Tab in Scam At Tax Office In D.C. Nears $50 Million

It was not unusual, sources said, for Walters to give a wad of cash to her assistant to buy breakfast or lunch for her 15-member office -- two or three times a week.

Some of the missing city money went toward buying property in the Washington area, New Jersey and the Caribbean, prosecutors have said, as well as for luxury cars, Louis Vuitton handbags and gambling trips to Atlantic City and Las Vegas.

The houses and cars can be sold by the government to reclaim some of the money for taxpayers, and the designer goods will probably bring some fraction of their original purchase prices at public auction. Much of the money is gone forever, investigators said.

Alethia Grooms, a former D.C. government employee who is among those charged in the case, has told authorities about what might be the beginnings of the scheme, her attorney, Kevin McCants, confirmed.

As early as 1990, McCants said, Walters told Grooms and a few other friends about how they could get free city money through bogus tax refund checks. Walters said there was no backup computer system to notice the manipulated checks, McCants said.

Grooms got a check for a little more than $4,000 in 1990, records show. McCants said she is "very remorseful" but didn't continue taking city money or know about the ongoing scam until Walters contacted her in 2003 trying to cash another refund check.

"She was dumbfounded that Harriette had been doing it on a continuing basis all this time," McCants said. "She thought this was done a couple of times and then it was over. But then she learned it had been going on uninterrupted, and the stakes had grown obviously much higher."

Staff writer Paul Duggan, database editor Dan Keating and staff researcher Meg Smith contributed to this report.