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An employee in the city’s beleaguered tax office helped file 282 fraudulent District tax returns that produced more than $300,000 in fraudulent local tax refunds, the U.S. Attorney’s Office says in recent court filings.
Kimberle Davis was a full-time “control technician” at the Office of Tax and Revenue while also maintaining a part-time second job in the evenings at a tax preparation company called 2FT Fast Facts Tax Service. Her job at 2FT was to answer the phones, make appointments for clients, fill out forms, etc. It also included, prosecutors say, providing clients false “charity receipts to be used in the event the client was audited.” And Davis used her perch as a government employee to access OTR records “concerning the audits” of 2FT clients, prosecutors say.
The details were filed as a criminal information recently, which means Davis has almost certainly agreed to a plea deal. Her lawyer did not immediately return a call seeking comment. Davis knew 2FT was filing fraudulent tax records, the feds say, because “she prepared her own false tax returns while working” there. Davis is being charged with conspiracy to defraud the government and first-degree theft.
The feds say Davis’ misbehavior lasted from 2009 through 2011. As of April of this year, she was still working at OTR, making $52,000 a year, city records show. She started working for the District in 2002.
Davis also helped file 973 false federal tax returns that totaled $3.8 million in fraudulent refunds from the IRS. It looks like she was a bit late to the scheme: An alleged co-conspirator, LaDonna Davis, was charged and pleaded guilty last year to filing more than 3,044 false tax returns that returned nearly $14 million in bogus refunds starting in 2006. Court records refer to 2FT’s owner as an unindicted “co-conspirator” known as “S.D.” who was LaDonna Davis’ aunt but unrelated to Kimberle Davis. Corporation records shows that a Sherri Davis owned the store. She was not immediately available for comment; there’s no record that she’s been charged with any crime.
The goal of the scheme, according to the feds, was simple: to charge larger fees for larger refunds and to keep and grow their customer base.
A spokesman for CFO Nat Gandhi, who oversees the tax office, says he’s checking on whether Kimberle Davis is still working at OTR and what the agency’s policy is towards secondary employment at tax preparation centers. LL will update as needed.
Davis’ legal troubles are more unwelcome news for Gandhi, who has faced tough questioning lately about whether he’s fully aware of what goes on in the tax office, whether he’s properly vetting employees, and whether he’s tried to keep problems in his office out of the public eye. These issues are particularly sensitive for the city since former tax employee Harriette Walters stole nearly $50 million when she worked there. Last year another tax employees was charged with stealing $400,000.
UPDATE: CFO spokesman David Umansky sends the following statement:
During the course of an OTR investigation of a tax preparer that began more than a year ago information was developed on the possible involvement of an OTR employee. The OCFO has been working with the US Attorney on this matter.
The Office of Integrity and Oversight was notified in February 2012 of this information and it opened an investigation that resulted in the employee being placed on administrative leave.
Because this is part of an ongoing grand jury investigation we can say nothing more about this matter.
Umansky says that OTR employees are not allowed to work outside jobs as tax preparers.
Here’s the filing on Davis:
Photo by Darrow Montgomery