WASHINGTON - Harriette Monica Walters, 51, a former employee of the District of Columbia’s Office of Tax and Revenue (OTR), pleaded guilty this morning to felony counts of wire fraud, money laundering conspiracy, federal tax evasion, and District of Columbia tax evasion, U.S. Attorney for the District of Columbia Jeffrey A. Taylor, U.S. Attorney for the District of Maryland Rod J. Rosenstein, Joseph Persichini, Jr., Assistant Director in Charge of the FBI’s Washington Field Office, Charles J. Willoughby, Inspector General for the District of Columbia, Special Agent in Charge C. André Martin of the Internal Revenue Service, Criminal Investigation, J. Russell George, Inspector General for Tax Administration of the U.S. Treasury Department, and District of Columbia Chief Financial Officer Natwar M. Gandhi jointly announced today. Walters is the tenth defendant in the long-running OTR property tax refund fraud scheme to plead guilty.

Walters entered her guilty plea in the U.S. District Court for the District of Columbia before the Honorable Emmet G. Sullivan, who provisionally accepted the guilty plea. The Court deferred scheduling a sentencing hearing, but set a status hearing for October 27, 2008. If the plea agreement is ultimately accepted by the Court after receiving a pre-sentence report prepared by the Probation Department, Walters will, among other things, be sentenced to between 15 years and 18 years of imprisonment and be ordered to pay $48,115,419.09 in restitution to the District of Columbia. Walters also agreed to pay $12,993,181 to the federal government and $3,283,428.27 to the District of Columbia for back taxes due and owing.

According to the factual proffer presented in Court and the 114-page Statement of the Offenses stipulated to by Walters, the scheme to defraud OTR began in 1989 and lasted 18 years, until Walters and others were arrested in November 2007. Walters, who began working for the District of Columbia government in 1981 and became Manager of the Real Property Tax Administration Adjustments Unit in OTR in 2001, used her experience and her knowledge of the District of Columbia’s property tax refund process to prepare 226 fraudulent property tax refund vouchers. As the leader of a sophisticated conspiracy, Walters embezzled $48,115,419.09 from the District of Columbia over the 18 years of her scheme.

“On this day of reckoning for the defendant and her co-conspirators, a sad chapter in the history of our City is coming to an end,” said District of Columbia U.S. Attorney Taylor. “As we now know, the defendant used her public office to fund her own greed for eighteen, long years. An enduring tragedy of this case is that the defendant stole $48 million to lead a life of conspicuous consumption while our City and its most vulnerable populations were in such great need.”

“Corruption arises when unprincipled government officials exercise discretion without oversight,” said Maryland U.S. Attorney Rosenstein. “The only way to prevent corruption is to eliminate opportunities for corruption.”

"Today's plea marks a significant milestone in the FBI's fight to prevent and disrupt public corruption in all levels of government,” said FBI Assistant Director in Charge Persichini. “The citizens of the District of Columbia, as all citizens of this country, are entitled to a fair and honest government and government employees representing them."

“The IRS takes abusive tax schemes seriously,” said IRS Criminal Investigation Special Agent in Charge Martin. “Tax evasion is not a victimless crime. Honest, hard-working Americans pay the price when others choose to evade their tax obligations. No one is above the law."

According to the Statement of Offense, Walters prepared the fraudulent property tax vouchers and then used her position of authority to shepherd the fraudulent vouchers through the approval process. Walters procured the fraudulently obtained property tax refund checks and gave them to her co-conspirators to deposit or cash. Walters and her co-conspirators then shared the proceeds of her scheme. Walters spent a significant portion of these proceeds on gambling trips and on expensive clothing and jewelry. Walters also gave large amounts of the proceeds to friends, family members, and co-workers. Walters was aided in her ability to distribute the proceeds from the fraudulently obtained property tax refund checks by bringing a bank employee into the conspiracy.

The breadth and scope of Walters’s scheme increased over time. At the beginning of the scheme, Walters prepared individual fraudulent property tax refund vouchers that were in amounts just over $4,000.00. By the end of the scheme, in 2007, Walters prepared a fraudulent property tax voucher that was in excess of $500,000.00. The amount Walters stole each year also generally increased, from $31,734.57 in 1989 to a high of $8,641,750.34 in 2004.

Walters embezzled the following amounts each year:

YEAR FRAUDULENT VOUCHERS PUBLIC FUNDS EMBEZZLED
1989 6 $31,734.57
1990 11 $47,016.79
1991 10 $160,153.08
1992 1 $4,711.29
1993 5 $246,301.15
1994 20 $1,237,425.12
1995 19 $1,423,237.59
1996 3 $243,424.61
1997 1 $543,423.50
1998 2 $275,893.90
1999 7 $1,244,522.43
2000 17 $3,157,343.53
2001 19 $3,515,671.85
2002 15 $3,296,280.80
2003 19 $4,771,776.55
2004 26 $8,641,750.34
2005 21 $7,107,129.71
2006 18 $7,317,097.17
2007 17 $4,850,556.91

Walters never put a property tax refund check in her own name and never deposited a fraudulently obtained property tax refund check into an account in her name. Walters relied on other people to lend their names as payees on fraudulently obtained property tax refund checks and to deposit such checks into their accounts. Over time, Walters added new co-conspirators to her scheme. At the beginning of the scheme, Walters used her friends as co-conspirators. As the scheme continued, Walters added her family members as co-conspirators. At the beginning of the scheme, Walters generally used individuals’ names as payees for the fraudulently obtained refund checks. Over time, Walters began to use the names of companies created by her co-conspirators as payee names for the checks.

In the summer of 2007, Walters took active steps to avoid being apprehended. When a bank questioned two of her fraudulently obtained property tax refund checks, Walters forged an internal OTR memorandum declaring that the checks were legitimate, instructed a co-conspirator to scan government documents to help mislead the bank, and forged a letter from OTR to mislead the bank into thinking that one of the checks was owed to a co-conspirator.

The investigation has thus far resulted in guilty pleas from nine of Walters’s co-conspirators: Walters’s brother (Richard Walters, 49); Walters’s nephew (Ricardo Walters, 33); Walters’s friends (Connie Alexander, 52, Patricia Steven, 73, Samuel Earl Pope, 61, and Alethia Grooms, 52); Walters’s former banker (Walter Jones, 33); Walters’s personal shopper (Marilyn Yoon, 40); and the husband of one of Walters’s friends (Robert Steven, 55).

In announcing today’s guilty plea, U.S. Attorneys Taylor and Rosenstein, Assistant Director in Charge Persichini, Inspector General Willoughby, Special Agent in Charge Martin, Inspector General George, and Chief Financial Officer Gandhi commended the outstanding and dedicated team that has investigated this case and the entire OTR tax fraud scheme, including: FBI Special Agents Andrew Sekela, Julie Shields, Debra LaPrevotte, and Matthew Walsh, and Intelligence Analyst Jessica Pipher and Contract Forfeiture Investigator Jerry Simpson; IRS CID Special Agent Nicole Davis and TIGTA Special Agent Edward Bosak; Director of Internal Security Charles Fultz and Senior Investigator Donna Tolliver, of the OCFO Office of Integrity and Oversight; Special Agent Kevin Craddock and Tax Auditor James LeSane of OTR; and D.C. OIG Special Agent Kerthalia Peavely.

U.S. Attorney Taylor commended Paralegal Specialist Diane Hayes; Criminal Investigator Diane Eickman; Legal Assistants April Peeler, Lisa Robinson, and Michael Thompson; summer legal interns George Ingham and David Courchaine; former Assistant U.S. Attorney Geoffrey L.J. Carter; and Chief Steven Durham, Deputy Chief Howard Sklamberg, and the attorneys and entire staff of the Fraud & Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia. U.S. Attorney Taylor also commended former Information Technology Specialist Oliver John-Baptiste, Litigation Support Specialist Joseph Calvarese, and the entire staff of the Litigation Services Unit in the U.S. Attorney’s Office for the District of Columbia.

Finally, U.S. Attorneys Taylor and Rosenstein commended Assistant U.S. Attorneys Timothy G. Lynch and David S. Johnson, from the U.S. Attorney’s Office for the District of Columbia; Assistant U.S. Attorneys Jonathan Su and Deborah Johnston from the U.S. Attorney’s Office for the District of Maryland; and Assistant U.S. Attorneys Diane Lucas and William Cowden from the Asset Forfeiture Unit of the U.S. Attorney’s Office for the District of Columbia.