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TAX SCAM

Bank of America Sued For Millions in Losses

The Bank of America building is seen in Washington, D.C. in September.
The Bank of America building is seen in Washington, D.C. in September. (Karen Bleier - AFP/Getty)

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By David Nakamura
Washington Post Staff Writer
Saturday, November 1, 2008

The District government filed a $105 million lawsuit against Bank of America yesterday, seeking damages and penalties from the institution that cashed fraudulent checks through accounts controlled by Harriette Walters and others in the D.C. tax scam.

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The bank should "make the District whole for losses suffered because of the Defendant Bank's wrongful hiring, inadequate training and inadequate supervision," stated the suit submitted in Superior Court by Acting D.C. Attorney General Peter J. Nickles.

Walters, who worked in the D.C. Office of Tax and Revenue, processed $48 million in bogus property tax refund checks over 20 years and sent them to friends and relatives. Walters and 10 others have pleaded guilty in the scheme.

One of the conspirators was Walter R. Jones Jr., who worked as an assistant branch manager at Bank of America, where he helped facilitate cashing the checks. All told, 116 fraudulent checks worth $34 million flowed through Bank of America accounts controlled by Walters and others in the scam, according to the lawsuit.

Citing Jones's complicity, the District is seeking triple damages under the False Claims Act, which provides federal and local governments protection from fraud.

"It made no sense to have these large checks being cashed and nothing adding up," Nickles said. "It sounds like a bank that would be in Disneyland. The proof is in the pudding. As soon as they tried to do what they were doing for years at another bank, SunTrust Bank, a very low-level person said, 'What's going on here?' and the whole process came tumbling down."

Federal authorities have recovered about $10 million in cash and property. D.C. Council member Mary Cheh (D-Ward 3), who last spring had pushed Nickles to consider suing the bank, said she was "delighted" that he has done so.

"The bank has a high duty to have their employees trained to see the bank is being used as a laundering operation," Cheh said.

Bank of America spokeswoman Shirley Norton declined to comment on the lawsuit, saying the company's lawyers need time to review it.

"We cooperated fully with authorities," she said of the federal criminal investigation.

The lawsuit states that Walters met Jones in the mid-1990s and began paying him for his assistance in cashing the checks.

"Some of these fraudulent refund checks were cashed despite the fact that the payee's name on the check did not match the account holder's name," the lawsuit states.


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