Tax Scam Leader Gets More Than 17 Years

By Del Quentin Wilber
Washington Post Staff Writer
Wednesday, July 1, 2009

Harriette Walters, a former mid-level D.C. tax office manager, was sentenced yesterday to 17 1/2 years in federal prison, capping the prosecution of the largest embezzlement in District government history.

Although she apologized for her conduct, Walters continued to display the confidence of a woman who managed to steal $48.1 million in fraudulent tax refunds over almost two decades before she was caught.

"If you put me back in there today," Walters told a federal judge, "I could get each of you a check."

Wearing a blue jail jumpsuit and glasses, Walters scribbled notes for much of the hearing and displayed no emotion when U.S. District Judge Emmet G. Sullivan delivered the sentence.

"I have accepted full responsibility for the part I played," Walters said, adding that when she was arrested in November 2007 she made a "decision not to lie anymore."

Ten others, including some of Walters's friends and relatives, have received prison terms for their participation in the fraud, which was uncovered in 2007. Authorities say they have recovered about $10 million in cash and assets, but the rest evaporated in gambling trips and purchases of expensive clothes, jewelry, cars and furniture.

In sentencing Walters to near the top end of a range laid out in her plea deal, Sullivan said he wanted to send a message.

"This scheme was very sophisticated," Sullivan told a courtroom packed with law enforcement and District officials, as well as reporters. "The city lost. The citizens lost."

The judge cut six months off Walters's maximum sentence because Walters has been cooperating with District officials who are trying to determine how someone could steal so much money for so long.

Federal prosecutors urged Sullivan to impose the maximum sentence of 18 years, accusing Walters of being a sophisticated and callous scam artist. Assistant U.S. Attorney Timothy G. Lynch said such punishment would be poetic justice. "It's one year for each year she stole from the city," Lynch said.

Walters's defense attorney, Steve Tabackman, said a 15-year sentence, the bottom of the plea deal's range, would be sufficient. The 52-year-old suffered severe childhood traumas, Tabackman said. She was deeply insecure, he said, and her stealing allowed her to see herself as a benefactor to friends and co-workers.

"Ms. Walters is not callous to the needs of others," he said, adding that crime stemmed, in part, "from her complex psychological needs."

Tabackman noted that Walters continued to talk to authorities and was hoping to help the District in its lawsuit against Bank of America, where a bank manager deposited almost $18 million in fraudulent refund checks.

City officials and federal investigators said they were pleased by the sentence. "It is well-deserved," said D.C. Attorney General Peter Nickles. But Nickles added that he did not think Walters would be much help as a witness against Bank of America. "I'm not sure how much credibility she has," he said.

Joseph Persichini Jr., head of the FBI's Washington field office, said "the judge sent a good message."

"Many people think white-collar crime is a victimless crime, and it is not," he said. "It may take years to recover from this."

Walters has admitted that she exploited lax oversight in the tax office to issue more than 230 fraudulent property tax refund checks to friends and co-conspirators starting in 1989. Between 2000 and 2007, her most prolific period, she issued 152 fraudulent refund checks worth $42 million.

Walters gambled heavily and made 45 trips to Las Vegas and Atlantic City. She had expensive tastes. She charged more than $2.3 million during shopping sprees at such high-end stores as Nordstrom and Neiman Marcus, where she had a personal shopper.

When agents raided her Northwest Washington home, they discovered a trove of luxury watches, designer purses and expensive furniture.

Known as "Mother Harriette," Walters often gave cash and checks to friends and co-workers. She distributed $1.2 million in checks and an undetermined amount of cash to her colleagues from 2001 to 2007, according to authorities.

The scheme unraveled in 2007 when the bank manager lost his job. An employee at SunTrust Bank grew suspicious when Jayrece Turnbull, Walters's niece, tried to deposit a $410,000 refund check. The bank employee alerted the FBI.

Turnbull, who played a hand in stealing about $24 million, was sentenced to nine years in prison. Other sentences have ranged from one year and one day for Marilyn Yoon, a former personal shopper for Walters, to six years and six months for Walter Jones, the bank manager.

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