Fast-Paced D.C. Tax Scam Probe Aimed 'to Stop the Hemorrhaging'

On June 25, Turnbull wrote a $200,000 check from the First American Home account and tried to deposit it into another account she controlled at Bank of America, the affidavit says. Two days later, the SunTrust employee balked at the transfer, questioning whether Turnbull had the right to make the transaction. A meeting was set up for July 9 with her at the bank.

The SunTrust employee, whose name has not been released, asked Turnbull for proof that she was an authorized agent of First American Home. Turnbull became verbally abusive, the employee reported, and accused the bank of breaking the law by refusing to make the transfer.

On July 10, the bank asked Turnbull to provide documents, such as articles of incorporation, to show that she was an officer of the company. The next day, Turnbull went to Prince George's County government offices and filed a trade name application for First American Home. When SunTrust received that paperwork from Turnbull, bank officials noticed it was filed after they started asking questions -- and well after the $410,000 check was issued.

Turnbull didn't get the money, and soon a fraud prosecutor in the U.S. attorney's Maryland office and an FBI agent in Calverton were digging into her activities. They found that the address given for First American Home in the tax refund paperwork belonged to a different company. They began looking into Turnbull's other banking habits and found more large checks.

By late August, authorities saw that Turnbull's checks were coming from a D.C. property tax assessment office where her aunt, Walters, was a manager -- and that some of Turnbull's deposits were being transferred to the bank accounts of Walters and others.

Investigators now suspected a much larger fraud was brewing inside the tax agency, part of the bureaucracy under Natwar M. Gandhi, the District's chief financial officer.

On Aug. 30, U.S. Attorney Rod J. Rosenstein, who oversees federal prosecutors in Maryland, summoned Gandhi's auditors to meet with him and the FBI. Federal investigators told the city officials what they had found.

Authorities wanted cooperation but also help in keeping the probe secret. Investigators needed city officials to explain how the refund operation worked, and they also wanted copies of internal records without any tax employees, who were all potential suspects at that point, finding out, Rosenstein explained.

Rosenstein concluded that the real action in the case was centered in Washington, and he handed off much of the probe to Taylor, the U.S. attorney in Washington, in early September. Both offices continued to develop leads as the probe expanded significantly.

One "aha" moment came when investigators saw that menial service contractors that no one had heard of, including Chappa Home Services and Legna Home Services, were getting multiple and sizable property tax refund checks of $200,000 to $540,000 in the same year. Thirty such checks were issued over four years, authorities said. Such refunds seemed illogical for all but the city's largest commercial landowners.

"How do housecleaning companies get multiple refunds?" one investigator asked.

A quick look at the second page of the tax refund applications made it fairly easy to confirm them as frauds, authorities said. Often, the company listed as being owed a refund had no connection to the company names listed in supporting documents. Conflicting information appeared throughout the same application. And copies of the same unrelated checks were repeatedly used in multiple applications to show that different companies had overpaid their taxes.