Surge in D.C. tax office settlements reduces commercial property owners’ bills

The settlements have raised concerns among some employees in the tax office, where three years ago manager Harriette Walters was sentenced to federal prison for stealing more than $48 million through fraudulent tax returns, the largest embezzlement scheme in city history.

At least one tax office employee recently complained about the process, prompting an ongoing investigation by the agency’s Office of Integrity and Oversight. In recent weeks, the FBI also has been looking into the deals.

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Dramatic rise in D.C. tax office settlements

An FBI spokesman said the agency does not confirm or deny the existence of investigations. Gandhi said he could not comment on any federal investigation but acknowledged that his agency had received a complaint and that the internal-affairs unit is investigating.

Three former D.C. tax office supervisors contacted by The Post said they were surprised by the settlements.

“Are you kidding?” said Richie McKeithen, a former tax office director who left in 2010 to become chief assessment officer in Philadelphia. “Dr. Gandhi made a concentrated effort to criticize the appeals board for reducing values. Yet it appears . . . that you are reducing the value yourself after you just levied it.”

David Fitzgibbon, the city’s former chief appraiser who left in 2011 for the same position in Fulton County, Ga., said that “if the staff followed the procedures that we followed for years, I would find it difficult to think that that many values were wrong.”

Out of public eye

The settlement process largely played out behind closed doors. Tax office officials said supervisors are authorized to significantly adjust property values without approval from higher-ups. The Post reviewed the publicly available settlement records for more than 40 cases and found only brief explanations for even the steepest reductions, which often occurred after staff appraisers provided written accounts supporting higher values.

In three out of four of those cases, the negotiated value was closer to what the property owner had wanted rather than what the appraiser had recommended.

“They’re just giving it away,” said one veteran city appraiser who for fear of termination declined to be identified. “It’s demoralizing because we are doing our jobs and then they change our assessments. Values are being undercut so much.”

The appraiser said tax office supervisors last month warned staff members that they would lose their jobs if they talked to the media. Tax office officials say all media inquiries must go through proper channels, and they said they were not aware that any appraisers had been threatened with termination.

Four people with knowledge of tax office operations told The Post that the upswing in settlements began under the direction of the city’s new chief appraiser, Tony L. George. George, who was hired last year, called a meeting with the city’s appraisers and told them to settle everything “within reason,” the people recalled. As chief appraiser, George has final say on settlements.

George did not return repeated calls seeking comment.