IRS Manager and His Wife Charged in D.C. Tax Scam
Friday, December 21, 2007
Two longtime friends of former D.C. tax manager Harriette Walters, including an IRS manager, were arrested yesterday and charged with joining in a massive embezzlement scheme to steal from District taxpayers.
Robert O. Steven and Patricia A. Steven, who are married but separated, were arraigned in U.S. District Court in Greenbelt, bringing the number of people arrested in the probe to 10. In an FBI affidavit, they are accused of illegally receiving and cashing at least $2.8 million in 11 fraudulent property tax refund checks that Walters and others allegedly generated.
Robert Steven, 54, of Edgewater, a division director of the IRS's New Carrollton office, has worked for the federal agency since 1975 and makes $143,000 a year. He is accused of spending $257,000 in the past five years to buy four Jaguar cars. In recent weeks, as the FBI stepped up its probe, agents put a Global Positioning System device on his 2007 Jaguar convertible to track his movements.
Patricia Steven, 72, of Harwood, described by authorities as one of Walters's best friends, is accused of joining Walters on numerous shopping sprees to Neiman Marcus, often spending thousands of dollars per trip. Prosecutors said Walters and Steven were classmates at Georgetown University, but Steven disputed that in court yesterday. Last month, authorities moved to seize two homes in New Jersey that Walters and Steven allegedly paid for with the help of what authorities said were stolen funds.
The FBI's charging affidavit, also used to obtain warrants to search the Stevens' Anne Arundel County homes, cites "evidence of over one million dollars worth of purchases at high end retail stores such as Neiman Marcus, facilitated at least in part by funds obtained through the scheme."
The embezzlement scheme, which is still being aggressively investigated, allegedly relied on Walters and some fellow employees to generate property tax refunds for companies that did not exist or were not owed a refund. City clerks then issued checks to those companies, which Walters and friends diverted and cashed, prosecutors say.
Overall, authorities have flagged at least $20 million in checks as fraudulent but said losses could be higher as they continue to comb through tax records.
According to the affidavit, Robert and Patricia Steven are linked to the Bellarmine company, one of the firms that showed up in a Washington Post review of suspicious refund checks. Bellarmine received fraudulent refunds, authorities said, as did other nonexistent companies, including Ninja Jo Associates, Norwest Corporation, Potomanc Associates and Stevens Property Management.
Authorities said all 11 checks that prosecutors claim are fraudulent were deposited by Robert Steven in a Bank of America corporate account he opened in the name of Bellarmine Design. The checks' dates begin in 2000, and their value ranges from $176,000 to $490,000.
The Post first identified Patricia and Robert Steven in a Dec. 2 article as individuals whose names were listed as co-payees or agents on at least nine suspicious property tax refund checks issued by the city and Walters's office, worth $2.6 million. The checks were among $44.3 million in property tax refunds The Post identified as suspicious -- from 1999 to the present -- because they were large checks issued without the court orders required for such legitimate refunds. The checks were written to companies that did not exist or did not own the property listed on the records.
In recent weeks, federal authorities have been putting off plea negotiations with numerous defendants. They have argued in court papers that the scam is too broad and complicated to rush into any decisions. The first arrests, of Walters and others, were made Nov. 7. Privately, authorities have told defense attorneys they will not make any deals until they more fully investigate people's roles. This week, prosecutors said they have evidence that the alleged wrongdoing could date as far back as 1990.
In a statement yesterday, Maryland's U.S. attorney, Rod J. Rosenstein, said agents are working to trace every dollar lost in the case, adding, "My advice to anyone who profited from this scheme is to call the FBI today and don't wait for us to contact you."