D.C. Chief Financial Officer Natwar Gandhi acknowledged Thursday that the largest corruption case in city history may extend back to 1999, when he headed the tax office where prosecutors say the fraud occurred.
Investigators have charged that the rip-off of more than $20 million in taxpayer dollars began in 2001. But The Examiner earlier this week traced checks that appeared to fit the pattern of the fraud back to Gandhi’s tenure.
While conceding for the first time the thefts may have occurred under his direct watch, Gandhi repeated earlier vows to remain in office until informed by the mayor and a majority of the D.C. Council they had lost confidence in him.
“If they have lost confidence in me, I’m gone,” Gandhi said.
While council members subjected Gandhi to a relentless verbal pounding throughout a hearing that lasted late into the evening, no consensus emerged among city officials that he needed to resign.
Gandhi was under fire for allowing a pair of employees in the Office of Tax and Revenue to allegedly steal more than $20 million by manipulating the property tax refund process over the course of nearly a decade — what Council Member Carol Schwartz called a “moronic scheme.”
He was accused of abdicating his stewardship of taxpayer dollars, ignoring audits dating back to 2004 warning of opportunities for fraud, and failing to implement controls to ensure such theft is caught or doesn’t happen.
“This is more a management failure than it is an audit failure,” said Council Chairman Vincent Gray. “While some say this was a sophisticated scheme, it seems to me several very amateurish things were done here.”
Sherryl Hobbs Newman, the ousted director of the scandal-plagued tax office, meanwhile, told the council she saw no “hint of wrongdoing” and probably couldn’t have stopped the fraud anyway.
Gandhi fired Hobbs Newman the day the scandal broke. The job she held was the same one Gandhi held in 1999.
The Examiner reported that tax-office officials in July 1999 approved a $113,000 check to an apparently bogus company. That payment was to the “Bellarmine Corporation.” But the businessman to whom the check was supposed to be sent said he had never heard of the company and never received a check for that size.
The tax office official charged with masterminding the case, Harriette Walters, helped develop the automated real-property system that prosecutors say she, with accomplices including her subordinate Diane Gustus, would eventually use to bilk the city.
Hobbs Newman, one of 15 people under Gandhi who have been fired or resigned since the scandal broke, said reforms that “would have shut this operation down” weren’t to be implemented until December.
“I wish I had found this scheme, but I did not and do not think that I could have,” Newman said.
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