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EMBEZZLEMENT SCANDAL

Former Tax Clerk Asks for Benefits

From left: John Gustus, Diane Gustus and Attorney A. Scott Bolden meet in the law offices of Reed Smith in September, 2008.
From left: John Gustus, Diane Gustus and Attorney A. Scott Bolden meet in the law offices of Reed Smith in September, 2008. (Sarah L. Voisin - Washington Post)

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By Del Quentin Wilber
Washington Post Staff Writer
Wednesday, February 11, 2009

A former D.C. tax office clerk once accused of being a key figure in a massive embezzlement scam is asking government officials to reconsider their decision to fire her so she can collect her retirement benefits.

The employee, Diane Gustus, lost those benefits when she was fired after federal authorities charged her with mail fraud and money laundering in the scheme. Federal prosecutors later dropped the charges because they didn't have enough evidence to prove their case, they have said.

Authorities had alleged Gustus helped her supervisor, Harriette Walters, embezzle millions of dollars from the D.C. government over the years. Walters, a mid-level tax office manager, has admitted that she issued more than 230 fraudulent property tax refund checks from 1989 until the scam was uncovered in 2007. The tab for the District's taxpayers: almost $50 million.

Walters pleaded guilty in September to money laundering and wire fraud charges and could face between 15 and 18 years in prison at sentencing next month.

The same day that Walters pleaded guilty, federal prosecutors dropped mail fraud and money laundering charges against Gustus. They had alleged that Gustus helped prepare 33 documents for Walters to support issuing the refund checks.

In a letter to D.C. Chief Financial Officer Natwar M. Gandhi last week, Gustus's attorney, A. Scott Bolden, wrote that his client should be allowed to resign or retire to collect her retirement benefits. She worked for the District for 35 years and was duped by Walters, he said.

"Ms. Gustus was manipulated by, exposed to imprisonment by, and betrayed by her supervisor," Bolden wrote. "This alone is punishment enough for her naiveté."

Yes, Bolden wrote, Gustus received gifts and money from Walters. But the 55-year-old is no different than 17 other employees who accepted such favors and were allowed to resign or were put on administrative leave, Bolden wrote.

Several of those employees even received bonuses, Bolden alleged.

Gustus received more than $80,000 from Walters over the years, Bolden has said. Walters has admitted giving her colleagues $1.2 million in checks from 2001 through 2007.

"Ms. Gustus should not be treated any differently than those employees," he wrote.

David Umansky, a spokesman for Gandhi, declined to comment on Gustus's status, saying it was a personnel matter. He also declined to comment on the letter, which the government received Monday night.


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