Black Female Empowerment

Two mid-level female D.C. government employees used phony paperwork to collect more than $16 million from illegal tax refunds, avoiding detection for at least three years while issuing more than 40 checks cashed by friends and family members in on the scam.

By day, Harriette Walters and Diane Gustus worked at the District's Office of Tax and Revenue. In their free time, prosecutors said, they worked with others to raid the city's treasury to stock up on luxury items including fancy cars, homes, furs, precious jewelry, designer handbags and clothing. Walters alone spent more than $1.4 million at Neiman Marcus.

Authorities called it the largest theft ever uncovered in local government in the Washington area.

Raids yesterday, conducted by at least 100 law enforcement officials, turned up a $160,000 Bentley in the garage of Walters's brother Richard Walters and designer purses and shoes bearing the labels of Chanel, Louis Vuitton and Hermes at Harriette Walters's home, law enforcement officials said. Authorities also found records tying Walters to the purchase of a $26,000 handbag, but the purse itself did not turn up.

The average amount for the refund checks generated in the scam was a staggering $388,000, and the losses amounted to several million a year, authorities said. The average alone would constitute an extremely high tax bill, not to speak of a refund, for all but the largest D.C. property owners. In all of fiscal 2007, for example, the office refunded a total of $20.7 million in real property taxes.

Walters, 51, whose extended family is from the Virgin Islands, had been the manager of the D.C. Real Property Tax Administration Adjustments Unit since 2004. She had worked in the D.C. government since 1981. Gustus, 54, was a program specialist in the office. Sources said the women had a reputation for lavishing their co-workers with gifts from time to time.

The refund checks would be made out to sham companies controlled by Walters's relatives and friends or to legitimate companies or law firms but with Walters's friends listed as the purported co-payees. Some of the cash was sent to a money exchange institution in the Dominican Republic. In the United States, Walters and Turnbull had help from an assistant manager at a Bank of America branch in Baltimore.

The plot began to unravel in July, after an employee at a SunTrust branch in Bowie raised concerns.

The scandal marks another embarrassment for the city. Former Washington Teachers' Union president Barbara Bullock is serving a nine-year prison sentence for her part in bilking the union of almost $5 million. An auction of her $800,000 in designer purses and other goods, seized by the FBI, is set for this weekend.

SOURCE: D.C. Tax Workers Charged In Scam: 2 Accused of Taking $16 Million Worth Of Illegal Refunds by Carol D. Leonnig, Clarence Williams and David Nakamura, Washington Post Staff Writers, Thursday, November 8, 2007.