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Politics

D.C. tax officials accused in scam

Authorities say the group stole at least $20-million.

McLEAN, Va. - The courthouse files look like the Christmas list of a high-society fashion maven with a purse fetish: mink coats, jewelry, Faberge eggs, a Mercedes-Benz and more than 100 handbags and wallets with designer names like Chanel, Hermes and Louis Vuitton.

Those are among the items the FBI found at the Washington home of Harriette Walters, who until recently was an $81,000-a-year city tax official.

Her salary was a pittance compared with the tens of millions of dollars prosecutors say she and at least five others stole in what may be the biggest embezzlement case in the city's history.

Authorities say Walters was the ringleader of a scheme in which she and the others wrote themselves bogus property tax refund checks. The scam went on for seven years until a bank employee last summer noticed irregularities in the checks.

The ripoffs were so brazen that one $346,000 check was made out to a fictitious company the embezzlers named "Bilkemor LLC."

The scheme has been an embarrassment for the city's finance chief, Natwar Gandhi, who has been praised for helping to produce surpluses and strong bond ratings for Washington, a city that was headed toward insolvency in the 1990s after years of mismanagement.

"They were certainly living high on the hog," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a government watchdog group. "There are supposed to be many controls in place to prevent this, but obviously those controls weren't enough."

Prosecutors estimate at least $20-million was stolen.

Walters, 51, spent more than $1.4-million at a Neiman Marcus store since 2000 and deposited more than $8-million in her bank account during that time, prosecutors say. Her $800,000 brick home was packed with handbags and other luxury items.

[Last modified December 15, 2007, 01:35:07]