bills from Thuy Duong Printing, even though university departments are required to use the campus bookstore for printing.

Luu mined the school's petty cash fund for thousands of dollars, tendering at least 97 receipts for $54.20 -- the precise maximum allowed, with inclusion of sales tax, in petty cash expenditures. Luu's superiors approved every receipt.

SFSU departments are allowed to submit several petty cash reimbursement requests at once, so long as the total payout is less than $200. Yvette MacPhee, the Educational Opportunity Program's advising coordinator, told the grand jury that she had turned in a petty cash request after she bought some decorated paper on sale for $6.50; Luu fattened the request to $155.70. "She said she couldn't get Morris Head to sign right away. She instructed me to give her the receipt ... and she would take care of the paperwork. Just sign here."

Even with two bosses willing to rubber-stamp whatever she put in front of their noses, Luu spread the money around. University checks went to Cafe Dang, and Cafe Thuy Duong, and Thuy Duong Printing, and she would mix up the addresses of these places, sometimes placing them in the Tenderloin, other times listing them at post office boxes, and yet other times putting them at the addresses of her three boyfriends: Reuben Flores, Hieu Sam, and Anthony Hang.

These gentlemen also showed up on the university's payroll, along with Luu's mother and brother, as teaching assistants in the EOP's tutoring center, or "Special Place." Student assistants are required to show that they are U.S. citizens and enrolled at least half-time at the university. Only Luu's brother was a student, and nobody, according to grand jury testimony, did any tutoring.

Ostensibly, Luu's friends and relatives were hired to teach college-level mathematics, and they were paid accordingly. For example, her mother, Kim Tran, received eight checks totaling $10,997. Hieu Sam accepted seven checks, for $9,240. The others received between $3,000 and $6,000 each.

Mendez, the EOP's former deputy director, told the grand jury he had signed time sheets for every one of these "tutors" -- without knowing who they were. He said he had seen Luu's mother, Kim Tran, around the office. He said he didn't recognize the others, including Nancy's brother, Vu Luu.

"Do you know Vu Luu?" Murray asked Mendez.

"No, I don't."

"Does your signature appear anywhere on the student assistant payroll voucher?"

"Yes, it does."

"You signed that and authorized the payment of that payroll voucher?"

"Correct."

"Did you personally investigate to determine the accuracy or honesty of any of the entries on that form?"

"Um ... no."

Near the corner of Turk and Leavenworth, a gate has been pulled across the facade of the Co Hang Nuoc Restaurant, a Vietnamese-style eatery. The owner, Andy Nguyen, has closed the place down and opened a new restaurant across the street.

"That place snake bit," he says, sitting at a table in his new location. A big-screen karaoke machine in the corner dominates the room. An Asian woman in a blue, slinky dress sings a lilting melody with tears in her eyes. Words written in foreign characters scroll across the bottom of the screen. Nguyen's wife, in a gray sweat suit, leans against her broom, mesmerized by the woman's sad song.

Nguyen says he acquired the cafe across the street at a good price two years ago. It, too, had been a karaoke bar. The cops had shut it down, he says. It was so beat up, he poured $67,000 into its renovation. Despite his investment, he didn't get any business. "You want in? I sell to you."

Nancy Luu and her boyfriend Anthony Hang had leased the establishment before Nguyen bought it, but it's difficult to say whether they were using it as a Spartan gangbanger hangout, or merely a money-laundering front. Neighbors in the area say it was a nightclub. Hang says it was a coffee shop. Hang and his brother, Hung Hang, controlled the lease between 1991 and 1999, while Luu occasionally paid the $933 monthly rent, the building's owners testified. During that time, the place went through several incarnations, from Cafe Thuy Duong to Thuy Duong Printing and then to the Vabe Cafe for four days, before Luu registered it as Cafe Dang.

Luu used a university credit card to furnish the cafe, purchasing 24 chairs, six tables, a dozen black ashtrays, and a 6-inch cleaver from Economy Restaurant Fixtures in San Francisco. The items cost $1,043 with tax, and because the university had imposed a $500 limit on the credit card she used, Luu split the purchase into two payments, one for $500, the other for $475; she paid the $68 sales tax in cash. She also bought $618 of additional fixtures with the credit card, including draperies, place mats, and vertical blinds, from Anna's Linens in Colma. Luu's boss Morris Head signed off on all the credit card receipts.

Somewhere, somehow, Nancy Luu fits with the allegations of large- and small-scale embezzlement against her. However it's all but impossible to reconcile the calculating swindler who appears to show up on paper with the sweet, flirtatious young woman her colleagues say they knew at the university.

James Chung, a manager at Copy One Printing, knew Luu as the contact person for the legitimate work his copying service did for the Educational Opportunity Program. Chung blushes when he says he knew Luu only as a business acquaintance. "She was beautiful," he says, his face getting redder. "She had long, flowing hair down to her shoulders and a kind face. And she had a nice body." Chung says every time he saw her, she was wearing short skirts and low-cut blouses from Bebe, the clothing store. In fact her e-mail address was bebe@sfsu.edu. He says she told him that's where she buys all her clothes.

Actually, he acknowledges, he thought she was rich. She was driving a Nissan 500 ZX, he says, a $40,000 car. "I knew she couldn't be making that much money for the university working as a secretary, so I wondered where she was getting it."

When Chung views a photograph of Luu from her high school yearbook, he blushes again. "She looked so much more innocent then," he says.

According to his grand jury testimony, Paul Mendez became suspicious of Nancy Luu in February 1998, when she was sick and stayed home from work, and he noticed something odd on a student payroll sheet sitting on her desk. The form showed her brother, Vu Luu, making $12 an hour as a student assistant, a wage above the standard scale. Morris Head would have had to approve the higher salary; Head said he knew nothing about it.

That's when the two supervisors called in Deborah Walter, a detective with the SFSU campus police. Walter interviewed Mendez and Head, and began an investigation of Vu Luu's student records. The more she looked, the more she found. Soon the entire university police unit was involved, looking into Luu's requests for billing, the petty cash fund, the student assistants, and the university credit card. They called in the university's internal auditor and a handwriting expert to study the signatures on checks. They tracked checks to banks where they'd been deposited, and issued search warrants to pull account records. They cordoned off Nancy Luu's cubicle.

While investigators leafed through the financial records, Walter circled outward toward the businesses listed on the checks. At Cafe Dang, she told the court, she found nothing more than tables, chairs, and beer pitchers. Then she tracked down Luu's boyfriends.

Hieu Sam immediately spilled the beans, she says. Sam said he had never worked as a teaching assistant, or provided any printing or catering services to the university. And yes, he had signed the checks he received from the university, and deposited them, giving Luu money when she needed it. They had been lovers, he said.

Reuben Flores denied everything, though he was living with Luu. He said he had never worked for San Francisco State, and had never received any money from the university. The signatures on the back of the checks were not his, he said, and he had never heard of Cafe Dang or Thuy Duong Printing.

Anthony Hang hesitated, then admitted everything, Walter testified. First, Hang said he was given checks to do some printing. He denied cashing the checks, then admitted to cashing them, Walter says. Hang would keep some of the money, and give the rest to Luu. She was his girlfriend, he said.

In March 1998, the District Attorney's Office began its own investigation, which focused on Luu and her accomplices, but not her bosses at the Educational Opportunity Program. Head and Mendez eventually testified against Luu without grants of immunity, meaning the District Attorney's Office may still prosecute them if it's so inclined. In the meantime, the university has reassigned Head to the College of Ethnic Studies, and Mendez to the department of student outreach services.

The university fired Luu in April 1998.

Needless to say, the affair has been a grave embarrassment to the university -- to the point that no one in a position of authority wants to say a word about it.

"It's really not in my best interests to say anything," Head says.

Mendez did not return numerous phone calls.

University President Robert Corrigan's office referred all questions to the university's public affairs coordinator.

Ligeia Polidora, a public affairs officer, responded to a few basic questions, then referred all further inquiries to the District Attorney's Office.

Stuart Hanlon, an attorney representing Nancy Luu, declined to answer questions, but did note that a grand jury indictment tells only one side of the story.

Considering that Head and Mendez have already admitted to failing in their fiduciary duties, it would seem logical to at least include them in the investigation. Investigators believe more than $200,000 slipped out the door on their watch, and they have admitted to authorizing every dollar that escaped.

Yet, for reasons the office will not explain, the district attorney has thus far given the gentlemen a pass. "Unfortunately, two people who could have stopped [the theft], could have caught it, simply trusted her," Albert Murray says in his closing arguments to the grand jury. "And it happens, and it's nice that we can trust people in the workplace. There's not one of you who's going to go away from here without a lesson.

"Morris Head and Paul Mendez learned a lesson, a very harsh lesson. I think that lesson has spread throughout the institution of learning out there. But it happened. Morris Head and Paul Mendez just trusted her fairly well, and they just signed whatever was put in front of them, and that's how it happened. The program suffered. The university suffered. The students suffered."

Actually, the university as a whole has not suffered greatly -- SFSU, after all, has a $190 million annual budget -- but the Educational Opportunity Program has certainly felt the pain. If campus investigators are correct, and Luu, indeed, pilfered more than $200,000 over a two-year period, she drained 10 percent of the program's budget each year, without a bit of interference from the program's top administrators.

The university has rejiggered the management of the Educational Opportunity Program, but it will take awhile to repair the damage that has been done. The program has been knocked down a notch in the administration's eyes, officials in other departments say, and in this respect, Luu's alleged misdeeds continue to have their effects.

When Luu joined the Educational Opportunity Program in 1992, the office was nestled within the university's main administration building, a cornerstone of the campus. But after an earthquake retrofit of the building, the administration relegated the program's staff to the school's old humanities building, the most dilapidated, rat-infested structure on campus. The program's affirmative-action crusaders, once considered the heart and soul of the university, now work in cramped offices smelling of sweat. The department's new director, Rick Gutierrez, does not even have a desk; he has a table stacked with papers in a barren room.

The office has struggled since the university discovered the theft, he says. Last year, the administration unexpectedly cut the program's annual budget by $113,000. The university has brought him in to clean up the books, but the program has yet to regain the administration's trust.

"They count every penny," he says. "The scandal has had an effect, because now the administration can say, 'You survived without that money. Maybe you don't need so much.'"

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Matt Isaacs

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