I kid you not. A $16 million dollar embezzlement of Washington DC tax money, conducted by employees of the tax office over several years, is being called immaterial by the district's Chief Financial Officer, Natwar M. Gandhi:
Gandhi, who came to the news conference as a spectator but was questioned repeatedly by reporters, emphasized that the loss of $16 million is "immaterial" to the overall financial stability of the District. He called the scam's apparent success a "major management failure" at the tax office and said he would ask the Internal Revenue Service and D.C. inspector general to look into operations.
In all, authorities have arrested five people, two were employed in the Office of Tax and Revenue for Washington DC.
Two mid-level 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, prosecutors said yesterday.
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, according to charging papers.
Authorities called it the largest theft ever uncovered in local government in the Washington area. Four top officials in the tax office resigned yesterday amid criticism that they did not spot what was going on. About $4 million of the money has been found, authorities said.
Walters, a 25-year D.C. employee, was a mid-level manager in charge of property tax refunds, with a salary of $81,000 a year. Gustus, a tax specialist, was paid about $55,000. Both were arrested yesterday and jailed overnight pending appearances today at U.S. District Court in Washington.
A bank employee raised questions this summer, refusing to cash a $410,000 refund check and triggering a federal investigation. 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.
Box loads of records also were carted from the D.C. tax office on North Capitol Street NE.
Three people close to Walters are charged with providing phony company accounts where the refund checks could be deposited — and laundered. They are her niece Jayrece Turnbull; Richard Walters; and Turnbull's friend Connie Alexander, all of Bowie. Richard Walters and Alexander were released on bond, and Turnbull is jailed pending a court hearing.
Gandhi has been spending vast sums of DC money to audit departments in the Government – and it took a suspicious bank teller to nail these people. No wonder he thinks it is "immaterial." He's ClueProof®. However, we here at Blue Crab Boulevard are happy to accept all the immaterial funds the district doesn't need. We could use new drapes.
I think you’re being unfair to Gandhi in one particular, and watering down your arguement.
Gandhi said that $16M spread over a few years was immaterial to the District’s financial health, and in that he is no doubt correct. Compared to the size of the DC local government, that isn’t a lot of money. The variance on healthcare costs for DC employees is probably more than taht on a monthly basis. Also, he DID say it was a major failure of management.
However, he should really be raked over the coals for the following:
That is a patently false statement. I’ve spend time in my work career reviewing large amounts of transactions, and I’ve been able to find problems as small as a few cents out of hundreds of millions spent annually, spread amongst tens of thousands of recipients. It can be done and it really isn’t that complicated. One just needs to sit down and actually review the records. (Intelligent use of database queries makes it easier.) The problem is that it IS labor intensive, requires some understanding of what’s being reviewed, and is extremely tedious.
The problem is that it IS labor intensive, requires some understanding of what’s being reviewed, and is extremely tedious.
The other problem (which I forgot to mention) is that the correction isn’t as simple as asking for more money to requisition more/better computers & software. A standard business desktop computer with Microsoft Office software plus the financial records would be all one needed. That and time + understanding + effort. One can easily see how a government would miss the boat….
Harriette Walters political donations?
Big surprise.
Property tax frauds are becoming the future wave, so I don’t want to hear more about the theft being “immaterial” since PricewaterhouseCoopers et al. have blown it on Kodak and now the nation’s capital gets hit.
Another clue – for beancounter eager beavers: Notice that Constance Roeders and John Nicolo from Kodak fame plus Ghandi’s guru both had Bentleys. Now, isn’t it easy to check Bentley car sales against names of people employed in tax – property tax strongly advised and then – Bingo – we got you!
However, the auditors and upper management will resort to it being “immaterial” whether its in the hundreds of millions or the biggest oil company in Texas.
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