Goodbye, Ms. Customer Service Tax scandal ends Sherryl Hobbs Newman's career in District government.

Hire Powers: Williams and Gandhi tapped Newman for multiple posts.
Darrow Montgomery/File

In 2003, Sherryl Hobbs Newman moved into her fourth managerial job in D.C. government, becoming secretary of the District of Columbia. It’s one of the most plum Cabinet-level positions in the city bureaucracy. Much of the job revolved around coordinating the busy travel schedule of Mayor Anthony A. Williams, a huge believer in Newman.

Under her watch, the secretary’s office endured some controversies—including payments to old friends of then City Administrator Robert Bobb for planning Williams’ famous 2005 China trip. The office also approved the issuance in June 2005 of an unprecedented D.C. Register “supplement” at the behest of investors hoping to put a slots parlor in Northeast. The supplement allowed the slots backers to get a head start on circulating petitions necessary to get their proposal on fall election ballots.

The epilogue on the D.C. Register scandal goes something like this: Subordinates acting without Newman’s knowledge had cooked up the scheme. Their manager found out too late.

Last week, that explanation defined another career moment for Newman, this time in connection with a far greater scandal. Prosecutors allege that employees under her supervision at the Office of Tax and Revenue stole $20 million or more from city coffers by writing refund checks to bogus corporations they controlled. Checks approaching $500,000, charging documents allege, went out the office’s door without any oversight from anyone higher than manager Harriette Walters, one of seven city employees under Newman alleged to have had a role in the scam.

Newman was fired last Wednesday. And, barring an appeal, so ends the career of a top-level city-government lifer. Newman’s stints at the Office of Tax and Revenue and at other offices seem to have something in common: great strides in customer service, but systemic breakdowns lying under the surface.

Perhaps it all had to do with Destiny.

Not predestination, mind you. Destiny, devoted students of D.C. government information systems will know, is the name of the Department of Motor Vehicles’ computer system. It was rolled out under Newman’s third big position in D.C. government, as DMV director. Destiny made its debut in 2002, and it did not go particularly well. System outages and long lines at DMV service centers generated enough complaints that At-Large Councilmember Carol Schwartz called a hearing on a computer program.

Newman was out of the DMV within a year, replaced by Anne Witt, who’s gotten most of the credit for the agency’s turnaround.

Though Newman was credited with many improvements at the DMV—a biography still on the District’s Web site lists “increased productivity, greater access to the agency, improved morale, enhanced customer communication, better facilities, and the creation of a better work environment” as among her accomplishments—she was dogged by the planned renovation of the West Virginia Avenue NE inspection station, which was promised to alleviate long lines at the infamous Half Street SW station but was repeatedly delayed and eventually canceled.

Newman came to District government in 1997 from New York, where she had worked as director of collections for that city’s property tax office. Hired by the control board, she worked for two years as director of customer service for Natwar M. Gandhi, who headed the Office of Tax and Revenue at the time.

She found a patron in Mayor Williams, who hired her husband, Robert Newman, as director of parks and rec in 1999. And that year, she became Williams’ “customer service czar,” overseeing such pet projects as the citywide call center. For a time, the two cabinet officials were the city government’s ultimate power couple. That was until Robert Newman’s résumé turned out to contain a number of exaggerations; he was forced to resign in October 2000.

In 2005, Sherryl Hobbs Newman was appointed by Gandhi, by then chief financial officer, to head the Office of Tax and Revenue. “There was some raising of eyebrows,” according to a former Williams administration official. But once again, Newman’s skills in the customer-service realm took precedence over her managerial oversights over the years. A Williams press release on the appointment cited great achievements at the office of the secretary, including “increased customer service outputs in the Ceremonial Services Unit and Notary Commissions by more than 25 percent.”

According to a source close to Newman, a city contract was issued late last year to evaluate the Office of Tax and Revenue’s technology and operations. That study, done by a firm called the Wendell Group, was nearing its completion—in fact, the final report had at one point been due to Newman on the day she was fired. Another request for proposals was in the works to fix whatever the study had found needed fixing. “There were plans to respond to the results of the evaluation that was being done,” the source says, “as well as to respond to other concerns that had been identified.”

The source also says that Newman doesn’t plan to appeal her firing and that she “has not finalized” her decision on whether to appear at Thursday’s council hearing on the scandal.

Newman declined an interview with LL. She released a statement to reporters last Thursday:

“I had no knowledge of the alleged activities and I agree entirely with senior government officials who stated that even the most sophisticated audits would not have detected these activities,” the statement reads. “While this activity seems to have begun well before my tenure at the Office of Tax and Revenue, any actions I took or did not take regarding these specific activities were consistent with those of my predecessors as well as existing policies and procedures.”

Dr. Gandhi’s Terrible, Horrible, No-Good, Very Bad Day

Wednesday, Nov. 7, was not a very good day for Gandhi. It started sometime before 5 a.m., when federal agents raided the Office of Tax and Revenue’s North Capitol Street NE headquarters. At 6 a.m. he had the unenviable job of informing Mayor Adrian M. Fenty that a cabal of District employees had raided the treasury to the tune of $20 million.

Wednesday, however, was a very good day for At-Large Councilmember David A. Catania, a longtime nemesis of Gandhi’s. The health committee chair saw the consummation of many months of work trying to find a way to keep Greater Southeast Community Hospital in business. That afternoon, Specialty Hospitals of America closed on its deal, supported by $87 million of public funds, to buy the hospital from Arizona-based Envision Hospital Corp., a company Catania and many others had long hammered for its poor management.

Among the roadblocks that nearly stopped the deal: a report by Gandhi shortly before a council vote on the Specialty deal calling into question the state of the company’s finances.

As reporters gathered at the U.S. Attorney’s offices in Judiciary Square for details on the tax scam, Gandhi wasn’t among the parade of officials behind the dais. After U.S. Attorneys Jeffrey A. Taylor and Rod J. Rosenstein, FBI agent Jennifer Smith Love, D.C. Inspector General Charles Willoughby, and Fenty said their piece in front of the camera, Gandhi stood off to the side, with Ward 2 Councilmember and financial maven Jack Evans and Ward 1 Councilmember Jim Graham. Once reporters started asking questions, though, Gandhi made his way to the podium, obviously flustered, to explain how what he called a “major management failure” had taken place.

In what would become a theme for Gandhi’s public comments on the matter, he emphasized the big picture. “In the larger scale of things,” he said, “this is immaterial in terms of financial viability of the District.” The “larger scale of things,” of course, refers to the generally healthy fiscal state of the District over the past several years—wink, wink.

After the press conference ended, LL crawled with rush-hour traffic down to Greater Southeast Community Hospital. He arrived just in time to watch a crowd of more than a hundred Greater Southeast employees shower Catania with a standing ovation in the hospital’s basement auditorium.

Once the convocation concluded, LL waited his turn as several employees offered Catania their personal thanks for saving their jobs. Catania refused to admit to any schadenfreude at the time, telling LL he didn’t know enough about the scam allegations to comment.

By Monday, however, he was feeling more informed. In an interview that afternoon, Catania suggested that a nearly $100,000 raise given to Gandhi earlier this year needs to be rolled back. In April, Amtrak tried to lure Gandhi with a $250,000 salary plus a $100,000 signing bonus. To keep him, Fenty decided to up Gandhi’s salary from $186,000 to $279,000.

“He should go without this recently approved pay increase,” Catania said. “I think that would be in bad form.…I’m at the point where that should be rescinded.”

But Catania, untrue to form, says he’s going to refrain from going for the jugular. On Thursday, the council’s committee on finance and revenue will hold hearings on the scandal. Catania, who has clashed with Gandhi repeatedly, most notably on baseball-stadium financing, says he plans to focus on improving oversight of disbursements across the District government rather than agitating for Gandhi’s head

“I don’t want to pile on with Nat, as much as on a personal level I might have smiled after what he put me through,” he says. “This is not a time to be engaged in that. This is about how quickly we can put a plan in to restore confidence in this government.”

Political Potpourri

• Look who’s defending one of those accused tax scammers: A. Scott Bolden.

Bolden’s kept a relatively low profile after getting hammered in last year’s race against Phil Mendelson for a Democratic at-large council seat. But Bolden’s name is now back in the papers, as defense attorney for alleged fraudster Diane Gustus.

LL is going to call this the official end of Bolden’s electoral political career, such as it was. In addition to his failed campaign against Mendo, Bolden formerly served as chair of the D.C. Democratic State Committee, a perch from which he was ousted via the ballot box.

If he should ever throw his hat in the ring again, Bolden will have some explaining to do. Those expecting to pursue public office don’t typically go around representing folks accused of stealing tens of millions from taxpayers.

That’s not to be unkind to Bolden: Gustus will be getting a more than competent defender. Bolden, after all, kept Christopher Barry, son of Ward 8 Councilmember Marion Barry, out of jail after assaulting a police officer in 2005, then after driving without a license last year and subsequently failing a drug test while on probation. He also defended WAMU-FM commentator and Examiner columnist Jonetta Rose-Barras against a libel complaint filed by a former Department of Parks and Recreation administrator.

It’s just that Bolden’s compulsion for publicity seems likely to stay in the judicial arena from now on. Fred Cooke better watch out: He has competition on the District-politico-criminal-defense bar.

• One of the grand political traditions of Northeast Washington is back. Ward 5 Councilmember Harry Thomas Jr. will be giving away turkeys.

Thomas’ father, three-term Ward 5 Councilmember Harry Thomas, made a yearly routine out of hosting a dinner with all the holiday fixings, and he made sure to hand frozen Butterballs to as many needy residents as he could. Along with his annual Christmas toy giveaway, it was the most memorable demonstration of the elder Thomas’ legendary commitment to constituent services. When the younger Thomas first took a stab at the Ward 5 seat back in 2002, he promised a previous LL that the turkeys would be back.

“Yes, I’m giving out turkeys!” Thomas said after LL brought up poultry during a press event earlier this month. “And we’re gonna have a dinner!” (He proceeded to inquire about LL’s turkey needs this year.)

The turkey giveaway is scheduled for Nov. 19 at two Ward 5 locations: 2800 V St. NE and in the Rite Aid parking lot at 14th Street and Rhode Island Avenue NE. A Thomas aide reports that as many as 1,000 turkeys will be given away. No details yet, though, on the dinner.

Says Thomas, “We keep traditions.” 

Got a tip for Loose Lips? Send suggestions to lips@washingtoncitypaper.com. Or call (202) 332-2100, x 302, 24 hours a day.

Correction: The article originally gave an incorrect name for the outfit that contracted to study the Office of Tax and Revenue's operations. It is called the Wendell Group, not the Window Group.

Our Readers Say

THERE IS A REAL CONCERN HERE WHEN THE OVER PAID IS STILL RUNNING THE SHOW AND STILL RESPONSIBLE FOR THE TOTAL FINANCIAL BACKBONE OF THE DISTRICT OF COLUMBIA.
SOMETHING WRONG INDEED.
WHAT I FAIL TO UNDERSTAND IS WHY COUNCIL AND THE MAYOR HASN'T AT LEAST ASKED HIM TO TAKE A LEAVE OF ABSENCE TO SEE HOW THING SORT OUT AND WHO IN THE END IS REALLY RESPONSIBLE.
LIKE SO MANY AGENCIES IN THE DISTRICT OF COLUBIA UPPER MANAGEMENT IS NOT READY FOR PRIME TIME. MID LEVEL MANAGEMENT IS MOSTLY POORLY EDUCATED, POORLY EQUIPED WITH THE PROPER EXPERIENCE AND CERTAINLY POORLY SELECTED BY THE DEPARTMENT HEADS TO DO THE JOBS THEY ARE HIRED TO DO.
I FAIL TO UNDERSTAND WHY IT IS TAKING SO LONG FOR MORE QUESTIONS TO BE ASKED BY MORE CITIZENS ON WHY WE HAVE SUCH A CONTINUED BREAKDOWN OF SERVICES BY SO MANY OF OUR DISTRICT AGENCIES.
FILE A COMPLAINT, WITH WHOM I ASK. IF YOU ARE EXPERIENCING DIFFICULTY IN GETTING A DC AGENCY TO DO THEIR JOB AND YOU ATTEMPT TO REACH THE HEAD OF THE DEPARTMENT YOU CAN'T. THEN AFTER TOTAL FRUSTRATION YOU ATTEMTP TO FIND OUT WHO IN THE EXECUTIVE OFFICE OF THE MAYOR TO SPEAK WITH YOU GET THE BULL PEN WHICH IS POORLY STAFFED AND EVEN WORSE MANAGED. WE HAVE CLOSE TO A TOTAL MELT DOWN IN SERVICES BEING DELIVERED TO THE CITIZENS AND IT SEEMS LIKE NO ONE IS REALLY TAKING RESPONSBILITY.
1) DISABILITY SERVICES ADMINISTRATION
2) MTM TRANSPORTATION (WHICH PROVIVES TRANSPORTATION SERVICES FOR DC. MEDICAID PATIENTS)
3)DCRA
4)OFFICE OF TENNANT ADVOCATE
5)DEPARTMENT OF HUMAN SERVICES (ONEOF THE WORSE)

THE LIST GOES ON AND ONE. WE WERE PROMISED IMPROVEMENTS AND YET WE JUST AREN'T SEEING THEM. WHEN WILL SOMEONE STEP UP TO THE PLATE AND PRODUCE?

I AM CONCERNED AND WONDER JUST HOW MANY OTHERS ARE AS WELL.

KEITH JARRELL
Schadenfreude (IPA: [ˈʃaːdənˌfʁɔʏdə] Audio (German) (help·info)) is a German word meaning 'pleasure taken from someone else's misfortune'. It has been borrowed by the English language[1] and is sometimes also used as a loanword by other languages.

I think two things. Fenty was goaded into immediately supporting Ghandi, by the media. I would have recommended a statement to the Washington Press Corp that any statement is premature as this is a ungoing investigation.

He fired Sheryl Hobbs Newman for a reason that he too is culpable for, being asleep at the wheel. If Fenty shows too much vigorous support once the facts shows that Ghandi showed have known or worst may even be directly involved he too will be tainted with the scandal. However to maitain neutality until all facts are in makes him look deliberate.

I have never been a fan of Ghandi...too many scandals under his watch. And it is always someone else. Some mid to semi high level employees are fired. But since we were fiscally proficient no one wanted to argue with success and his role was primarily seen as creating financial health. You cannot argue with that. However, he does not seem like top guy material. He seems like a good guy on the team to have because he has a speciality but there is always something happening with him at the top. Is it possible to demote him? Or mandate a forensics team that specialize in something he obviously has no skill--routing out fraud, and theft. You know the worst part. This is probably not the only case of thievery going on right now in the district.

And what is the deal with the City Paper and A.Scott Bolden...you guys are obsessed. Well at least you spell his name right. I do not think A. Scott has any elected ambitions but with this press you are definitely helping his client list.

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