SEATTLE — The Washington Department of Revenue made a mistake that has cost taxpayers more than $318,000.
Because of a KIRO 7 investigation, the department launched an internal inquiry, re-examining its work to see if there are similar errors.
KIRO 7 discovered Ruvim Savin, a 19-year-old from Auburn, was able to fool the state into granting a tax exemption his housing cooperative, Homewood Terrace, doesn't qualify for.
"We're looking at a mistake," WA Department of Revenue spokesperson Kim Schmanke said. "We don't know exactly why it happened."
Savin ran from and evaded our cameras several times, refusing to answer KIRO 7's questions about the money.
DOR erroneously gave Homewood tax-exempt status after Savin filed an application on behalf of Homewood Terrace, saying the property has mostly very low-income residents.
With that exemption, Savin sought and received a property tax refund from King County for 2011, 2012, 2013 and 2014, totaling $318,145.
According to multiple sources and bank records obtained by KIRO 7, days after the money from the county arrived, Savin turned around and made out a check to himself for more than $109,000.
After KIRO 7 started asking questions about the filing, DOR the application again and revoked the exemption two weeks ago.
See the letter here.
It's a relief to former Homewood Terrace bookkeeper Cheryl Luper.
"I'm shocked that it happened," Luper said. "There are so many agencies that are involved and it all passed by them."
Luper was first concerned when Homewood Terrace's attorney, J. David Huhs with Curran Law Firm, severed all ties. He wrote a letter saying he believed "the refund amount is based on inaccurate, false, or misleading information."
The application Savin filed had two serious issues.
Savin listed residents and their incomes; however, multiple members told KIRO 7 their incomes had to have been falsified.
"Did you at any point give Homewood Terrace your income?" KIRO 7 asked resident Brenda Garland.
"Absolutely not," she said.
"We've never filled out any of that paperwork because frankly, it's none of their business," Erica Pearson said.
In fact, KIRO 7 discovered one woman listed as a current resident on the application hasn't even lived at Homewood Terrace for years.
"I had nothing to do with it," Debbie Gaines said. "I don't live there. I haven't lived there in almost four years."
But application documentation provided by the state under a public records request shows Gaines was listed as a resident for 2012, 2013 and 2014.
"It was false information," she said.
Homewood Terrace also never qualified for the tax exemption because it doesn't have 501(c) status through the Internal Revenue Service.
"How did the application get approved by the Department of Revenue without that letter?" KIRO 7 asked Schmanke.
"We don't know," she said. "It shouldn't have been. We don't know exactly how. So we've launched our own internal inquiry into why."
Schmanke said the department takes the error seriously.
"We're pleased that KIRO brought this to our attention and we're reviewing our processes," she said. "We're looking into different ways we can get into that income verification and have that assuredness."
Board members did not allow KIRO 7's cameras inside an emergency meeting, but we obtained video from members who recorded the heated meeting.
During the meeting, Savin denied wrongdoing.
When neighbors pressed for an explanation regarding the $109,000 check in his name he replied, "There was a $109,000-plus something ... draw on my account which I paid someone for a service."
People were in disbelief.
"How do you have that kind of money?" one demanded.
"Who would do that?" another asked.
King County issued a letter saying that the full amount, $318,145, must be returned to King County by August 28.
See the letter here.
If it is not paid, the county could put a lien on the property and start the foreclosure process with a potential sale as early as 2016.
We checked with King County Sheriff's office about possible criminal charges.
A spokesperson said investigators asked the King County Prosecutors Office to review the case and that a deputy prosecuting attorney deemed it a civil matter.
The Department of Revenue said there can be criminal charges for knowingly filing false paperwork.
UPDATE: The King County Sheriff's Office is re-launching the investigation after KIRO 7 found the mistake by the Washington Department of Revenue.
KIRO
