By Del Quentin Wilber
Washington Post Staff Writer
Saturday, July 5, 2008

The woman at the center of the D.C. tax scandal has spoken extensively with authorities in recent months, providing them with a detailed outline of the largest embezzlement scheme in District government history, according to law enforcement sources and others familiar with the investigation.

Harriette Walters, the former city worker accused of orchestrating the thefts, has been interviewed by prosecutors and federal agents at least five times in meetings that began in February. The most recent session was in May, according to the sources, who spoke on condition of anonymity because they are not authorized to talk publicly about ongoing investigations.

Walters, 51, has helped investigators review bank records and tax office documents and confirmed who received money, the sources said. All told, authorities have said that as much as $50 million was stolen in a scam that could date back almost 20 years.

Prosecutors have been building a trail as they pursue plea agreements with many of those charged. Six people -- including Walters's brother, Richard Walters, and one of her nephews, Ricardo Walters -- have pleaded guilty and agreed to cooperate with authorities. Five others are charged, including Walters, who has been jailed without bond since her arrest in November.

As many as three more people could face charges in coming months, according to the sources.

Walters's attorney, Steven Tabackman, said he didn't "want to discuss publicly what Ms. Walters is or is not doing at this point." He declined to comment further.

Channing Phillips, a spokesman for the U.S. attorney's office, also declined to comment.

Walters, a mid-level manager in the D.C. Office of Tax and Revenue, is accused of clearing the way for fraudulent tax refunds that went to companies set up by friends and relatives. Authorities have said that her niece, Jayrece Turnbull, who also remains jailed, helped cash the checks and distribute money to those in the scam.

Turnbull is accused of handling at least $12 million of the stolen money through bank accounts she created. Her attorney did not return calls seeking comment.

Among those still facing charges: Alethia Grooms and Diane Gustus, former tax office employees. Grooms, who allegedly got a check for a little more than $4,000 in 1990, has told authorities about what might be the beginnings of the scheme, her attorney has said. Gustus allegedly got a relatively small sum for helping with paperwork, but authorities do not consider her a major participant, the sources said. Her attorney has said she was misled by Walters.

Arrested in November on federal charges of conspiracy, money laundering and mail fraud, Walters has waived her right to a speedy trial and has not been indicted by a grand jury -- signs that she is cooperating in hopes of a plea deal and less time in prison, former prosecutors said. Her cooperation is considered crucial in helping investigators locate the missing money. The recent guilty pleas have been contingent on various defendants surrendering property and cash they accumulated in the scam.

Investigators have fanned out across the region, even to the Virgin Islands, to seize property that includes flat-screen televisions, expensive cars and motorcycles, ocean-view houses and a $60,000 ring at an Annapolis jewelry store, court records show. Still, authorities have said that they have recovered only a fraction of the missing money.

The tax case is following a familiar pattern in major investigations. Authorities typically gather guilty pleas and promises of cooperation from defendants to build stronger cases against the alleged ringleaders -- in this case, Walters, Turnbull and Walter Jones, a former Bank of America manager who pleaded guilty in May.

Within days of her arrest, Walters's attorney told a judge that his client needed time to have "ongoing discussions" with prosecutors. That Walters started talking so soon is a sign that the case against her is particularly strong, former prosecutors said.

Roscoe C. Howard Jr., a former U.S. attorney for the District, said he was not surprised that Walters is cooperating, especially in light of the guilty pleas from family members and friends. Testimony from her brother and nephew would be particularly hard to rebut at trial, he said.

"You have so many people rolling over and pointing at you, especially friends and relatives," Howard said. "What do you do, call them liars? It's hard to see you get up there and mount any kind of defense."

Joseph E. diGenova, also a former U.S. attorney for the District, said Walters is hoping for a lighter sentence by helping authorities locate missing funds.

"She is providing them with useful information so in her plea bargain the government will be able to say that she substantially cooperated," diGenova said. "The government will say that even though she is the ringleader she has started down the road of making amends."