By David Nakamura and Carol D. Leonnig
Washington Post Staff Writers
Wednesday, December 19, 2007
Congress has blocked a $92,400 pay raise for D.C. Chief Financial Officer Natwar M. Gandhi, another blow for the embattled leader in the wake of the embezzlement scandal at the city's tax office.
The news came as federal prosecutors charged an eighth person in the property tax case, Alethia O. Grooms, a Prince George's County real estate agent. They also said they are investigating evidence suggesting that the operation could date to 1990, nearly a decade earlier than thought. Prosecutors did not detail their evidence in court papers, making only passing reference to a suspicious 1990 property tax check made out to Grooms. Prosecutors said she received two fraudulent refund checks this year from the District's tax office.
Two D.C. tax office employees, including Harriette Walters, and six others have been charged with conspiring to steal more than $20 million in bogus property tax refunds. Authorities have said they are assessing the total loss. A Washington Post analysis of city records has identified more than $44 million in questionable property tax refunds since 1999.
"This investigation keeps spreading, and we're seeing more and more tentacles" in the scheme, said Joseph Persichini Jr., head of the FBI's Washington field office.
If the scam dates to 1990, it took place under four mayors -- Marion Barry, Sharon Pratt, Anthony A. Williams and Adrian M. Fenty -- and under the financial control board that oversaw the city from 1995 to 2001. Gandhi headed the D.C. Office of Tax and Revenue from 1997 until 2000, when he became chief financial officer.
Gandhi declined to comment yesterday. He has said that he has removed 15 employees since the scandal broke. One of his top deputies, Ben Lorigo, announced that he will resign at the end of this month. Gandhi and Lorigo have not been charged with any wrongdoing.
Fenty (D) and the D.C. Council had agreed to raise Gandhi's salary from $186,600 to $279,000 last spring after he was offered a high-paying job with Amtrak. Gandhi, who built a sterling reputation on Wall Street, agreed to stay put.
But his raise required congressional approval. The Senate had included a rider providing for the raise in the omnibus appropriations bill. House members removed the provision before approving the bill Monday night, said Del. Eleanor Holmes Norton (D-D.C.).
Fenty declined to comment yesterday on the pay issue.
Council member Jack Evans (D-Ward 2), chairman of the Finance and Revenue Committee, said Gandhi deserved a raise based on his overall performance. "It's outrageous," Evans said. "Once again, this is an intrusion into the affairs of the District."
But council member Kwame R. Brown (D-At Large), who has called for Gandhi to be replaced, said: "Right now, there is a formal investigation, and it would be irresponsible to give anyone a raise until we know what's going on. At this moment, I think the House of Representatives did the right thing."
Norton said she did not know which House member removed Gandhi's raise provision. But, she said: "There is no doubt in my mind what the reason was."
Rep. José E. Serrano (D-N.Y.), chairman of the House Appropriations Subcommittee on Financial Services and General Government, said in a statement that the raise was removed because it was "not an appropriations issue and therefore we preferred it be handled by the committee of jurisdiction." It remained unclear which committee that is and whether Norton or others will pursue the matter.
Also yesterday, a few blocks from the Capitol, Grooms appeared in federal court, wearing a black athletic jacket with the Harrah's casino insignia. She had been arrested earlier in the day by the FBI at her home in Clinton and was charged with conspiracy, bank fraud and other offenses.
Prosecutors said Grooms, 52, is a close friend of Walters, a former mid-level tax office manager who was arrested last month. Prosecutors say that Grooms stole nearly a quarter-million dollars in property tax refunds this year using phony company names. She is charged with conspiracy, bank fraud and other offenses.
Grooms, who works for Visions Realty in Greenbelt, was a relatively minor player, prosecutors said, but she knowingly received two fraudulent refund checks this year. She is listed in a city employee database as having worked as an accounting clerk for the University of the District of Columbia in the late 1990s.
Prosecutors said that a check for $84,000 was issued to Grooms in February. It was marked "hold for pickup" by a local lawyer. Instead, Grooms deposited the check into accounts she opened at SunTrust Bank, according to charging documents.
Another check, written in June for $125,000, was issued to "AwsomGraphics Group" and listed "A. Grooms" as a co-payee on the check who could be reached at "Carfritz Realty." There is a Cafritz Co. that manages real estate in Washington, but Grooms does not work there.
Grooms created a company called Awesome Graphics, but it existed only on paper, prosecutors said. Authorities said that Grooms also used several aliases, including Alethia Mack, Alethia Sloan and Alethia Covington.
Prosecutors said a cooperating witness has told them that Walters knows Grooms well and recommended her when the witness was considering buying a home. A judge released Grooms yesterday pending a hearing today.
Database editor Dan Keating, staff writer Allan Lengel and staff researcher Meg Smith contributed to this report.