Suspicious Refunds in Gandhi's Tax Tenure

Questionable Checks Total $2.4 Million

In the last year that Natwar M. Gandhi ran the D.C. Office of Tax and Revenue, the agency issued 15 property tax refund checks worth $2.46 million without required court orders and sometimes to companies that did not exist, a Washington Post analysis has found.

The suspicious checks included a $223,000 refund in mid-2000 to a fictitious business listed as Ninja Jo Associates. Accountants at Nina Jo Associates -- an actual partnership that owns a commercial high-rise on K Street -- said yesterday that they never received such a check. The business's name appears to have been slightly altered in city records to cover up a fabricated tax refund, The Post analysis showed.

Similar alterations were uncovered in five additional checks issued to companies that didn't exist.

The analysis covered refund checks issued from October 1999, the oldest records available, through June 2000, when Gandhi was promoted from director of the tax office to the city's chief financial officer. The amounts of the suspicious checks ranged from $50,000 to more than $350,000.

"It's almost impossible to believe this happened," said Rory Dechowitz, comptroller for Tower Cos., a group that manages the Nina Jo Associates property.

"We didn't get this check," Dechowitz said. "And if we were expecting $200,000, we'd be calling the District every day to get it."

Gandhi immediately demanded the resignations of the tax office's director and three other managers after federal authorities filed charges Nov. 7 in what they described as the biggest corruption scam in the D.C. government's history. He said after the scam was alleged that he had carefully reviewed tax revenue when he directed the Office of Tax and Revenue from 1997 to 2000 and required that he sign off on all tax refunds exceeding $250,000.

Yesterday, after The Post provided a list of the suspicious checks, Gandhi declined to comment. Gandhi, who has issued numerous statements since the scandal became public, cited the federal investigation. All told, he has released 15 employees.

Two tax office employees and four other people have been arrested on charges stemming from the alleged theft of more than $20 million in property tax refunds. The two women -- Harriette Walters, a mid-level manager, and Diane Gustus, a specialist -- worked for the tax office while Gandhi headed it.

Federal authorities have said the scheme, which allegedly relied on a coterie of tax employees using phony paperwork and sham companies, had been going on for as long as seven years. Law enforcement sources say the alleged fraud might wind up costing taxpayers more than $30 million.

The financial records examined by The Post do not say who prepared the refund paperwork or who approved it.

Mayor Adrian M. Fenty (D), who gave Gandhi a vote of confidence at a news conference last week, continued to support him last night after being informed of The Post's findings. Fenty and others have credited Gandhi with restoring the city's financial credibility after a crisis in the 1990s.