U.S. Department of Justice
JEFFREY A. TAYLOR
United States Attorney for the District
of Columbia
ROD J. ROSENSTEIN
United States Attorney for the District
of Maryland
PRESS RELEASE
| FOR IMMEDIATE RELEASE Wednesday, November 7, 2007 | For Information Contact: Public Affairs Channing Phillips (202) 514-6933 http://www.usdoj.gov/usao/dc |
Federal and local law enforcement officials announce
arrests and raids in multimillion-dollar D.C. property tax refund fraud scheme
Beginning early this morning,
approximately 100 federal and local law enforcement agents executed
seven search warrants in the District of Columbia and Maryland and arrested five persons, including two
District of Columbia employees, in connection with a massive property
tax refund fraud scheme that was designed to steal tens of millions of
dollars from the District of Columbia by approving and issuing
fraudulent property tax refunds from the District of Columbia’s Office
of Tax and Revenue ("OTR"), U.S. Attorney for the District of
Columbia Jeffrey A. Taylor, U.S. Attorney for the District of Maryland
Rod J. Rosenstein, Joseph Persichini, Jr., Assistant Director in Charge
of the FBI’s Washington Field Office, Charles J. Willoughby, Inspector
General for the District of Columbia, and District of Columbia Chief
Financial Officer Natwar M. Gandhi jointly announced today.
Arrested this morning were 51-year-old Harriette Walters,
Manager of the D.C. Real Property Tax Administration Adjustments Unit,
of Washington, D.C., and 54-year-old Diane Gustus, a Real Property
Program Specialist with OTR, of Clinton, MD, and three of their alleged
co-conspirators, Jayrece E. Turnbull, 33, Richard J. Walters, 48, and
Connie L. Alexander, 52, all of Bowie, Maryland, for their roles in a
scheme to defraud the District of Columbia out of millions of dollars in
real estate property tax refunds. The arrest warrants and felony
complaints charge the participants in the scheme with several felony
offenses, including mail fraud, bank fraud, money laundering, interstate
transportation of stolen property, and conspiracy. If convicted of bank
fraud alone, the defendants face a maximum sentence of 30 years in
prison.
The District of Columbia tax code imposes property taxes
on real estate in the District and provides a mechanism for property tax
refunds when, for example, an individual or company overpays real estate
taxes. According to the affidavits filed in support of the arrest and
search warrants, from 2004 through the present, Harriette Walters, Diane
Gustus, and other D.C. government employees were involved in preparing
or approving fraudulent property tax refund requests to generate over 40
separate fraudulent refund checks averaging over $388,000 each. Those
fraudulent tax refund checks were deposited primarily into sham
corporate accounts controlled by Harriette Walters’s relatives, including
Turnbull’s "Chappa Home Services" and "Legna Home
Services" accounts, and Richard Walters’s "Helmet Plumbing and
Heating" account.
The fraudulently obtained funds then allegedly were
distributed through cash, cashier’s checks, and wire transfers to the
co-conspirators and family members, who used the funds to purchase
homes, vehicles, jewelry, luxury clothing and houseware items, and other
real and personal property, among other things. For example, it is
alleged that between September 2000 and the present, Harriette Walters
spent more than $1.4 million at Neiman Marcus. Additionally, the
affidavits allege, some of the money stolen from the District of
Columbia has been sent to a money exchange institution in the Dominican
Republic that has no bank branches in the United States.
To date, approximately 42 fraudulent refund checks have
been identified that resulted in a loss of over $16 million to the
District.
"Public officials serve the public, and those who
abuse the public’s trust by treating the District’s tax coffer as a
private cash trough will be rooted out and held accountable for their
actions," stated U.S. Attorney Taylor. "Today we have taken a
significant step toward eliminating this fraud and recovering funds
looted from the District’s treasury."
"Corrupt government employees can cause tremendous
harm when they abuse their authority and line their pockets with
taxpayer dollars. This expeditious, effective, and coordinated
investigation demonstrates our commitment to ensure that any government
employee who betrays the public trust and steals from the taxpayers is
held accountable," said U.S. Attorney Rosenstein.
"Today’s arrests and searches were a success due to
a seamless joint investigation between the FBI’s Washington and
Baltimore Field Offices and our federal and local law enforcement
partners. Solid teamwork leads to solid, productive
investigations," stated FBI Assistant Director in Charge Persichini.
"This joint effort demonstrates how the federal and
D.C. governments can work together for the benefit of the District and
its residents," stated D.C. Inspector General Willoughby.
"This behavior, on the part of those entrusted to
safeguard the government’s resources, is reprehensible and will not be
tolerated. Those involved will be identified and prosecuted to the
fullest extent of the law. We will coordinate with the Office of the
Inspector General, to conduct a comprehensive review of the Office of
Tax and Revenue to immediately address deficiencies in management and
internal controls. I want to emphasize that although any dollar lost to
fraud is a dollar too much, this incident in no way compromises the
financial stability and viability of the District," said Chief
Financial Officer Gandhi.
As a result of today’s search warrants and arrests,
special agents from the Washington Field Office and Baltimore Field
Office of the Federal Bureau of Investigation, in conjunction with
agents from the Internal Revenue Service and District of Columbia Office
of Inspector General, and criminal investigators from the District of
Columbia Office of the Chief Financial Officer seized fur coats,
jewelry, and designer bags worth thousands of dollars, bank accounts
controlled by the conspirators, and several of their automobiles,
including a 2005 Bentley.
Defendants Harriette Walters and Diane Gustus were
charged in the U.S. District Court for the District of Columbia. Their
three alleged co-conspirators were charged in the U.S. District Court
for the District of Maryland. The defendants’ initial appearances in the
respective courts began this afternoon.
This investigation is continuing. The extent of the
scheme and magnitude of the fraud are still being assessed.
In announcing today’s arrests and seizures, U.S.
Attorneys Taylor and Rosenstein, FBI Assistant Director in Charge
Persichini, Inspector General Willoughby and Chief Financial Officer
Gandhi commended the team of investigators and prosecutors from their
respective offices.
The cases will be jointly prosecuted by the U.S.
Attorneys’ Offices for the Districts of Columbia and Maryland.
A felony complaint is merely a formal charge that a
defendant has committed a violation of criminal law. All defendants are
presumed innocent until and unless proven guilty.