Friday, November 9, 2007

$16 Million Embezzlement from DC Property Tax Office

Embezzlement is bad enough, and when it involves the theft of tax money, the corruption overlay just spreads the harm even further.  Two officials in the Washington, D.C. real property tax office were arrested for stealing approximately $16 million through bogus tax refunds that were directed to straw accounts maintained by three other defendants also charged in the case.  The charges are mail fraud, bank fraud, money laundering, interstate transportation of stolen property, and conspiracy.  According to a press release (here) from the U.S. Attorney's Office:

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.

$1.4 million at Needless Markup?!  Now that's a spending spree.  According to the Washington Post (here), the search turned up a receipt for a handbag purchased for $26,000, although it has not been located yet.   

The Post article notes that the investigation is continuing, and others in the real estate tax office may have had some involvement in the scheme, or at least an inkling of what was going on, because they received lavish gifts from the two officials.  Even worse, while the investigation to this point has identified improper tax refund checks from 2004, there's a chance that the scheme began as far back as 2000, so the loss to the D.C. government may be even worse.  That's an awful lot of money to skim off without anyone noticing for over three years, especially in these days of tight government budgets. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/11/16-million-embe.html

Corruption, Fraud, Prosecutions | Permalink

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