The District government’s attempt to collect more than $100 million fromBank of America for allegedly failing to stop the biggest embezzlement scheme in the city’s history is shifting to prison.
The Federal Bureau of Prison’s medium-security penitentiary in Marianna, Florida, to be exact.
That’s where ringleader Harriette Walters, a former mid-level manager in D.C.’s Office of Tax and Revenue, is currently serving a 17-year sentence for organizing the theft of nearly $50 million from the District’s treasury. D.C. Superior Court Judge Frederick Weisberg has ordered Walters to sit for a 12-hour videotaped deposition. No date for the deposition has been scheduled.
For roughly 20 years, Walters used her position in OTR to create and process false and fraudulent real estate tax refund checks, converting those to cash or checks that were then deposited in bank accounts that she and her cohorts controlled.
The scam unraveled in 2007, after Bank of America — where D.C. maintained its property tax refund account — discovered one of its employees, assistant branch manager Walter Jones, was engaged in unauthorized and irregular deposits and withdrawals. Jones was fired, forcing Walters and her conspirators to shift to other financial institutions. When Walters’ niece, Jayrece Turnbull, attempted to deposit a $410,000 refund check at SunTrust, bank officials there immediately became suspicious and launched an investigation that was ultimately turned over to the FBI. (Jones was latersentenced to 78 months in prison; Turnbull was sentenced to nine years in prison).
On Oct. 31, 2008, the District filed a multicount lawsuit against Bank of America (NYSE: BAC), alleging the bank was complicit in the scheme by not enforcing safeguards, violating its agreements with the District and not exercising “ordinary care to prevent this fraud from occurring and continuing.” The city sought roughly $117 million.
Attorneys for Bank of America, represented by McGuireWoods, were not available for comment for this story.