Scandal notes: Unraveling corruption

Comments

 SEE THE LATEST ON THIS STORY

EMAIL STORY

PRINT STORY

250 days ago: Feds subpoena casino records

271 days ago: Cordi is new D.C. tax office director

272 days ago: Accused mastermind's nephew first indicted in tax fraud case

283 days ago: Feds confiscate more accounts

» 287 days ago: Scandal notes: Unraveling corruption «

290 days ago: Cops: Name belies alleged role in scam

290 days ago: IRS official and wife charged in widening web of tax scam

292 days ago: D.C. scandal soils Gandhi’s reputation, may cost his job

292 days ago: Tax scandal may date to '90

(Andrew Harnik/Examiner)
The multimillion-dollar D.C. tax office scam tarnished Chief Financial Officer Natwar Gandhi’s reputation as the District’s fiscal guru.

WASHINGTON (Map, News) - In the early hours of Nov. 7, federal and District of Columbia authorities fanned out to homes around the District and its suburbs. They knocked on doors and hauled off six suspects, including D.C. tax officials Harriette Walters and Diane Gustus. By the end of the day, the District would learn that authorities had busted what they called the largest public corruption scandal in D.C. history.

The tax office scandal has led to 10 arrests, and more might be coming soon. It disgraced Chief Financial Officer Natwar Gandhi, who had until then been spoken to in hushed and reverent tones by D.C.’s political class.

Tens of millions might have been stolen. Authorities are still tracing checks and might have dated the scam to mid-1990. So far, the public has been offered only a glimpse of the riches bought with the allegedly stolen money, but the glimpse has been enough to fire the public’s imagination and outrage: Faberge eggs, Bentleys, Jaguars and beachfront homes in the Caribbean.

The prosecution’s case rests on two middling D.C. bureaucrats. Diane Gustus was a veteran timeserver who plugged along at her work nearly anonymous for three decades and was a few weeks from retirement when she was arrested. The key figure, according to prosecutors, is Harriette Walters, a heavyset, garrulous West Indian who supervised property tax refunds.

Walters had been in the office since 1981, but, unlike Gustus, was well-known by many. She claimed to have inherited money from a rich relative and bragged about her savvy at casinos. And she wasn’t afraid to spread the wealth. Dozens of employees in the tax office, including supervisors, received jewelry, clothing, Wizards tickets and concert seats. Walters even handed out portable safes to store the boodle.

If someone was down on his or her luck, Walters was always glad to lend some money.

Her co-workers called her “Mother Harriette.”

Prosecutors say that the scam relied on a mixture of phony companies and legitimate names. Real estate lawyers would later be surprised to get calls from the FBI or the U.S. Attorney’s Office, asking them why their names were on six-figure checks to companies that either didn’t exist, didn’t own property or weren’t owed refunds.

Sometimes, the names were ludicrous, as in “Ninja Jo” and “Awsome.” Other times, the thieves apparently were hoping for heavenly sanction, christening the fronts with monikers such as “Aurora,” “Bellarmine” — the name of a Roman Catholic saint — “Provident” and “Legna,” which is “Angel” spelled backward.

According to court papers and sources close to the widening investigation, the scam began unraveling around June 18, when Jayrece Turnbull deposited a $410,000 check into a SunTrust bank account at a grocery store in Bowie.

Bank officials were worried about the check. It was made out to “First American Home” and was put in care of “David Fuss, Esq.” The bank put a “hold” on the check and, around June 27, a woman who worked there called Fuss.

Fuss, a real estate lawyer who often obtained refunds for his clients, told the bank clerk that he’d never heard of “First American” and certainly didn’t remember ever receiving a refund that large. The bank clerk asked Fuss what she should do. Fuss suggested she call the D.C. Inspector General’s Office.

Meanwhile, the bogus checks kept rolling out of the tax office. There were often two or three per day, in six-figure increments, most of them marked “hold for pickup.” No one from the finance office apparently questioned why so much money was going out, or where it was heading.

By late June or early July, the FBI and the U.S. Attorney’s Office were poring over bank records and vouchers from the tax office. A month later, Gandhi’s top auditors were called into a meeting with Rod J. Rosenstein, the U.S. attorney for Maryland, and told that there may be thieves in Gandhi’s den.

In the wee hours of Nov. 7, federal authorities raided the homes of Walters, Gustus and several others. According to court records, Walters confessed to running the scheme but wouldn’t say where the money had gone.

The investigation continues.

A who’s who

D.C. tax office scandal

Harriette Walters

Tax office supervisor and alleged mastermind of the scheme

Diane Gustus

Veteran tax office employee, allegedly helped Walters process phony refunds

Jayrece Turnbull

Walters’ niece, allegedly set up accounts for “Legna Home Services”

Richard Walters

Allegedly set up an account for “Helmet Plumbing and Heating”

Ricardo Walters

Allegedly set up an account for “Provident Home Services”

Connie Alexander

Friend of Turnbull, allegedly set up an account for “Aurora Re Enterprises”

Walter Jones

Former Bank of America assistant manager, allegedly laundered millions

Alethia Grooms

Walters’ friend, allegedly laundered money through her real estate company

Patricia Steven

Relative and former Georgetown classmate of Harriette Walters, allegedly set up “Bellarmine” company.

Robert Steven

Estranged husband of Patricia, IRS executive, allegedly helped set up “Bellarmine.”

Got a tip on the tax scandal? Call Bill Myers at 202-459-4956 or e-mail bmyers@dcexaminer.com.

SEE THE LATEST ON THIS STORY

EMAIL STORY

PRINT STORY

250 days ago: Feds subpoena casino records

271 days ago: Cordi is new D.C. tax office director

272 days ago: Accused mastermind's nephew first indicted in tax fraud case

283 days ago: Feds confiscate more accounts

» 287 days ago: Scandal notes: Unraveling corruption «

290 days ago: Cops: Name belies alleged role in scam

290 days ago: IRS official and wife charged in widening web of tax scam

292 days ago: D.C. scandal soils Gandhi’s reputation, may cost his job

292 days ago: Tax scandal may date to '90