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Fast-Paced D.C. Tax Scam Probe Aimed 'to Stop the Hemorrhaging'
U.S. Attorney Jeffrey A. Taylor announces details of Wednesday's arrests after a four-month investigation. At right is Mayor Adrian M. Fenty, who was not informed in advance of the probe into the Office of Tax and Revenue.
(By Marvin Joseph -- The Washington Post)
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The magnitude of the case became apparent: The District issued $20.7 million in property tax refunds in fiscal 2007, and the amount going to Walters and her cohorts might amount to as much as 20 percent of that, authorities said.
The records showed that Walters and others were picking up the pace in recent months, authorities said. The pattern seemed the same: Gustus, they said, typically generated the refund paperwork, Walters signed it, others deposited the money and the illicit proceeds were passed along. Other city workers also signed paperwork, and investigators said they wondered if they, too, were involved.
While one team of agents went over tax materials, another pored over bank records, trying to trace money to real estate, big-dollar purchases and bank accounts. Authorities said they thought some of the money went to pay for Walters's house in the 6800 block of Oregon Avenue NW and other proceeds went toward properties in Bridgewater and Washington, N.J. But agents were nervous about how little cash they were finding.
Meanwhile, Gandhi and his auditors were urging both U.S. attorney's offices to make arrests as soon as possible.
Prosecutors needed to gather more facts but had their own sense of urgency. As Rosenstein explained, "We didn't want to be in a position at the end of extending the investigation and learning later that millions more had been lost while we were investigating."
For fear of tipping off the others, investigators didn't interview the other five lower-level Tax and Revenue employees who the records showed had helped approve refunds that were patently bogus. Instead, they mobilized for action.
On Oct. 23, an agent from an FBI public corruption squad put out word that he would need help in searches involving a probe into the Office of the Chief Financial Officer, said Debbie Weierman, spokeswoman for the FBI. The date was set: Wednesday, Nov. 7.
A day before the raids, FBI agents from the Washington office met with assistant U.S. attorneys for about an hour to go over details of raids and the plans to arrest Walters, Gustus and the others -- Richard Walters, Walters's brother; Turnbull, and Turnbull's friend, Connie Alexander.
Prosecutors got permission from a federal judge to begin the raids at 5 a.m. instead of 6 a.m. to increase the chances that the suspects would be caught off guard.
At 4:30 a.m. Wednesday, about 120 agents from the Washington and Baltimore field offices arrived at staging areas near the suspects' homes and city offices. They marched up to the doors 30 minutes later, joined by FBI computer forensic experts and investigators from the Internal Revenue Service and D.C. inspector general's office.
Now, with the suspects arrested on fraud and other charges, authorities can move more methodically in the case. The day of the raids, they assessed the loss to the city at $16 million. That figure has grown, and, as Taylor said, "we're still counting."
Staff researcher Meg Smith and staff writers Allan Lengel and David Nakamura contributed to this report.
