Tax Scandal Leads to Resignations in D.C.

WASHINGTON -- The theft of millions of tax dollars has led to several resignations within the upper levels of the D.C. government.

Six people were arrested Wednesday morning and accused of stealing more than $16 million through a property tax scheme. Two of those arrested were city employees.

D.C. Deputy Chief Financial Officer Sheryl Hobbs-Newman and three other high ranking officials at the Office of Tax and Revenue have been forced to resign. None have been implicated in the scandal, but sources close to the investigation tell WTOP there was a "substantial breakdown in internal controls."

Channel 4 reports D.C. Chief Financial Officer Natwar Gandhi believed Hobbs-Newman and others should have caught onto the scheme earlier.

Hobbs-Newman was the former head of the D.C. Department of Motor Vehicles.

The alleged defrauding of the District began in 2004 when the suspects set up dummy corporations and fraudulently began filing for millions of dollars in real estate tax refunds.

City officials say they will try to recover as much of the money as possible. WTOP has learned the city has been cooperating with an FBI investigation for more than a month.

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