Interim Tax Director 'Blew It' in Audit Role; D.C. Office Failed to Detect Theft

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Byline: Gary Emerling and Jim McElhatton, THE WASHINGTON TIMES

The man tasked with restoring accountability to the District's Office of Tax and Revenue failed when he served as the agency's internal watchdog to investigate the unit where an employee orchestrated the largest theft in city history.

Sebastian Lorigo, head of the Office of Integrity and Oversight under Chief Financial Officer Natwar M. Gandhi, was named interim director of the Office of Tax and Revenue after Mr. Gandhi forced its former director to resign for failing to detect the embezzlement of at least $20 million by city employees.

Mr. Lorigo conceded yesterday that his office conducted no audits on the unit where supervisor Harriette Walters is charged with spearheading the scam by approving phony tax-refund checks.

"You can say I blew it," Mr. Lorigo told the D.C. Council during a public hearing on the fraud yesterday. "I take responsibility for it."

In response to questions from The Washington Times, city officials said auditors under Mr. Lorigo conducted several reviews of the Office of Tax and Revenue, but "none with respect to OTR's Real Property Tax Adjustment Unit," which Miss Walters supervised and where she is charged with approving the fraudulent checks.

The internal-audit office conducts an average of 33 audits, reviews and agency alerts each year, officials said.

A CFO employee since 1998, Mr. Lorigo created the Office of Integrity and Oversight, which is charged with investigating thefts, embezzlements and frauds or abuses.

Mr. Lorigo, who retired from the Internal Revenue Service after a 30-year career in federal law enforcement before joining the city government, yesterday said his investigators were stretched thin. But he acknowledged that a sophisticated audit would have uncovered the fraud.

"You have so many areas you look at," Mr. Lorigo said. "To have this happen under my watch ... it breaks your heart"

Council member Mary M. Cheh, Ward 3 Democrat, pointed out to Mr. Lorigo that he failed to audit the real-property tax area of the tax and revenue office, but that he now holds the job Sheryl Hobbs Newman was fired from for not detecting the fraud.

"If there is no confidence in my ability to do it, I will resign immediately," he said.

He said his office relies heavily on deputy chief financial officers under Mr. …