By now, you’ve gotten the broad strokes of the $16 million-plus tax-refund scam—-alleged to be the greatest theft in D.C. government history. You’ve heard how Office of Tax and Revenue employees Harriette Walters and Diane Gustus, along with conspirator Jayrece Turnbull and others, cut themselves huge tax refund checks and spent it on fur coats, jewelry, and a 2005 Bentley.
But how exactly did the scam go down? At yesterday’s press conference, prosecutors and investigators were understandably tight-lipped with details, but the charging documents are always good for filling in the gaps. Here in PDF format, for your reading pleasure, is an affidavit compiled by FBI Special Agent Matthew T. Walsh to support the search and arrest warrants executed yesterday.
There’s some sweet reading in there. Some of the highlights:
Page 4: Besides Walters and Fustus, there are five additional, unnamed D.C. government employees mentioned in the affidavit—-all work in the Office of Tax and Revenue. At yesterday’s press conference, U.S. Attorney Jeffrey Taylor refused to comment on whether more arrests are to come, citing the ongoing investigation.
Page 7: “[S]ome of the money stolen from the District of Columbia has been sent to a money exchange institution in the Dominican Republic that has no bank branches in the United States.”
Page 8: “[T]here is probable cause to believe that the scheme has generated at least 42 fraudulent checks, with a financial loss to the District of Columbia of more than $16 million. That amount may continue to grow as the investigation continues and additional fraudulent checks are discovered. Moreover, of that $16 million, less than $2 million in bank accounts have been located thus far.”
Page 10: The checks weren’t sent out by mail, but typically labeled “Hold for Pickup.” When picking them up, Walters signed for many of the checks that she had approved.
Page 13: A $350,000 check was authorized to refund taxes on a piece of propety that doesn’t even exist. A property referenced in the attached “Refund Research Form,” however, does: the Omni Shoreham Hotel. More than $200,000 ended up in Walters’ bank account.
Page 17: A $330,000 check also refunded taxes on a nonexistent property. It was actually made out to a legitimate building owner, “BGW LLP.” There’s no explanation why Bank of America would have deposited it.
Page 27: The check that brought the whole scheme down. Based on Walters’ approval, a $410,000 check made out to “First American Home c/o David Fuss” was issued on May 23 this year. The same tax payment checks included as supposed evidence of overpayment had been included on four other refund vouchers approved by Walters as well.
Page 29: In June, Turnbull deposited the $410,000 at a SunTrust bank branch in Bowie, Md. Later a SunTrust employee actually called up David Fuss, who’s a real estate lawyer with Wilkes Artis. He told the bank that he had no idea what this check was or who First American Home is. On July 9, a SunTrust employee met with Turnbull and asked for references to prove she was authorized to accept checks made out to First American. Says the affidavit: “TURNBULL accused the SunTrust Bank employee of illegality but nevertheless stated that the nature of her business was making investments in real estate and vacation property rentals abroad.”
Page 30: SunTrust wanted corporate docs, so Turnbull got some corporate docs: She went to the Prince George’s County courthouse and filed a trade name application for “First American Home.” She sends the application documents to SunTrust, and, yes, they notice she filed for the trade name a day after they asked for it—-and two weeks after the check was issued. Then, in September, still trying to convince SunTrust she was on the level, she gave then a letter on D.C. government letterhead signed by one of the unnamed co-conspirators vouching for her as a “fully registered” tax sale purchaser. Still wasn’t good enough for SunTrust.
Page 33: The biggest check fraudulent detailed in the affidavit: $459,990—-prepared by Gustus and approved by Walters.
Page 37: Walters, on three occasions, wrote letters to the District’s check-issuing office asking for “expedited payment” on fraudulent checks. When they were ready, they were to be held for pickup, and Gustus or one of the unnamed coconspirators was to be contacted.
Page 39: Turnbull had the help of a Bank of America employee, whom she had authorized to make withdrawals, deposits, and transfers without her being present. Needless to say, that’s not B of A policy. Probably neither is accepting $145,000 in “gifts” from Turnbull, which he did. The employee was fired in February.
Page 43: In early July 2006, Gustus bought a new GMC Envoy for $40,456, for which she took out a six-year $35,000 loan. She paid off the loan within a year.