D.C. Official's Brother Pleads Guilty In Tax Scam
Friday, May 30, 2008
A key figure in the D.C. tax scandal pleaded guilty yesterday to two felony charges, admitting that he funneled millions of dollars in illegal property tax refunds through his plumbing company and used the money in part to build an ocean-view home in the Virgin Islands, buy a Bentley and purchase Washington Wizards season tickets.
Richard Walters is among 11 people charged in what authorities have called the biggest corruption scandal in D.C. government history. Authorities have said that as much as $50 million was stolen in a scheme that stretched back almost 20 years, and only a fraction of the money has been recovered.
As part of his guilty plea, Walters, 49, must cooperate with prosecutors and testify in court proceedings. That could put him on the witness stand against his sister, Harriette Walters, the former D.C. tax office manager who is accused of engineering the thefts.
He also agreed to give up what remains of his share of the illegal proceeds: two properties in the Virgin Islands, two homes in Bowie, jewelry, the $160,000 Bentley and four other cars, and more than $1.4 million that authorities traced to 13 bank accounts. He earlier turned over an additional $405,000, and prosecutors took control of $480,000 he had stashed in the Virgin Islands.
Nearly seven months after the scandal came to light, the pace is picking up on the legal front. Walters was the fourth person and second Walters family member to plead guilty -- all within the past month. The prosecution is following a typical pattern for large-scale investigations: Authorities are gathering guilty pleas and promises of cooperation from various defendants as they build bigger cases against the two alleged leaders of the scam, Harriette Walters and her niece, Jayrece Turnbull, who allegedly handled at least $12 million of the stolen money through bank accounts she created.
Harriette Walters and Turnbull are the only defendants now in jail, having been locked up since their arrests in November.
Richard Walters, who has remained free since his arrest that month, appeared before U.S. District Judge Alexander Williams Jr. in Greenbelt and pleaded guilty to possession of stolen property and conspiracy to launder money. The two charges carry up to 30 years in prison, but Walters will probably receive less under federal sentencing guidelines. He is to be sentenced Sept. 8.
After the judge outlined the ramifications of his plea, Walters was asked whether he had any questions.
"I don't have any questions, your honor," Walters replied. "I just have one simple statement of apologizing to the District of Columbia and the State of Maryland."
Walters, of Bowie, is a licensed plumber who owned a business in Maryland called Helmet Plumbing. But prosecutors said much of the money flowing into its bank account came from D.C. taxpayers.
Assistant U.S. Attorney Jonathan C. Su said in court that Helmet Plumbing cashed $4.9 million in illegal property tax refunds allegedly steered to the firm by Harriette Walters. There were 15 checks in all, issued from March 2001 to May 2007 and ranging from about $95,000 to about $540,000, prosecutors said.
According to court documents, Walters and his sister used the money transferred to Helmet Plumbing to enrich themselves and others. The transactions included transferring more than $1 million to accounts controlled by Richard Walters and $461,000 to his sister. At least three co-defendants also got money: Turnbull received more than $230,000; Connie Alexander, a friend of Harriette Walters's, got $84,600, and Diane Gustus, a co-worker in the D.C. tax office, got $10,000, the documents said.
Prosecutors said Richard Walters used about $225,000 for projects at a home he built in St. Thomas, Virgin Islands; $47,000 for season tickets to the Washington Wizards; and nearly $60,000 to cover purchases at Neiman Marcus and Saks Fifth Avenue.
Virgin Islands records show that Richard Walters bought more than half an acre in Estate Sorgenfri on the north shore of St. Thomas in September 2002 for $45,000. In February 2003, he applied for a building permit to construct a house on the property. Blueprints on file with the building department show a two-story, five-bedroom, four-bath house with a two-car garage and a total of 3,775 square feet of living space. In the permit application, Walters listed the estimated cost of the house at $415,192 and said that he was in charge of the construction.
The large white stucco house with a royal blue galvanized roof and blue trim sits nestled into a hillside down from the main road. It faces Caret Bay West and the Atlantic Ocean and has a full view of two small uninhabited islands.
The second property that Walters agreed to give up is an undeveloped parcel in Estate Fortuna on the west end of the island.
Real estate agent Rosemary Sauter, owner of RE/MAX Dream Properties in St. Thomas, said in an interview that her office did business in 2006 and 2007 with Richard Walters and his nephew, Ricardo Walters, another defendant in the case. Richard Walters attempted to make a deal for another property overlooking the Caribbean and left $9,500 in escrow money. The deal fell through, and now federal authorities have the $9,500.
Ricardo Walters is among those who recently pleaded guilty, admitting to netting about $795,000 in illegal money. The other guilty pleas came from Walter Jones, a former Bank of America manager who admitted handling bogus refund checks and receiving more than $366,000 in the scheme, and Marilyn Yoon, a former employee of the Tysons Corner Louis Vuitton store who said she got $150,000 from Harriette Walters for handling a fraudulent check.
Richard Walters was in trouble once before. Court documents filed in U.S. District Court in the Virgin Islands show that he pleaded guilty in February 2000 to one count of possession of a stolen money order. According to court papers, he was a postal clerk in St. Croix and converted two $700 postal money orders "for his own use or gain."
For that crime, Walters was sentenced to weekends in jail for four months, two years of supervised release and 100 hours of community service. He was ordered to pay a $2,000 fine and full restitution.
After yesterday's plea, attorney David Greenbaum said neither he nor his client would have any comment until after the sentencing.
Staff researcher Meg Smith contributed to this report.