Independent auditors commissioned by the D.C. Council have told lawmakers that $43 million was stolen from city coffers in the tax office scam, which officials have called the largest corruption case in D.C. history.
Lawyers and accountants from the law firm of Wilmer, Hale and the accounting giant Price WaterHouse Cooper briefed city and law enforcement officials privately earlier this week, The Examiner has learned.
The auditors’ report is not due for several more weeks. That report was commissioned by the council after the scam was revealed by federal authorities last November.
William R. McLucas, a former federal securities investigator who is leading the city’s independent audit, declined comment for this story, saying only: “We’ve done a lot. We have a lot more to do.”
Law enforcement sources familiar with the widening federal investigation told The Examiner that the scandal dates at least to 1989, when Marion Barry was mayor of D.C. And the ultimate price tag may be even higher than the council’s auditors have uncovered, the sources said.
Authorities allege that tax office employees Harriette Walters and Diane Gustus lined their own pockets with millions from phony tax returns that they themselves approved. Several others, most of them friends or relatives of Walters, have been charged as accessories to the scheme.
Four other tax office employees have been cited in court documents as playing a role in the scam, but haven’t been formally charged with any wrongdoing.
Prosecutors are in intense plea discussions with all the defendants, sources told The Examiner, as the clock ticks towards an early March deadline either to indict or to dismiss charges against Walters, et al.
The scandal has embarrassed D.C. Chief Financial Officer Natwar Gandhi and opened questions about the outside accounting firms that gave a clean bill of health to Gandhi’s shop.
Got a tip on the D.C. tax scandal? Call Bill Myers at 202-459-4956 or e-mail [email protected].
