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EMBEZZLEMENT INVESTIGATION

Ex-Worker 'Happy but in Shock' Over Case Dismissal

John Gustus, left, his wife, Diane Gustus, and her attorney, A. Scott Bolden, discuss the case. She was accused of aiding a fraud scheme.
John Gustus, left, his wife, Diane Gustus, and her attorney, A. Scott Bolden, discuss the case. She was accused of aiding a fraud scheme. (By Sarah L. Voisin -- The Washington Post)
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By Del Quentin Wilber
Washington Post Staff Writer
Thursday, September 18, 2008

Once accused of being a key player in the largest embezzlement scheme in D.C. government history, former District tax office employee Diane Gustus said yesterday that she was stunned to learn that prosecutors had filed a motion to dismiss the case against her on the same day the scam's mastermind, her former boss, pleaded guilty in federal court.

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"I'm feeling pretty good right now," Gustus said, a day after prosecutors filed the motion in U.S. District Court seeking to dismiss fraud and other charges. "It's starting to be behind me, thank God. It's like I'm happy but in shock."

Gustus, 55, and her attorney, A. Scott Bolden, have asserted her innocence since shortly after her arrest in November in a scheme that authorities alleged drained $48.1 million from the D.C. government.

U.S. Attorney Jeffrey A. Taylor said prosecutors filed the motion to dismiss the case Tuesday because "we concluded we did not have sufficient evidence to establish that she was a knowing conspirator."

Gustus's boss, Harriette M. Walters, a mid-level manager in the D.C. Office of Tax and Revenue, pleaded guilty Tuesday to federal money laundering and wire fraud charges and could be sentenced to 15 to 18 years in prison under a deal reached with prosecutors. She admitted that she issued more than 230 fraudulent property tax refund checks from 1989 until the scam was uncovered last year.

FBI agents wrote in court documents filed last year that Gustus prepared at least 33 of the documents used to support those checks.

But Gustus said yesterday that she didn't prepare most of those documents: She signed them only because Walters told her to. Bolden said Walters forged Gustus's signature on several of the documents and had Gustus prepare others that his client thought were legitimate.

"I was only doing my job," Gustus said. "I never saw it as a scam. . . . If your boss gives you something to sign, you sign it."

Walters has reportedly told authorities that Gustus was not involved in the scheme. Gustus's daughter, Tamika, has pleaded guilty to mortgage fraud tied to another player in the D.C. tax scandal.

Gustus said she liked Walters and never suspected her friend was embezzling millions of dollars from the D.C. government. Her boss lavished gifts, cash and checks on employees in the office. From 2001 through 2007, Walters also wrote $1.2 million in checks to her colleagues.

Gustus received between $80,000 and $300,000 in gifts or money from Walters over the years, Bolden said.

But the gifts and cash never raised Gustus's suspicions because Walters told her that she inherited the money from her father, a banker in the U.S. Virgin Islands, or won it gambling, Gustus said.

Gustus, who lost her D.C. government job and a part-time one at Sears, said she sometimes felt uncomfortable and returned many of the gifts to Walters or stores, and refused others. She said she wants to get her job back so she can retire with a pension.

"The government filing this motion to dismiss the case was just the first step of getting her life back together," Bolden said.


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