FBI seizes handgun, cash in Lynnwood police investigation

The FBI has seized a handgun that was reported missing from the Lynnwood Police Department's evidence room as well as cash during a search this week of the home of a deputy chief under investigation for theft, according to court documents.

A search warrant return filed in U.S. District Court on Thursday says FBI agents seized money, a. 38-caliber revolver, financial records, shredded documents and police paperwork as well as pipes, powder and a scale from the Everett home of Deputy Chief Paul Watkins.

The serial number on the revolver matches that of a handgun that was among evidence checked out from the Snohomish County Prosecutor's Office by Watkins in 2002, according to the FBI. The evidence package also contained more than $14,000 cash and 2 grams of cocaine seized along with the handgun during a 1996 drug bust, the search warrant application alleges.

The search warrant alleges that Watkins told the Police Department's evidence officers that he would release the money to its rightful owners, but no paperwork tracking the money was ever completed and no receipts were found.

The amount of cash seized by the FBI from Watkins' home is not included on the search warrant return, which is an accounting of items taken during the search.

Watkins, 50, has been placed on paid administrative leave as a result of the federal investigation. Evidence against the longtime Lynnwood officer is being presented to a grand jury, according to a law-enforcement source. No criminal charges have been filed.

Watkins could not be reached for comment. The Lynnwood Police Department has declined to comment.

According to court documents, Watkins served as the department's commander of the Investigations Division during 2001-04 and oversaw property seized from criminal suspects. During that period, Watkins flouted department policy by having officers turn over to him cash that had been seized by police and was due to be returned to its original owners, the search warrant alleges.

When asked in May about the missing package checked out from the prosecutor's office, Watkins said he recalled bringing the cash, handguns and cocaine to the evidence room at the department, but said he failed to log it in properly.

The search warrant also details six additional instances between 2001 and 2005 in which Watkins allegedly kept seized cash that he was supposed to return to its owners.

According to the search warrant, Lynnwood police asked the FBI to investigate Watkins after an internal audit showed that cash released to him between 2001 and 2005 could not be accounted for.

The search warrant also says Watkins and his wife have filed for bankruptcy four times in recent years and that on several occasions Watkins deposited cash in his bank account on the same days that he claimed to have returned seized funds.

Numerous people have been questioned in connection with the investigation, including an evidence officer with Lynnwood police, a former department evidence handler and an officer with the Mountlake Terrace Police Department.

The Mountlake Terrace officer is being questioned by the FBI as a witness in the investigation, Mountlake Terrace Police Chief Scott Smith said Friday.

The 15-year veteran, who Smith said was a cadet with the Lynnwood Police Department before joining the Mountlake Terrace department, "is in no way considered involved or a suspect" in the investigation.

Christine Clarridge: 206-464-8983 or cclarridge@seattletimes.com.

Seattle Times staff reporter Christina Siderius contributed to this report.