Harriette Walters is in federal custody on money laundering, bank fraud and other charges

Harriette Walters was generous with her friends.She showered the people she met with cash they used to buy fancy vacations, designer goods, fur coats, cars and homes. Those friends included a bank teller, hair salon owner, luxury goods saleswoman and an IRS tax official. But federal prosecutors say the gifts were more than generosity.The midlevel official in the District of Columbia's tax office used them to recruit the network she would need to steal roughly $50 million from D.C.'s coffers, prosecutors said in federal court filings in Washington and Maryland.
Walters is in federal custody on money laundering, bank fraud and other charges. Her attorney, Steven Tabackman, would not comment on the investigation. Seven of the 13 friends and relatives charged in the case so far have pleaded guilty, and their pleas provide a window into what prosecutors say is broad scheme that eluded detection for about two decades.She wrote fake property tax refund checks 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 at the tax office, deposited into bank accounts, then distributed to partners in her scheme, prosecutors say. 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 '80s. To boost the amounts and evade detection, Walters recruited people who had business bank accounts, filings show.
Walters worked for more than 25 years in the tax office, eventually as a manager in the property tax refund division. Her longevity and a reputation for diligence made her a trusted worker. The city even consulted her when it developed the computerized tax system she is accused of manipulating.
"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."Walters, whose annual salary was $81,000, also gave gifts and loans to co-workers, earning her the nickname "Mother Harriette," according to testimony at the council hearing. FBI search warrants from her Washington home list more than 40 Louis Vuitton handbags among a hoard of clothes, jewelry, shoes and a Faberge egg. She spent $1.4 million at Neiman Marcus, a chain of high-end department stores, court documents say.Friends and co-workers assumed her money came from an inheritance from her father, a banker in the U.S. Virgin Islands, said Samuel Pope, who owned a D.C. beauty salon frequented by Walters in the '80s. Pope said Walters was a kind, generous woman and they became close friends.
"She seems to care about what happens with most people and with their problems," he told The Associated Press in an interview two weeks ago. "She seemed to always be in their corner to help out."
Last year, Pope was having financial difficulties and 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.However, Pope pleaded guilty Wednesday to conspiracy to commit money laundering and mail fraud. According to prosecutors, Walters let Pope in on the scheme about 20 years ago, and that he took in more than $1.5 mllion by allowing his business bank account to be used for check deposits. He also sought out two property tax refunds from Walters, authorities said.
Walters' family appeared to be key to the scheme. A niece is accused of delivering checks and distributing the money. Her brother used his plumbing business for deposits while her nephew, used the account of his cleaning business, court documents state.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 Walters, according to court filings and defense attorneys.Alethia Grooms, a real estate agent from Prince George's County who also did graphic design, would draft fake documents such as check stubs to help cover up the alleged fraud, according to her lawyer, Kevin McCants. She also helped deposit about $600,000 in checks, though McCants said she didn't know how big the scheme was. She made about $200,000, but gambled most of it away with Walters at casinos.Grooms plans to plead guilty to conspiracy to commit fraud, McCants said.
Some people held key positions.Walter Jones was a bank worker when Walters came in as a customer in the mid-1990s. The two became friends, and Walters began to use Jones for most of her banking. She offered him gifts of $100, which Jones refused _ but he took the money when the offers went up to $1,000.Jones, who eventually became an assistant manager at a Baltimore Bank of America branch, helped deposit nearly $18 million in checks, and in return, received $366,000, according to his May plea to conspiracy to commit money laundering.
The ring included an IRS tax official, Robert Steven, who deposited $9.2 million into the account of a catering business he owned with his wife, documents say. They used the $1.7 million they kept to buy Jaguar cars, a townhouse, and Bahamas trips.
His wife faces federal charges and Steven pleaded guilty to federal counts.
As for Walters' family, her niece Jayrece Turnbull is still facing charges, and her brother, Richard Walters and nephew, Ricardo Walters, have pleaded guilty to federal charges. Ultimately, the penalty proved greater than what people gained. Many face long prison terms and must repay the full amount of checks they handled, even if they didn't keep all the money.