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What the Feds Say the Tax Lady Spent at Neiman's: $1.4 million
Designer Goods and Doting Staff Make Spending an Enriching Experience

By Hank Stuever
Washington Post Staff Writer
Friday, November 9, 2007

Despite every effort to make ourselves over into a hipper, more fashionable Washington, one pernicious problem remains: Too many of us still struggle with the idea that a person, even a thief, could have "spent over $1.4 million at Neiman Marcus, the retailer," in seven years' time.

Which is what the affidavit alleges that Harriette Walters, who worked for the D.C. government for 25 years (the last few as a manager in the city's Office of Tax and Revenue), did. Prosecutors said Wednesday that Walters and her colleague Diane Gustus had been, for years, quietly helping themselves to $20 million from the city pile in the form of bogus refund checks. They "got paid," in urban parlance, and bought themselves some nice things.

Prosecutors mention a Bentley in someone's garage. But let's just imagine the clothes: Two fiftyish ladies, off to the Judiciary Square Cosí, decked out in Chanel, St. John, Ralph Lauren.

They shopped, jaws drop.

And did you know Wednesday was officially "Neiman Marcus Mazza Gallerie Day" in Washington? Mayor Adrian Fenty made a proclamation at a nice little evening cocktail party at Mazza Gallerie, thanking the shopping center and its premier tenant for 30 years of happy, high-end retail. A jazz quartet played "The Lady Is a Tramp."

The scheduling irony was not the mayor's fault -- he made the commitment to Mazza Gallerie's anniversary party more than a month ago, his spokeswoman reminded us.

Neiman Marcus "both enriches and improves the lives of many in Washington, D.C.," the mayor read from his proclamation, noting its charitable donations and sponsorship of fundraising events, and then he added: "And I should say: We really love collecting sales taxes off of you."

The crowd laughed.

No mention was made, of course, of the shopping habits of Walters and Gustus.

Back to our scandal in progress: The affidavit was written by a total man, who doesn't go into exact detail about what Walters actually purchased at Neiman's. He's all about the bottom line. FBI agents are sometimes like those husbands you distract by putting dry-cleaning bags over things you just bought, so he doesn't think you went shopping again. Eventually he figures it out, but in the intervening, a whole other retail economy transpires in the trunk of one's car.

(And don't go wondering if the spokeswoman at the Mazza Gallerie Neiman Marcus store can illuminate the many ways Walters became a good customer. For all we know at this point, she may even have been a Tysons II shopper. "We never talk about [customers]," the spokeswoman says.)

To use a cliche, do the math. Prosecutors allege Walters's purchases were made "from September 2000 to the present," seven years, which is really only a couple hundred grand a year.

"That's nothing," says Helen Moody, a well-known Washington stylist and shopping consultant. "Two hundred thousand dollars is really easy."

You could do that with a single season of Chado Ralph Rucci. The dollar -- even your tax dollar -- is not at work the way it used to be. Good bags are $5,000. Even the spring shoes are $900, $1,200 now. And don't just think about clothes. Think accessories. Think home furnishings. Think Horchow. The journey into the inner circle of doting salesclerks and special invites begins the minute you walk in and drop, say, $10,000 on a skirt and jacket. Soon there are phone calls from sales associates, asking not who you are but how you are, inviting you to a personal lunch or to special previews. Your shoe size is now known; you will never have to tell them again. The room is ready for you. In another $15,000 or $20,000, even "the guys who take your parking-garage ticket know who you are," Moody says.

As the tax refund scandal unfolds, a certain kind of criminal species has again captured the local imagination: The public servant or official or organization president who sees the money flowing to and fro, helps himself or herself to what he or she imagines is an insignificant cut of it, and makes a beeline for the high-end department stores.

When the alleged perp shows up in court, heads crane to figure out, "Who are you wearing?" (Gustus appeared yesterday in a heavy denim jacket, with white socks. Walters wore black slacks under a jacket of cardinal red wool, which set off her blond braids.)

As the Washington Teachers' Union prepares to auction this weekend some $800,000 worth of designer handbags, furs and other luxury items bought by its former president, Barbara Bullock, with union funds (she's now doing nine years in prison togs), only the boring, rational-minded ask why the crooks don't spend it less conspicuously. What sort of thief opens mutual funds?

"If I was stealing that kind of money," Moody says, it wouldn't be on clothes, not right away. "It would be on attorney fees, getting a plan lined up." She's thought about this. You need property, real estate that can't be seized, that you can rent out while you serve your term. There's so much to do before the retail binges.

"Could you spend $1.4 million at Neiman Marcus in seven years? Absolutely," says Susan Rolontz, executive vice president of Tobé, a retail consultant group in New York. "Neiman Marcus has fabulous, fabulous luxury merchandise. I don't think there's any question you could spend it in a short period of time, while giving everybody you know gifts and dressing yourself amazingly. First of all, it's a place you like to spend it. And I think that's important -- that's where you want to spend that kind of money."

No matter how you got it.

Rolontz yells out to a co-worker: "This guy wants to know if you can spend $1.4 million at Neiman Marcus in seven years."

"Seven years?" the woman asks.

"Yes, seven years."

"I could spend that in a week," she answers.

You could start with the Dior Samurai Knot Frame Bag in black calf and goat leather, $3,600, in the store's Christmas book. Add in the updated Burberry trench coat, adorned with metal pyramid studs, for $10,995. Throw in a pair of Royal Asscher diamond drop earrings at $25,500.00. And keep going.

"There are three kinds of people who spend this sort of money" at Neiman Marcus, Moody says. "There's the devotee, who spends an amount each season on a particular designer and everyone knows them. These are not women who you see in the street all the time, and they all look really, really lovely. Then you have the professional people, you know, some of the media folks who come in and buy and buy and buy, and it's always between Saks and Neiman's. And then there's more the kind of person we're talking about here, someone who comes in and makes a big purchase and the lucky sales associate starts to work from there, and pretty soon they're back, and the [salespeople] are bringing them things from all over the store."

As it happens, if you spend this much stolen money -- allegedly! allegedly! -- at Neiman Marcus, the world becomes a slightly different place. People notice you. You're almost spending rock star money. You're almost spending wife-of-the-Kuwaiti-ambassador money. Then you realize you've got a long way to go. (Which may explain why you need still more money.)

Walters and Gustus are thus known. "They're social in D.C.," Moody says, who would see them at smaller parties, where you'd see "the government people. Oh, yes. I know them. I know who we're talking about. . . . These aren't stand-out women."

And how did they look? (Or how did they look for D.C. employees who made $81,000 and $55,000 a year, respectively?)

Lots of St. John, Moody recalls, and Jimmy Choo. There are some people you can walk up to and tell them how lovely they look, because it's true, because it all came together, not just the right clothes, but the right accessories, the hair and the whole look. Waters and Gustus didn't have that, she says. It was -- how to put it?

"Basically unfinished," Moody says. "That's typical in D.C."

Staff writer Paul Duggan contributed to this report.

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