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Karl A. Racine
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Juries Find For District in Two Cases Brought by Former Finance Office Employees

Friday, January 17, 2014

Ted Gest
Public Information Officer
[email protected]

WASHINGTON, D.C. –Juries in D.C. Superior Court found in favor of the District in two lawsuits filed by former employees of the Office of the Chief Financial Officer (OCFO), who were asked to leave the office after the 2007 discovery of fraud involving bogus tax refunds, according to D.C. Attorney General Irvin B. Nathan, whose office defended both suits.

This week a jury returned a defense verdict denying any recovery in a lawsuit filed by Nancy Tucker, a former OCFO manager who retired in 2009. Tucker filed suit against the District in 2010 asserting claims under the D.C. Human Rights Act (DCHRA) and the D.C. Whistleblower Protection Act (DCWPA).  She claimed that she was unlawfully forced to retire because she had complained about alleged mismanagement, including problems with OCFO’s software and certain staffing levels, in violation of the DCWPA.  She asserted that the District refused to rehire her for the same position based on her age, in violation of the DCHRA.  The trial court dismissed the claims under the DCHRA before the case went to the jury.

At trial, the District’s witnesses explained that Tucker was let go after an investigation of the Harriette Walters case, in which Walters, a former employee in the Real Property Tax Administration unit of OCFO, embezzled some $48 million from the District over a period of 20 years.  Tucker was Chief of the Assessment Services Division (a branch of Real Property Tax Administration), and Walters’ direct supervisor from mid-2004 through mid-2006.  While there was no evidence that Tucker played any role in Walters’ crimes, she was asked to resign after the OCFO concluded that she had failed to exercise due diligence in her supervision of Walters.

The case was tried to a jury, with Judge Herbert Dixon, Jr presiding.  After six days of trial, the jury returned a verdict in the District’s favor, concluding that Tucker’s alleged disclosures had nothing to do with the end of her employment with the District.  Plaintiff had sought damages of $1,000,000. The case was tried by Assistant Attorneys General Alex Karpinski and Rick Ferrini.   

In a second case, a jury last week found for the District in a case brought by Diane Gustus, a long-time employee of OCFO who was terminated in 2007 after the tax fraud scheme was discovered.  She held the position of Real Property Program Specialist with the Real Property Tax Administration unit in July 2007.  That year, evidence emerged that unit manager Walters was embezzling government funds by initiating and then approving bogus tax refund packets with the assistance of other individuals.

Gustus’ signature appeared on the majority of these packets, and on November 7, 2007, she was arrested for her alleged involvement with the embezzlement scheme. OCFO also terminated her employment the same day because she either knowingly participated in the scheme or she grossly failed to perform the duties of her job, which enabled the scheme’s success. While Walters was convicted and is serving time, the criminal charges against Gustus were dismissed.  In last week’s case, Gustus brought breach of contract claims based on two separate clauses of a union collective bargaining agreement.  She alleged that the District breached the agreement by terminating her without completing an investigation and that it was not reasonable for the decision maker to conclude that she was a hazard to the agency. Gustus sought $350,000 in damages.

The jury in the court of Judge Neal Kravitz deliberated for approximately four hours, and came back with a verdict in favor of the District on both breach of contract claims.  Assistant Attorneys General Michael Addo and Caliandra Burstein handled the case.

Attorney General Nathan said, “We are proud of the hard work of our trial lawyers who secured just results for the District and saved the District’s taxpayers from a further invasion of the funds entrusted to their government.”