D.C. Drafts Suit Against Bank for Tax-Scam Cash
Saturday, October 18, 2008
The District government has drafted a lawsuit against Bank of America to recover $30 million that flowed through accounts controlled by Harriette Walters and others in the D.C. tax scam, Acting D.C. Attorney General Peter Nickles said yesterday.
During a nearly eight-hour confirmation hearing before a D.C. Council committee, Nickles said the city is negotiating with the bank in hopes of reaching a financial settlement. If they cannot agree, he said, the District would likely pursue the lawsuit.
"Our complaint lists checks through Bank of America," said Nickles, who offered to let the council see copies of the draft.
In an interview, Nickles said he has given the bank until Friday to respond to a settlement offer, the terms of which he would not disclose. Under an agreement with the bank that extended the statute of limitations, the District has until Nov. 10 to file the lawsuit.
Nickles said the draft of the lawsuit also includes charges under the "False Claims Act," which could triple the monetary damages.
"I know how to protect the city's interests," he said. "I intend to do that."
Messages left with two Bank of America officials were not returned last night.
Also during his confirmation hearing, Nickles said he was on the verge of an agreement with the Washington Nationals in which the team would pay $3.5 million in ballpark rent, which it has refused to pay since spring because it said the stadium was not complete. In exchange, the District would seek extended warranties to cover repairs on the ballpark, Nickles said.
In the tax scam case, Walters, a former tax office manager, and 10 accomplices have pleaded guilty to stealing $48 million over 20 years from the D.C. Office of Tax and Revenue. The amount cited in the draft of the lawsuit is based on the amount of the checks cashed at Bank of America, Nickles said.
Bank of America was the primary bank used by Walters and most other participants in the scam, and the vast majority of the money stolen from the District flowed through the institution. One defendant, Walters's niece, Jayrece Turnbull, channeled more than $24 million through various accounts there.
Walters recruited a Bank of America employee, Walter Jones, to help keep the money flowing. Jones, who has pleaded guilty to conspiracy, handled at least $17 million in fraudulent checks from 2000 to 2006, charging documents state; he was fired early in 2007 after questions about his dealings with Turnbull emerged. But federal authorities did not catch on to the scam until several months later, when another bank, SunTrust, raised questions about a large check handled by Turnbull.
Last year, Nickles, then Fenty's general counsel, blocked the D.C. attorney general, Linda Singer, from trying to sue Bank of America to recover the stolen money. Nickles subsequently said he was fearful of interrupting the ongoing federal investigation into the scam. Singer resigned, citing friction with Nickles, according to sources.