The feds are about to complete their investigation of the D.C. tax scandal, according to my sources. Here are some of the essential numbers:
— $15 million is what my sources say the feds have recovered from the $50 million siphoned from tax revenues.
— 20 years is the time it took the tiny group of corrupt tax officials to embezzle the dough; 10 months is what the feds needed to close their investigation, if they bring final charges next month, as expected.
— Nine is the number of people who have pleaded guilty in the tax scheme so far; if ring leader Harriette Walters pleads guilty in September, as expected, the number will grow to 10.
— One is the number of tax office employees caught by new controls set up since last November; Jacqueline Wright was nabbed and pleaded guilty a few weeks ago to sending $184,000 to her boyfriend in fake income tax refunds.
— 33 is the number of tax employees who are scheduled to take the city’s voluntary buyout today; while their leaving has no relation to the embezzlement scam, it will allow the tax agency to hire and train fresh employes.
— Four is the number of special audit committees investigating the largest corruption scam in D.C. history, that we know of: Chief Financial Officer Natwar Gandhi appointed one headed by former IRS Commissioner Sheldon Cohen, council finance committee chair Jack Evans formed another, the city’s outside accounting firm has one, and the inspector general is investigating, too.
— Zero is the amount of catharsis city residents can expect when the FBI and federal prosecutors unveil their 10-month probe. There will be no top cahuna, no major master mind, no big fish politician behind the massive scam. And $35 million down the drain.
Turns out that mid-level tax official Harriette Walters, a nice lady who lived not far from my northwest neighborhood, engineered and operated the scheme that was horribly effective in its simplicity: Walters evaded all electronic controls by writing refund checks by hand to fake companies. Her co-conspirators helped set up the firms and launder the cash.
What makes Nat Gandhi — the finance chief who brought D.C. from bankrupt capital to model of fiscal health — believe another Walters isn’t draining millions right now — or might not in the future?
“If the process we have put in place works,” he tells me, “we will be the first city in the country to have an outside, independent audit committee. My model here is the Sarbanes-Oxley Act.” Enacted to prevent accounting scandals in the private sector, it set up controls for corporations; Gandhi wants similar controls for the government.
Why not rely on the city’s existing controls?
“I want and external validation,” he says.
Kroll, a forensic accounting firm, has volunteered to comb the tax office; Gandhi intends to hire Kroll or another firm to set up new financial controls for schools, procurement and medicaid.
Will that guarantee another $50 million isn’t stolen?
“No one can do that,” says Gandhi.
