- The Washington Times - Sunday, July 13, 2008

Harriette Walters was good to her friends. But for the midlevel official in the District’s tax office, prosecutors say her generosity went farther than picking up the lunch tab.

The people she met — a bank teller, a hair salon owner, a luxury goods saleswoman, an IRS tax official — were showered with cash they used for fancy vacations, designer goods, fur coats, cars and homes.

In federal court filings in Washington and Maryland, prosecutors say Miss Walters used lavish gifts to recruit the network she would need to steal roughly $50 million from the District’s coffers. In a city that has seen its fair share of official vice, this may trump all, becoming the largest corruption case in its history.

Miss Walters is in federal custody on money laundering, bank fraud and other charges. Her attorney, Steven Tabackman, would not comment on the investigation. Six of the 12 people charged in the case have pleaded guilty so far, and their pleas provide a window into what prosecutors say is an elaborate scheme that eluded detection for about two decades.

Miss Walters worked for more than 25 years in the city’s tax office, eventually as a manager in the property tax refund division. Her longevity, plus a reputation for diligence, made her a trusted worker. She was even consulted when the city developed the computerized tax system she is accused of manipulating to avoid being caught.

“She was known for being professional, very direct, efficient,” said Sherryl Hobbs Newman, the former tax office chief, in testimony to the D.C. Council last November. “She was not one of those people you would be questioning their performance.”

Miss Walters, who had an $81,000 salary, also gave gifts and loans to co-workers, earning her the nickname “Mother Harriette,” according to testimony at the council hearing. Friends thought the money came from an inheritance.

FBI search warrants from her Washington home list more than 40 Louis Vuitton handbags among the hoard of clothes, jewelry, shoes and a Faberge egg. Prosecutors claim she spent $1.4 million at Neiman Marcus, a chain of high-end department stores.

Fake property tax refund checks were written to shell firms controlled by relatives and friends or in the names of real, unsuspecting companies, according to prosecutors. Court documents list dozens of checks, some for more than $500,000, drafted as early as 1991.

Checks were picked up by hand at the tax office, deposited into bank accounts, then distributed to those accused of being involved in the scheme. Miss Walters personally approved vouchers for the checks to avoid detection, prosecutors say.

The amounts were initially small — just a few thousand dollars in the late 1980s. To boost the amounts and evade detection, Miss Walters recruited people who had business bank accounts, filings show.

People assumed her money came from an inheritance from her father, a banker in the U.S. Virgin Islands, said Samuel Pope, who owned a District beauty salon frequented by Miss Walters in the 1980s. Mr. Pope said Miss Walters was a kind woman and generous with money. They became close friends.

“She seems to care about what happens with most people and with their problems,” he said. “She seemed to always be in their corner to help out.”

Last year, while Mr. Pope was having financial difficulties, Miss Walters called him to report he had a $75,000 tax refund on his Washington home, he said. Pope said he thought the money was legitimate.

“Why turn down that kind of money?” he asked.

Federal authorities say Mr. Pope wasn’t that naive. Court documents charging him with conspiracy to commit money laundering and mail fraud say Miss Walters let Mr. Pope in on her scheme in 1991, and that he netted $1.5 million for his help. He also asked for the home refund, the filings show. Mr. Pope denies the charges. He has a plea hearing set for Wednesday.

Most of her accused conspirators didn’t ask questions, chose not to believe they were participating in fraud or didn’t understand the scale, even as they pocketed hundreds of thousands or millions of dollars from Miss Walters, according to court filings and defense attorneys.



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