Investigators have begun poring over decades of city tax records, an indication that federal authorities are following the trail of the largest public corruption scandal in D.C.’s history even further back than previously acknowledged, The Examiner has learned.
Prosecutors have accused property tax office bureaucrats Harriette Walters and Diane Gustus of embezzling tens of millions of dollars through phony tax refunds since at least 2001. The Examiner has uncovered suspect payments dating to mid-1999, but a law enforcement source with intimate knowledge of the widening investigation said authorities still haven’t found the first check the pair allegedly wrote and are trying to search records going back decades.
Walters started in the tax office in 1981.
Authorities are scrambling to figure out the depth of the scandal because they fear the millions the pair allegedly hid in offshore accounts will quickly disappear. Authorities have acknowledged that, to date, they have recovered only one-third of the allegedly stolen funds.
But investigators have been hampered by D.C.’s chaotic record-keeping. The source, who asked to remain unnamed because of the sensitivity of the investigation, said what records still exist are scattered and few are computerized.
Even computerization hasn’t helped clear up the mysteries. According to tax office records obtained by The Examiner, D.C. authorized about $27.1 million in disbursements, but the payees and addresses were left blank. The transactions weren’t recorded on D.C.’s general ledger, the records show.
The scandal has cast an unfavorable light on the city’s chief financial officer, Natwar Gandhi, who started his D.C. career in the tax office and who has boasted about professionalizing D.C.’s finances. Despite Gandhi’s reputation for good fiscal practices, there were warnings in recent years that his office wasn’t properly monitoring the public’s funds.
In October, the D.C. inspector general reviewed three years’ worth of audits and reported that the finance office had been cited at least 13 times for having shoddy controls. The only D.C. agency with more citations was the health department, which was written up 16 times, according to the inspector general’s report.
Gandhi retains the public support of Mayor Adrian Fenty, District Council Chair Vincent Gray and Finance Committee Chair Jack Evans, D-Ward 2.
But the council has opened its own investigation of the tax office debacle and some City Hall sources told The Examiner that a consensus is emerging that D.C. might have to live without Gandhi’s services.
Neither Gandhi nor his spokeswoman responded to a request for comment.
Got a tip on the tax office scandal? Call Bill Myers at 202-459-4956 or e-mail [email protected].
