By Carol D. Leonnig
Washington Post Staff Writer
Saturday, November 17, 2007
FBI agents who descended on the Northwest Washington home of D.C. tax manager Harriette Walters found a nondescript brick rambler, but just inside was the wardrobe of a princess.
The investigators hauled out more than 100 pieces of jewelry, a mink coat and 90 purses -- many of them such designer brands as Louis Vuitton, Chanel and Gucci, according to an FBI inventory that was released late yesterday.
Walters, who was arrested in the predawn raid Nov. 7, also had 68 pairs of shoes, designer luggage and other luxury items, the FBI said. Some of the goods were stored in the garage, near a 2006 Mercedes-Benz, where authorities said they found a pair of silver-plated iguana figurines, a silverware set, a Rolex watch and a silver bar cart.
The inventory, filed yesterday in U.S. District Court, provided new insights into the lifestyle of the woman who prosecutors say masterminded the biggest fraud ever perpetrated against the D.C. government: $20 million and counting, they say. It details items seized by nine agents who went through every room of the house near Rock Creek Park.
Walters, 51, co-worker Diane Gustus and four others are charged with taking part in a conspiracy to generate illegal property tax refund checks for themselves. In a separate court filing yesterday, authorities alleged that at least $12.7 million of the stolen money flowed directly into accounts controlled by Walters's niece, Jayrece Turnbull, whom they described as Walters's principal partner in the scam.
The morning of the raids, agents searched the residences of the suspects as well as Walters's fourth-floor work space at the D.C. Office of Tax and Revenue. There they turned up a designer bag and other items, including a Faberge vase, the FBI reported. The search at the office also uncovered a $410,000 voucher that was written to David Fuss, a lawyer who has said his name was used improperly in the fraud, authorities said.
In their search in the 6800 block of Oregon Avenue NW, the agents often did not specify what they found at the home of Walters, who allegedly racked up $1.4 million in bills at Neiman Marcus on a government salary of $81,000 a year.
They filled 25 boxes with her clothes and listed 414 unidentified pieces in the inventory. While seizing the jewelry from the home, they placed the baubles in boxes in the dark morning hours without immediately cataloguing them.
Agents also collected papers and other records offering tidbits about the little-noticed and now-infamous former manager of the property tax assessment adjustment unit. On desks and inside cabinets were 16 casino cards, used by regular gamblers, for such establishments as Aladdin, Atlantis, MGM Mirage, MGM Grand and Borgata in Las Vegas and Atlantic City, the FBI said. The FBI also reported finding a bill from the Trump Taj Mahal.
Chanel appears to be one of Walters's favorite designers. Of the 90 purses that agents seized from her closets and garage, 47 were from the famous French house of couture. The FBI said it seized 13 watches, including the Rolex. Her housewares included numerous flutes and goblets by Steuben and an item identified as a Faberge egg, the inventory stated.
Authorities also found a receipt for a $15,000 cashier's check recently paid to Saks Fifth Avenue. They found another receipt for $20,900 that Walters had deposited in her Bank of America checking account two weeks earlier.
Investigators found other items at Walters's residence that might yield clues into the workings of the alleged scam, including vouchers to authorize property tax refund checks. Agents also found blank checks and deposit tickets for a Bank of America account in the name of Provident Home Services, a firm that prosecutors said was a false front controlled by Walters's nephew Ricardo Walters where she directed city refund checks that could be turned into quick cash.
The day of the arrests and searches, federal prosecutors said they had confirmed that Walters, Gustus, three of Walters's relatives and another friend had stolen $16 million in 42 phony refunds dating from 2004. The next day, prosecutors said they had found evidence that the group stole a total of at least $20 million using 58 fraudulent checks.
A subsequent Washington Post analysis found $31.7 million in 92 suspicious property tax refund checks from 2000 to 2007, all issued to fictitious companies or for properties that do not exist in the city.
Prosecutors have said they expect to confirm more theft, and some law enforcement sources said the total loss to the city could exceed $30 million. Despite the haul from Walters's home, prosecutors said in a court hearing this week that they fear the suspects spent or spirited away most of the money. They persuaded a judge that Walters has the means and motivation to flee, and she remains jailed.
In papers filed yesterday, federal prosecutors in Maryland, where charges against four of the defendants were filed, said they have located $4.2 million in cash in banks, $1.5 million in real estate and $800,000 in cars, furniture and other property.
Walters is charged with 10 counts of bank fraud, mail fraud and theft. In addition to Gustus, Turnbull and Ricardo Walters, others facing charges include Walters's brother Richard Walters and her friend Connie Alexander.
More details emerged in a court filing yesterday about Turnbull's alleged role in the case. Turnbull, who has been jailed since her arrest, wants to be released and has a hearing set for Monday. Prosecutors argued in court papers that she is "one of two leaders of the scheme," along with her aunt.
Assistant U.S. Attorney Jonathan C. Su said Turnbull "was crucial to the scheme in that she received and negotiated at least 34 of the fraudulent checks identified thus far, totaling over $12 million."
Her attorney, Michael CitaraManis, a federal public defender, did not respond to a message left at his office seeking comment.
Turnbull is a native of Puerto Rico, Su said, and has traveled extensively to that island and also to the Dominican Republic, the Bahamas, Spain, France and other places in Europe.
"She owns at least one home in the Dominican Republic (where she has also transmitted hundreds of thousands of dollars), the father of her children resides in Puerto Rico, and her mother resides in the Virgin Islands," Su wrote.
"The defendant also noted that she had telephone bills averaging $1,500 per month because she had many friends all over the world," he said.
Staff researcher Meg Smith and staff writer Paul Duggan contributed to this report.