About Francisco Alvarado


Website: http://www.floridabulldog.org
Francisco Alvarado has written 48 articles so far, you can find them below.


Hialeah’s mayor, a former crony, an off-the-books city gig and an ethics investigation

By Francisco Alvarado, FloridaBulldog.org 

Hialeah Mayor Carlos Hernandez, left, and retired Hialeah police officer Glenn Rice Photo: NBC6

Being a political operative for Hialeah Mayor Carlos Hernandez comes with city perks.

Glenn Rice — a former city cop who worked on the mayor’s 2011 and 2013 campaigns — collected roughly $12,000 during a three-year period acting as an off-the-books employee monitoring the company Hialeah hired to collect trash from private homes, as well as investigating potential hires and vendors, according to an April 25 Miami-Dade ethics commission close-out memo.

Ethics commission officials began probing Rice’s work for the city between 2013 and 2016 while investigating separate criminal allegations that Hernandez was shaking down local businesses, and that Rice was collecting bribes on the mayor’s behalf. At the time, Rice was also working as a $2,000-a-month consultant for three city vendors, including two garbage-collection firms.

While ethics investigator Karl Ross didn’t find enough evidence to recommend the filing of ethics or criminal charges against Hernandez, his findings suggest the mayor attempted to conceal his involvement in the city retaining Rice’s services. Hernandez did not return a message left with his secretary Thursday afternoon and his defense lawyer, Tom Cobitz, declined comment.

Ross began looking into the relationship between Hernandez and Rice on Aug.13, 2015, according to ethics commission records. The ethics investigator, along with a detective and a prosecutor with the Miami-Dade State Attorney’s Office, interviewed Hialeah Police Lt. Rick Fernandez and Hialeah firefighters union representative Eric Johnson. Both men accused Hernandez of “extorting” two local businessmen and claimed that Rice was the mayor’s bagman.

When Hernandez, who was a high-ranking Hialeah police officer before becoming a councilman, ran for mayor in 2011 and re-election two years later, Rice often engaged his political godfather’s opponents in public confrontations. Among the Hernandez detractors Rice accosted include former Mayor Raul Martinez and blogger ex-Miami Herald reporter Elaine de Valle, who first wrote about the ethics investigation on her blog, Political Cortadito.

Hernandez and Rice have since apparently had a falling out. “Lt. Fernandez stated Rice is no longer on good terms with Mayor Hernandez,” a March 30 ethics investigative report said. “[Fernandez] stated he knows Rice well, and that [Rice] might be willing to cooperate if issued immunity via subpoena.”

In a sworn statement last fall, Hernandez said Rice volunteered to be his campaign’s “ally,” “political informant” and “snitch.” But the mayor — despite being Hialeah’s top bureaucrat — said he did not know how Rice ended up overseeing the rollout of trash-collection services by Progressive Waste Solutions. “I think he volunteered,” Hernandez told investigators on Sept. 26. He then referred them to Armando Vidal, the city’s public works director, for more specifics. “I think he can better answer the question,” Hernandez said.

Mayor denies wrongdoing

The mayor also vehemently denied directing any vendors or local business owners to make payments to him via Rice. “He said he felt Rice ‘took a lot of liberties’ and ‘used the perception of influence’ to make money,” the close-out memo states.

On Feb. 3, Vidal gave a sworn statement contradicting the mayor. “Mr. Vidal advised that several of the jobs originated with Mayor Hernandez and that Rice’s involvement was expressly requested,” the close-out memo states. “He said the mayor wanted Rice to assist the public works department in monitoring issues relating to solid waste, and also to assist the city attorney in vetting a consulting firm.”

Additionally, Vidal said he believed Hernandez was aware that Rice was being paid through a legal services contract the city had with the law firm of Miami Lakes Councilman Ceasar Mestre, who told ethics investigators he has been friends with the Hialeah mayor since 1983. Rice was subcontracted to handle “relevant investigative duties.”

“[Vidal] said the mayor trusted Rice to provide an independent look at matters relating to City of Hialeah affairs,” the close-out memo said. The public works director also showed ethics investigator Ross invoices totaling $18,056 the city paid Mestre’s law practice. Two-thirds of the money was paid to Rice, according to ethics investigators. Vidal could not be reached for comment because he is on vacation this week.

On April 4, Mestre met with Ross and told him it was either Vidal or Rice who approached him about providing legal services and that the arrangement would include the former Hialeah police officer. (Mestre was also a city cop from 1983 to 1987.) “Mestre said he never considered that his law firm was being used as a way to conceal payments to Rice from public view,” the close- out memo states. “He said, ‘that was never discussed… Mayor Hernandez and I never talked about this until after the fact.’”

Mestre did not return a message left with his secretary or an email requesting comment.

When Ross contacted Rice, the ex-cop said Hernandez “was aware of these payments” through Mestre’s law firm. In an email response to Florida Bulldog, Rice did not comment on what is written about him in the close-out memo and other investigative reports. But he said Vidal told the truth.

“Armando Vidal may be considered to be brash and an a-hole by many,” Rice said. “But he is one of the most honorable men I’ve ever come to know and he DOES NOT and will not lie for anyone.”

Lauren’s Kids racks up six-figure donations via auto tag registration renewals

By Francisco Alvarado, FloridaBulldog.org 

State Sen. Lauren Book

In January, Broward County car owners who received their auto tag renewal notices also got a special message from Lauren’s Kids, the nonprofit organization dedicated to preventing child sex abuse and founded by freshman State Sen. Lauren Book.

Inside the envelopes, colorful flyers bearing Lauren’s Kids logo wished vehicle registrants a happy birthday while segueing into an ominous stat: “Yet shockingly, 1 in 3 girls and 1 in 5 boys are sexually abused before their 18th birthday.”

That bit of data was followed by a sales pitch. “But there is hope — 95 percent of abuse is preventable through awareness and education. Celebrate your birthday by donating to the Lauren’s Kids foundation and honor the kids in your life.”

Of course, the advertisement includes a disclaimer in small italicized words that the Broward County tax collector’s office, which sends out the notices, is not endorsing Lauren’s Kids.

Drivers with February birthdates weren’t the only ones to find the Lauren’s Kids flyer in their motor vehicle registration renewal envelopes. Broward residents who received renewal notices in March and April also got the insert. Those automobile registrants whose notices are mailed this month are going to get the flyer too, says Paul Rowe, operations manager for the Broward tax collector’s office.

In fact, more than 6 million vehicle owners across Florida likely will have received the flyer stuffed in their auto tag renewal notices by year’s end. For the past seven years, Lauren’s Kids has been part of an exclusive club of charitable organizations approved by the Legislature that are allowed to hit up Florida drivers and vehicle owners for donations via auto tag and driver’s license renewal notices. But none of the other 43 nonprofits on the list has come close to Lauren’s Kids’ haul during a four-year period from 2013 through 2016 — $572,850, according to figures provided by the Florida Division of Motor Vehicles.

The department also contributes to Lauren’s Kids via the sale of specialty license plates approved by the Legislature in 2013. According to its most recent tax records, Lauren’s Kids received $294,653 from the DMV in 2015.

Lauren’s Kids’ success has been made possible by the organization’s aggressive marketing strategy to stuff as many auto tag renewal and driver’s license renewal envelopes with flyers requesting contributions and urging people to buy its specialty tag. The practice raises concerns among ethics watchdogs that government resources are being used to help a private organization raise funds without a public benefit. While the motor vehicle department administers annual auto tag renewals, individual county tax collector offices are responsible for mailing out the notices to vehicle owners.

Conflict of interest?

And now that Book is a state legislator, her nonprofit’s participation in the auto tag renewal raises the possibility of a conflict of interest. “In a perfect world, she would not do it,” said Beth Rosenson, a University of Florida political science professor who teaches government ethics. “It’s an accountability issue that raises questions in constituents’ minds. It leads people not to trust government.”

Ben Wilcox, research director for the government watchdog organization Integrity Florida, echoed Rosenson. “It may be technically correct,” Wilcox said. “But I don’t think it will look good to the public.”

A Lauren’s Kids insert in a Florida Department of Motor Vehicles registration renewal.

In an email response to questions about the inserts, Book dismissed the criticisms. “First of all, none of what we do markets the foundation and you seem to miss the purpose of our messaging,” Book said. “Awareness and education is our focus. Redundancy of message is a part of that.”

She also sees no conflict, Book added. “I have been advised that the work of the foundation may continue as it has for years educating the public and raising awareness about childhood sexual abuse,” she said. “Furthermore, the program is approved by Florida law.”

The Plantation Democrat, whose father Ronald Book is a powerful lobbyist and president of Lauren’s Kids, said she resigned from the board of directors of her nonprofit’s fundraising arm to “add an additional (but entirely unnecessary) layer between myself and the foundation.”

“I derive no personal benefit from public tax dollars except knowing that these monies are being used to save lives, raise awareness and prevent childhood sexual abuse,” she said.

In 2010, the Florida Legislature approved a bill adding Lauren’s Kids to a list of charitable organizations eligible for donations through auto tag registration applications and renewals, as well as driver’s license applications and renewals. The charities are listed on a form with a box next to each organization that the recipient can check off to receive a voluntary contribution. The legislation also allows Lauren’s Kids and the 43 other authorized nonprofits to include inserts promoting their cause in the renewal notices.

According to a 2010 legislative bill analysis and fiscal impact statement, the legislation authorizing Lauren’s Kids placement on the list was sponsored by then-state Rep. Marcelo Llorente from Miami and current Senate President Joe Negron. In order to qualify, Lauren’s Kids was required to submit an application to the motor vehicles department, along with a $20,000 check to “defray the costs of reviewing the application and developing the check-off.”

In addition, Lauren’s Kids had to submit a financial analysis and a marketing strategy outlining the anticipated revenues and planned expenditures to be derived from the voluntary contributions.

DMV passes the buck

However, after nearly four weeks of repeatedly requesting documentation about Lauren’s Kids participation in the program, motor vehicles spokesperson Alexis Bakofsky told Florida Bulldog there was none. “The department does not place Lauren’s Kids educational materials in driver license renewal mailings or have information regarding Lauren’s Kids educational materials being placed in auto tag renewal mailings from tax collector offices,” Bakofsky said. “You may want to contact a Tax Collector office for any additional information.”

Bakofsky did provide Florida Bulldog with a spreadsheet detailing how much money each of the 44 organizations received in fiscal years 2013-2014, 2015 and 2016. In those years, Lauren’s Kids received $161,936, $213,517 and $197,397, respectively. Only one other group has been able to raise a six-figure sum. Support Our Troops collected $108,791 in fiscal year 2013-2014.

The money raised through the renewal notice program is in addition to other funding Lauren’s Kids receives, including $8.5 million in state grants since 2012.

Sen. Book referred specific questions about the program to Lauren’s Kids communications director Claire VanSusteren, who did not respond to a list of 11 questions about the inserts despite four requests for comment via email and voicemail during a two-week period in March.

VanSusteren provided Florida Bulldog only with a copy of Lauren’s Kids 2015 tax return, which states Lauren’s Kids spent $449,785 to “develop an educational piece regarding protecting children against sex abuse that is included with all vehicle registration renewals… the goal is to reach as many individuals with direct messaging as possible.”

The tax return also states “that over 6 million individuals will read the material this year.”

In addition, Lauren’s Kids reaches another 50,000 individuals in December of each year through a “targeted program [that] occurs in driver’s license renewal offices” that provides “educational materials on how to better protect our children from predators and pedophiles.”

Broward County’s Rowe told Florida Bulldog that Lauren’s Kids was added administratively in 2011. “We don’t advertise it to participating charities,” Rowe said. “It’s up to the organizations to submit a request for the inserts to be included.” Only two other nonprofit organizations have asked to include inserts in renewal notices besides Lauren’s Kids, he added.

“Outside of those three, no one else has done it,” Rowe said.

U.S. Rep. Francis Rooney mum about fat fees paid to White House Counsel’s ex-law firm

By Francisco Alvarado, FloridaBulldog.org 

U.S. Rep. Francis Rooney, R-Naples

From last July to March, the campaign committee for freshman Florida Congressman Francis Rooney paid roughly $117,000 to the former law firm of White House Counsel Donald McGahn II. However, neither Rooney nor McGahn are answering questions about the payments to Jones Day, a global firm based in Cleveland where McGahn was a partner for nearly three years before joining President Donald Trump’s administration in January.

So far, the only information McGahn, a former commissioner for the Federal Election  Commission, has released is that he provided “legal services” exceeding $5,000 to the Rooney for Congress campaign committee, according to his public financial disclosure report. Campaign finance reports filed by Rooney for Congress show nine disbursements to Jones Day between last July and March. Jones Day received five of those payments totaling $72,328 after the Nov. 8 election, including $17,505 on the day of Trump’s inauguration, Jan. 19

Efforts by Florida Bulldog to get answers about the type of “legal services” McGahn and Jones Day provided Rooney for Congress were unsuccessful. Over the course of four days, White House media affairs director and former Miami political television host Helen Ferre did not respond to three email requests to interview McGahn. Likewise, Rooney press secretary Chris Berardi did not respond to three emails and three voicemails requesting comment from the Naples-area U.S. representative, a rising star in the Capitol’s GOP power circle. A spokesman for Jones Day declined comment.

McGahn and Rooney may not want to talk, but a government watchdog group and two campaign finance lawyers who spoke to Florida Bulldog believe the costly legal services may be for defending the congressman or his committee in a civil investigation for either ethics or campaign violations.

“You can never really know without them telling you,” said Jordan Libowitz, spokesman for Citizens for Responsibility and Ethics in Washington. “But that pattern of spending is consistent with people who are under investigation by the Federal Election Commission.”

He added: “It certainly raised a flag when we started looking at Donald McGahn’s financial disclosure statement.”

The attorneys, who spoke on the condition of anonymity, concurred that the expenditures seem to indicate that a probe by the commission, also known as the FEC, is taking place. “There could be a civil investigation by the FEC inquiring about donations and expenditures within the campaign,” said one lawyer, who has represented clients accused of federal civil and criminal campaign violations. “Once the FEC starts an inquiry, you got to get a lawyer.”

The other lawyer, who primarily represents city, county and state candidates, said it could also be that Rooney is under investigation by the Office of Congressional Ethics. “That would entitle him to the use of his campaign funds to defend against a complaint,” the attorney said. “I can’t see anything else these payments are for but an investigation.”

Riding the Trump train

Rooney, one of the first prominent Florida Republicans to climb aboard the Trump train, has become a leading conservative voice. The former U.S. Ambassador to the Vatican, Rooney owns a construction company that built the Dallas Cowboys’ new stadium and the presidential libraries honoring the two Bush presidents. Before jumping into the race to represent Florida’s 19th Congressional District, Rooney was one of the top Republican rainmakers in the country.

In February, Rooney participated in two panels about national security and political correctness at the annual Conservative Political Action Conference, or CPAC. In a press statement at the time, CPAC Chairman Matt Schlapp hailed Rooney as a “much needed and welcomed” addition to Congress. “He will stand up for you and for conservative policies,” Schlapp said. “We are proud to welcome him to our stage next week.”

While filings for Rooney for Congress don’t show any warning letters from the FEC regarding impermissible donations and expenditures, McGahn seems to be the ideal counselor to hire when campaigns run into trouble with the commission.

A January Jones Day press release touted McGahn’s commission credentials from 2008 to 2013 when Trump selected him as White House Counsel. “He led what has been called a ‘revolution’ in campaign finance,” the statement says. “He rewrote virtually all of the FEC’s procedures for audits, enforcement matters, and advisory opinions, which provide for an unprecedented amount of due process.”

However, press reports paint a much more controversial tenure. Campaign finance reform groups clashed with McGahn over his efforts to deregulate the FEC. He voted to loosen restrictions that prohibited parties from using campaign money for recounts and litigation. In 2013 before he resigned, he unsuccessfully pushed a rule that would have barred FEC lawyers from sharing information with federal prosecutors without commission approval. But McGahn was instrumental in passing a new rule allowing campaigns and party committees to present their cases in open session instead of behind closed doors.

McGahn joined the Trump team early on in the billionaire developer’s astonishing run to win the White House. He served as the campaign’s general counsel and lists several Trump political committees as clients on his financial disclosure form. When Trump appointed him as the commander-in-chief’s top lawyer, 13 attorneys from Jones Day joined McGahn at 1600 Pennsylvania Avenue.

Since Trump took office, McGahn has been at the center of some of the biggest controversies to hit the new administration. For instance, then-acting Attorney General Sally Yates warned McGahn’s office in January that Michael Flynn, Trump’s first pick as National Security Adviser, had misled officials, including Vice President Mike Pence, about his conversations with Russia’s U.S. Ambassador Sergey Kislyak and could be vulnerable to Russian blackmail.

When Flynn was subsequently forced to resign after his compromised position was leaked to national media outlets, questions arose about McGahn’s handling of the information he received. During a February press briefing, White House Press Secretary Sean Spicer defended McGahn, saying he “informed the President immediately” and that he concluded Flynn did not violate any laws after conducting “exhaustive and extensive questioning of Flynn.”

Ms. Book goes to Tallahassee, sees no conflict voting $ for Lauren’s Kids or dad’s clients

By Francisco Alvarado, FloridaBulldog.org 

Lauren and Ron Book in Times Square in March 2015 promoting her child sex abuse education book. Photo from the documentary “Untouchable” by David Feige

Freshman Broward State Sen. Lauren Book says she won’t abstain from voting on matters involving clients of her father, powerful lobbyist Ron Book. Similarly, she sees no conflict of interest in voting on measures to funnel millions of taxpayer dollars to benefit her non-profit charity and political launching pad, Lauren’s Kids.

Book, a Plantation Democrat, offered her thoughts on the issue of personal voting conflicts in an email exchange last week with Florida Bulldog.

“No,” she said when asked if she plans to abstain from voting on any matters involving Ron Book’s clients. “In ALL matters, I will vote my conscience and in what I believe is best for my district, for Broward County, and for the people of the State of Florida.”

Sen. Book also said that Lauren’s Kids would again seek significant state funding during this year’s legislative session that began March 7. Does that mean she will abstain from voting on bills to authorize funding for her organization?

“No. I have met with the Counsel of the Senate and have been advised that it is proper that I do not abstain on these matters unless the funding directly inures to my benefit, which it will not,” Sen. Book said.

Lauren’s Kids, however, pays Sen. Book a six-figure annual salary for serving as its chief executive. In 2015, her salary was $135,000 – a $20,000 increase from 2014, according to the charity’s federal income tax returns.

“My salary is not paid for with any state funds,” said Sen. Book. “I derive no personal benefit from public tax dollars except knowing that these monies are being used to save lives, raise awareness and prevent childhood sexual abuse.”

Sen. Book said that to make certain her salary includes no state dollars, she “restructured my employment to ensure that no public dollars were used to compensate me for my work” once she declared her candidacy. She declined to elaborate on how she accomplished that restructuring and that separation.

Ron and Lauren Book at a Tallahassee rally promoting Lauren’s Kids in April 2015. Photo from the documentary “Untouchable” by David Feige

Sen. Book did say, however, that she resigned from the board of directors of the Lauren’s Kids Foundation “to add an additional (but entirely unnecessary) layer between myself and the Foundation.”

Lauren’s Kid’s tax return for 2015 – the latest available – shows the charity received more than 83 percent of its $4.5 million in total revenue that year from the state. Since 2012, records show, the state has contributed more than $10 million to Lauren’s Kids.

The Florida Department of Education has requested another $1 million in funding for Lauren’s Kids for Fiscal Year 2017-18 “so we can continue to educate children and families to prevent abuse and help survivors,” said Sen. Book. “I might add, the DOE would only recommend funding if as experts they believed the curriculum was of significant benefit to our children.’’

Ron Book as landlord

Lobbyist Ron Book, the senator’s father, is the unpaid president of Lauren’s Kids. Yet he also makes money from Lauren’s Kids. According to the 501(c) (3) organization’s 2015 tax return, he paid himself $61,651 for renting space to Lauren’s Kids in his Aventura office.

Ron Book, who is also on the charity’s board, collected $63,175 in rent from Lauren’s Kids in 2014, according to that year’s tax return.

Ron Book declined to comment.

On Wednesday, March 22, Sen. Book will face one of the first ethical tests of her nascent political career. As a member of the Florida Senate’s health policy committee, she will be evaluating five bills to establish the rules and regulations for the state’s medical marijuana industry.

While some patient and industry advocates argue the state should open up the market to competition, four of the bills discourage participation by more cannabis providers beyond the seven companies already licensed to manufacture a non-psychoactive, non-smokable form of the drug under a restrictive medical marijuana program set up by the Legislature in 2014.

Among the Florida licensed providers is a joint venture between Homestead-based nursery Alpha Foliage and Surterra, an Atlanta-based medical marijuana company that employs the senator’s father Ron Book as its Tallahassee lobbyist.

While government watchdogs said Sen. Book should abstain from voting on any matters involving her father, she told Florida Bulldog she has no intention of doing so because Florida law and Senate rules do not prohibit it.

“As I stated above, I will follow the letter and spirit of the law in how I vote and how I conduct my business,” she said.

Conflict questions loom

Still, questions about Sen. Book’s potential vote conflicts involving both her father’s 100-plus clients and Lauren’s Kids loom large.

Ben Wilcox, research director for the government watchdog organization Integrity Florida, noted that because Florida has a citizen legislature that allows members to have outside employment, the bar is set low when it comes to ethical requirements.

Florida’s weak Code of Ethics for Public Officers and Employees says that state officers “may not vote on any matter that the officer knows would inure to his or her special gain or loss.” It does not prohibit such votes. Rather, the code says vaguely that officers who vote to benefit themselves or a relative “shall make every reasonable effort to disclose the nature of his or her interest in a public memorandum” that can be filed up to 15 days after the vote.

Integrity Florida Research Director Ben Wilcox

Sen. Book, nevertheless, could face questions when it comes time to vote on an appropriations bill that would include Lauren’s Kids, which advocates against child sex abuse.

“You are not supposed to vote on something that has a direct benefit to you personally,” said Wilcox. “That is where she may get into some trouble if her organization is getting an appropriation from the Legislature.”

Wilcox said Book should also be mindful about voting on matters favorable to her father’s clients. “She should be sensitive to the appearance of a conflict of interest,” Wilcox said. “Even if it technically is not a conflict, it raises questions in the public’s mind and causes the public to lose confidence in government.”

Since founding Lauren’s Kids 10 years ago, Book has seemed on a trajectory for public office. In addition to appearing before the Legislature to lobby in favor of laws that crack down on sexual predators and child abusers, Book has led an annual walk from Key West to Tallahassee to raise awareness for child sex victims that receives statewide media coverage. She’s also written two books, including one for children, about her own experience being sexually abused by her former nanny. Book and her father had a starring role in the recently released documentary about Florida’s sex offender laws called Untouchable.

Book, 32, decided to run for the Senate seat previously held by Eleanor Sobel, who left the Legislature in 2016 due to term limits. After raising more than $1.5 million through her campaign and her political action committee, Leadership for Broward, Book automatically won the seat when no one filed to run against her. A Bulldog analysis of her 2015 and 2016 campaign finance reports and her father’s client list show she received $35,000 from 15 entities that employ Ron Book.

Clients and contributions

Of that amount, her campaign received $1,000 apiece from two of Surterra’s owners, Michael Havenick and Alexander Havenick, who is also vice president and general counsel for Southwest Florida Enterprises, a company that owns several pari-mutuels in the state, including Magic City Casino in Miami. Southwest, four affiliated companies and four other Havenicks also each gave the $1,000 maximum to Sen. Book’s campaign.

According to 2016 lobbyist compensation reports filed with the state, Ron Book’s law firm was paid between $40,000 and $80,000 by Surterra to lobby the Legislature. Ron L. Book P.A. also received approximately $30,000 from Surterra to lobby the executive branch.

Lauren’s Kids has also been the beneficiary of millions of dollars in state funding. According to the organization’s 2014 tax return, Lauren’s Kids received $2.7 million in state grants. Its 2015 tax return shows the nonprofit got $3.4 million that year from Florida’s Department of Education. In 2016, records show, the Legislature awarded Lauren’s Kids $1 million.

A Lauren’s Kids insert in a Florida Department of Motor Vehicles registration renewal.

Florida’s Department of Motor Vehicles also contributes to Lauren’s Kids via the sale of specialty license plates approved by the Legislature. Lauren’s Kids, which got its specialty tag in 2013, received $294,653 from the DMV in 2015, tax records show.

Further, the DMV allows Lauren’s Kids to insert a brochure asking for donations in every auto tag renewal notice mailed to Florida residents. Lauren’s Kids is one of several nonprofits eligible to insert their brochures under the specialty tag program.

Beth Rosenson, a University of Florida political science professor who teaches a course on ethics in U.S. politics, said in an interview that Book might derive a benefit from her father’s earnings as a lobbyist. “Parents always help out their kids,” Rosenson said. “Let’s say she had a medical emergency or something in which she needed money so her father’s financial situation is not something that is totally separate from hers.”

Rosenson said Sen. Book’s potential for conflict is analogous to President Donald Trump and his sons, who have taken over the Republican billionaire’s companies while he’s in the White House. “In a perfect world, she would realize that her relationship with her father raises questions of conflict of interest,” Rosenson said. “So ideally, yes she should recuse herself.”

When it comes to Lauren’s Kids, Integrity Florida’s Wilcox said even if Book’s salary is not being paid with state funds, she should still abstain from voting on matters involving her nonprofit. “In an abundance of caution, that is something she may want to reconsider,” Wilcox said. “While technically it may be correct, I don’t think it will look good to the public.”

Miami-Dade judge sent Shelborne Hotel case to judge with similar conflict

By Francisco Alvarado, Florida Bulldog.org 

Miami-Dade Circuit judges Beatrice Butchko, left, and Jennifer Bailey

The Miami-Dade Circuit judge who chose to quit presiding over the high-profile Shelborne Hotel case due to an apparent conflict of interest, funneled the case directly to a second judge with a similar conflict in a way that avoided the case being randomly reassigned.

Typically, judges recuse themselves from cases in which they have a disqualifying conflict or the appearance of a conflict. But in the Shelborne case, Judge Jennifer Bailey chose another path after disclosing that she briefly had attended a meeting with Chief Judge Bertila Soto at which prominent Miami Beach developer Russell Galbut presented preliminary plans to build a new civil courthouse on nearby property partially owned by one of his companies. Two other of Galbut’s companies were defendants in the Shelborne case.

“If I am a plaintiff and I read in the newspaper in a month that Russell Galbut is going to build a new courthouse, I might not be incredibly comfortable with Judge Bailey hearing my case,” Bailey said in open court during a Dec. 14 hearing.

But five days later, using her authority as administrative judge of the civil division, Bailey transferred the case to her associate administrative judge, Beatrice Butchko, who also actively campaigned in 2014 to convince voters to approve a bond referendum to pay for a new $350 million courthouse to replace downtown’s landmark courthouse built in 1928. The referendum did not pass.

Within weeks, Butchko tossed out the entire case that Bailey had set for trial in early January.

“Cases are randomly reassigned upon recusal,” said court spokeswoman Eunice Sigler. “This was not a recusal. This was a transfer.”  Transfers fall under the jurisdiction of the administrative judge, per 11th Judicial Circuit administrative orders adopted in 1979 and 2016.

For more than two years, Bailey had presided over the lawsuit filed by 40 investors who purchased rooms at the historic art deco Shelborne South Beach against the property’s condo association, condo board members, and companies tied to developer Galbut. The plaintiffs, who sued in 2012, alleged the condo association illegally assessed them $30 million in unnecessary repairs and renovations at the Shelborne, damaged their rooms and have tried to force them into foreclosure so the Galbut entities can acquire their units at a huge discount.

Butchko, however, made quick work of the investors’ case after she took over. She dismissed key parts in early January, days before jury selection was to begin.  She tossed the rest the following week. She did so while brushing aside a plaintiffs’ request that she recuse herself from the case and for a change of venue.

‘Dirty work’

“Obviously we were going to ask Bailey to remove herself once we found out about her involvement with Galbut,” Gia Hutt, one of the 40 investors, told Florida Bulldog. “But before any of that happened, she handed off the dirty work to Butchko, who destroyed our case.”

Hutt said the investors’ plan an appeal, but none was filed as of Tuesday.

Miami-Dade court spokeswoman Sigler said Bailey and Butchko would not comment on their rulings. She explained, however, that Bailey assigned the case to Butchko, who are both in the complex business litigation section, because Butchko was the only judge available to handle what was expected to be a 7-week trial for the Shelborne case that was set to start Jan. 9.

“The parties expressed their satisfaction with the transfer at the time, in the interest of keeping their specially-set trial date,” Sigler added.

But the case never got to jury selection. On Jan. 20, Butchko issued a summary judgment in favor of the Shelborne Beach Hotel Condominium Association and its board, as well as Shelborne Property Associates and Shelborne Operating Associates, two companies partially owned by Galbut. Butchko ruled that the plaintiffs had not presented any material facts disputing the defendants’ assertions that the repairs were necessary to address life safety issues.

Alice K. Sum, an attorney at the Fowler White Burnett law firm who represented the condo association, refuted Hutt’s claims that Bailey and Butchko were both compromised because of their public advocacy for a new courthouse and Galbut’s offer to build one.

“On the first day we appeared before Butchko, she said she didn’t know who Russell Galbut is and that her involvement in anything related to a new courthouse dated back to the prior initiative that was voted down in 2014,” Sum explained. “There’s no doubt lawyers and judges would like a new courthouse. But to imply no judge can be impartial because of that is to taint public servants unnecessarily.”

Kevin Malek, lead attorney for Hutt and the other 39 investors, declined comment.

Motions denied

Hutt, however, said that before Bailey disclosed her meeting with Galbut and transferred the case to Butchko, she had denied motions by the defendants to dismiss 8 of the 12 counts in their lawsuit, including civil conspiracy, breach of fiduciary duty and other wrongdoing. According to a Dec. 29 motion filed by the defendants, Bailey’s rulings were contrary to state law that required her to disclose her conflict before making a decision.

On Jan. 6, 19 days after she took over the case, Butchko granted the defendants’ request to reverse Bailey’s denials and dismissed the eight counts, according to court documents. By doing so, Hutt contends, Butchko crippled their case.

“You have a judge who is on the case for less than a [month] and throws out most of our lawsuit,” she said. “She took our rights away to go before a jury.”

Condo association attorney Sum said Butchko had sufficient time to process evidence presented by the defense that the repairs and renovations were not only necessary, but mandated by the City of Miami Beach. She claimed the plaintiffs’ counsel offered nothing to refute that.

“Judge Butchko explained she has been brought in again and again to take over cases,” Sum said. “So she had a lot of experience getting up to speed on cases dumped on her last minute. Butchko is well regarded among her peers and lawyers as a hard worker.”

Lenny Walder, another the 40 investors, doesn’t buy it.

“The same element of ‘eureka’ and awareness Bailey had on the new courthouse issue should have applied to Butchko, since she too is a courthouse advocate,” Walder said. “What is good for the goose is good for the gander. Butchko should have recused herself.”

A curious search for justice amid Miami-Dade judges’ desire for new civil courthouse

By Francisco Alvarado, FloridaBulldog.org 

Miami-Dade Circuit judges Beatrice Butchko, left, and Jennifer Bailey

The effort to build a new civil court building to replace the historic, but crumbling, Dade County Courthouse in downtown Miami recently took a bizarre turn that prompted a local judge to remove herself from a high-profile case involving prominent developer Russell Galbut and another local landmark, the Shelborne Hotel in Miami Beach.

Miami-Dade Circuit Court Judge Jennifer Bailey took herself off the case on Dec. 19 after disclosing she briefly attended a meeting with Chief Judge Bertila Soto at which Galbut presented preliminary plans to build a new civil courthouse on nearby property that’s partially owned by one of his companies.

Bailey transferred the case to Miami-Dade Circuit Judge Beatrice Butchko, who like Bailey had actively campaigned to convince voters to approve a 2014 bond referendum to pay for a new $350 million courthouse.

Butchko quickly dismissed eight of 12 counts against the Shelborne Ocean Beach Hotel Condominium Association and five companies owned by Galbut, his brother Abraham and other relatives. The counts alleged civil conspiracy, breach of fiduciary duty and other wrongdoing.

“This is so shocking, you can’t believe it’s happening,” said David Kraus, a plaintiff in the Shelborne case.

Miami attorney Kevin Malek represents four-dozen Shelborne Hotel room owners who claim that Galbut’s companies and the condo association illegally tried to force them out. Malek told Florida Bulldog that his clients would appeal Butchko’s rulings, which he said severely weakened their case a week before the beginning of the Jan. 9 trial period. The trial on the remaining counts had not begun as of Thursday.

“This case is not over,” Malek said. “We will be back.”

A fair shake?

His clients, however, have little faith that they will get a fair shake as long as the case remains in Miami-Dade. Several of the unit owners, including Kraus, told Florida Bulldog they don’t believe any Miami-Dade judge can rule impartially on their case while Galbut is talking about building them a new home.

“Pretty much every judge wants a new courthouse,” said plaintiff Mark Shemel.

The Shelborne was converted into a condo hotel about a decade ago, allowing individual investors to buy rooms that are rented to tourists. In 2012, 40 of those investors sued alleging that the five Galbut entities – three of which own units in the hotel and two others that run the hotel’s operations – and the condo association broke Florida law by authorizing nearly $30 million in illegal assessments, or roughly $107,142 per room, for renovations at the Shelborne.

In court documents, the unit owners accuse Galbut of stacking the association’s board with flunkies and trying to force them out by foreclosing on their rooms because they refuse to pay the assessments. They also allege their rooms were demolished without their consent during the renovations, resulting in the City of Miami Beach revoking their certificates of occupancy until they fixed their units.

Their lawyer, Malek, sought unsuccessfully last week to remove Butchko from the case due to her advocacy for the 2014 bond referendum. She declined to recuse, while also rejecting a motion that sought to move the case outside of Miami-Dade County.

Nevertheless, Judge Butchko’s dismissal of the eight counts against the Galbut entities and the condo association was a jolt to plaintiffs in the long-running case.

“This lawsuit has been going on for years and Butchko dismissed our entire case within days,” said Kraus, who owns two rooms at the Shelborne. “How could she have reviewed so much evidence in such a short amount of time?”

Judges Bailey and Butchko declined comment through court spokeswoman Eunice Sigler, who said state law bars judges from publicly commenting on their rulings. Still, Sigler said Butchko had not been influenced by Galbut’s interest in developing a new courthouse.

“Judges rule based on the facts presented and applicable law,” Sigler said. “And their rulings can always be appealed to a higher court.”

‘A far-fetched theory’

Ron Lowy, Galbut’s personal attorney, said the 40 Shelborne owners are pursuing a “far-fetched” theory as to why Butchko dismissed the eight counts.

“I don’t believe any judge in Miami-Dade is going to give up their view of justice and doing what’s right simply because [Galbut] may in the future submit a formal proposal which may result in the construction of a new courthouse,” Lowy said. “The plaintiffs were simply unable to prove their case.”

Both Lowy and Sigler also noted that Miami-Dade County government, not the 11th judicial circuit, is the actual owner of the current courthouse and it is that body which would negotiate with Galbut for any deal for a new building.

Still, it was Bailey’s concern about a perception of possible impropriety and conflict of interest that caused her to remove herself from the Shelborne case, according to a transcript of the Dec. 14 hearing.

Bailey explained that two weeks before the court hearing, she was invited “out of the blue” to participate in a meeting with Galbut and Chief Judge Soto because she is the only local judge who is familiar with national courthouse standards and guidelines.

Three years ago, Soto, Bailey and Butchko were among a group of judges and high profile lawyers who led a public awareness campaign to tell voters that the downtown courthouse, built in 1926, had fallen into a state of disrepair and was no longer safe for the people who work there. Their goal: to convince Miami-Dade voters to approve a bond referendum to pay the nearly $400 million cost to build a new courthouse, plus repair the existing building, which was listed on the U.S. National Register of Historic Places in 1989. Voters, however, rejected the referendum.

“I was very involved in public appearances with all that,” Bailey said during the Dec. 14 hearing. “Suffice it to say I am very involved in the campaign to get a new courthouse for my judges and the people I work with.”

Bailey relayed that when she showed up for the meeting with Soto, Galbut was also there. She said the plans Gabut presented were very preliminary and that she did not believe his proposal would go anywhere. However, she soon realized that his plan is gaining steam and that she needed to address it with the lawyers involved in the Shelborne litigation.

A judicial ‘epiphany’

“I had the epiphany that it might be a potential issue in this case,” Bailey said according to the transcript. “If I am a plaintiff and I read in the newspaper in a month that Russell Galbut is going to build a new courthouse, I might not be incredibly comfortable with Judge Bailey hearing my case.”

Five days later, Bailey transferred the case to Butchko. However, the plaintiffs’ don’t believe they got a fair shot in court.

“I don’t think there is a conspiracy between Galbut and Butchko,” said owner Mark Shemel said. “But she is very sympathetic about getting a new courthouse. So it’s certainly possible she is sympathetic to the defendants.”

Shemel noted that Galbut has been involved in new courthouse talks for quite some time. He cited statements made by Greenberg Traurig attorney Ron Rosengarten, who represents two of the Galbut entities.

In a Jan. 3 motion, Rosengarten admitted that Galbut has been communicating with Soto, Miami-Dade Mayor Carlos Gimenez’s office, Clerk of Courts Harvey Ruvin, members of the Dade Heritage Trust and retired judge Scott Silverman for more than a year about getting involved in a possible deal to develop an “expanded courthouse project.”

Silverman, who declined comment, was the court appointed mediator in the Shelborne case. Galbut’s lawyer, Lowy, said his client only met once with Silverman and that the encounter took place after the mediation had ended with an impasse.

“That bothers me,” said plaintiff Shemel. “Silverman made the plaintiffs feel doomed. The whole thing stinks.”

Two Miami-Dade charter schools loaned $900K in taxpayer funds to sister schools

By Francisco Alvarado, FloridaBulldog.org 

Keys Gate Charter School in Homestead. Photo: Wikimedia Commons

Keys Gate Charter School in Homestead. Photo: Wikimedia Commons

Two Miami-Dade charter schools illegally transferred taxpayer funds by lending a combined $912,094 to sister schools outside the county, the top lawyer for the Florida Department of Education has determined.

As a result, Miami-Dade Public Schools auditor Jose Montes de Oca is recommending the district initiate efforts to recoup the money even as a representative for one of the charter schools claims no law was broken.

On Dec. 6, Montes de Oca will brief the school board audit and management committee on what steps the district can take to recoup the funds used for the loans.

In an Oct. 21 letter to school district attorney Walter Harvey, education department general counsel Matthew Mears said Keys Gate Charter School in Homestead and BridgePrep Academy in Miami’s Little Havana neighborhood were prohibited from making loans to affiliated schools not in Miami-Dade.

“Funds that are appropriated to a local school district are for the education of the students within the school district,” Mears wrote. “For this reason, the transfer of appropriated funds across district lines, with or without interest, is not authorized.”

Colleen Reynolds, a spokeswoman for Florida Charter Educational Foundation, the nonprofit organization that owns Keys Gate disputed Mears’ conclusion that the $700,000 loaned to Clay Charter School in Middleburg, Florida, is illegal. Keys Gate and Clay are operated by Charter Schools USA, one of the country’s largest charter school management companies, under a contract with the foundation.

“We have not received any direction or concern regarding this issue,” Reynolds told Florida Bulldog. “However, we believe we are in full compliance with the law.”

Florida Department of Education general counsel Matthew Mears.

Florida Department of Education general counsel Matthew Mears.

Juan Carlos Quintana, a principal with S.M.A.R.T. Management, the company that developed and operates BridgePrep Academy, did not return three phone calls and an email message seeking comment about the $212,094 loan given to an unidentified affiliated school in another county. Two other Miami-area charter schools under the BridgePrep name also had loaned a combined $18,949 to sister schools outside the county, but those funds have already been paid back, according to a Sept. 12 Montes de Oca memo to the audit committee.

The dispute over the use of district school funds for loans initially arose in May when Montes de Oca notified the school board’s audit and management committee about the problem following his review of annual financial statements for 2015 submitted by Keys Gate and BridgePrep. At the time, Keys Gate had loaned Clay Academy $750,000 with zero interest. Since then, the loan was paid back, but Keys Gate issued another loan for capital improvements at Clay Academy. This second loan is for $700,000 with a five percent interest rate and a term of five years, according to Montes de Oca’s September letter.

Opinon sought

The school board attorney sought an opinion from Mears after Keys Gate officials informed Montes de Oca that the loans were acceptable under state law, according to a Nov. 30 letter by the school district auditor.

Mears’ response that the loans are illegal prompted Montes de Oca to recommend that the money be returned. “The district administration plans to formally notify these schools of the state’s guidance and that the loan funds must be repaid,” Montes de Oca wrote.

Charter school watchdogs told Florida Bulldog the loans illustrate a total disregard for taxpayer funds diverted from public schools to private educational institutions. Lisa Guisbond, executive director for Citizens for Public Education, an organization that advocates against charter schools and standardized testing in Massachusetts, said Keys Gate and BridgePrep should be held accountable for the mishandling of school district funds.

“It seems bizarre that a charter school would have an extra $750,000 to loan out when so many public schools are scraping by to meet the needs of their students,” Guisbond said. “That kind of blows my mind. It’s outrageous, even.”

Carol Burris, executive director for the New York-based Network for Public Education, said Keys Gate and BridgePrep should not have given out the loans in the first place.

“In the case of these charter schools, their allegiance to their sister charters was greater than their allegiance to the children of Miami-Dade County they are supposed to serve,” Burris said. “They put the needs of the charter schools ahead of the needs of the kids. That is a problem.”

It’s a good thing both schools were caught, she added. “Hopefully, it will discourage other charters from doing the same,” Burris said. “And I hope the citizens of Miami-Dade have all of their tax dollars returned.”

Non-profit donors allegedly acting as “fronts” for utilities backing Amendment 1

By Francisco Alvarado, FloridaBulldog.org solar-panels

Consumers for Smart Solar, the Political Action Committee supporting controversial Amendment 1 that critics say would give Florida utility companies a monopoly on solar energy, has raised $4.45 million from three non-profit groups allegedly acting as “fronts” for utility industry contributions.

“Big monopoly utilities filter money through outside organizations in an attempt to make it appear like they have support from non-utility interests,” said Susan Glickman, Florida director of the Southern Alliance for Clean Energy, a group that supports a marketplace for solar energy that allows consumers to choose their provider. “But the money [donated to Consumers for Smart Solar] all comes from the same place.”

The three alleged fronts for the state’s largest electric companies are Let’s Preserve the American Dream, the 60 Plus Association and the National Black Chamber of Commerce. Records show that each has received money from utility interests in the past, and each does not disclose the identities of its financial backers.

For the Amendment 1 ballot measure to pass, it must get 60 percent voter approval.

Although the money raised by the non-profits is a fraction of the $20 million-plus utility companies have given to Consumers for Smart Solar, their donations create the false perception that Amendment 1 has the support of regular people, said Aliki Moncrief, executive director of Florida Conservation Voters, a group promoting environmental protection and clean energy.

“These groups supporting Amendment 1 have brought up the legitimate concern about protecting consumers,” Moncrief said. “Unfortunately, they are acting as fronts for the big utility companies.”

Consumers for Smart Solar chairman Jim Kallinger did not respond to two requests for comment sent to his company’s email address. The company, Stamp Vault, does not have a listed phone number, and the phone number listed on the Political Action Committee’s campaign filings belongs to a Tallahassee accounting firm.

Sarah Bascom, the PAC’s spokeswoman, did not respond to a voicemail and email requesting comment before deadline.

According to Consumers for Smart Solar’s campaign finance reports, Let’s Preserve the American Dream has donated $1.3 million since 2015 with its most recent contribution of $250,000 made on Oct. 28. The Tallahassee-based non-profit organization’s executive director is Ryan Tyson, who is also vice president of political operations for Associated Industries of Florida, a group that bills itself as “The Voice of Florida Business” and counts former Florida Republican House Speaker Tom Feeney as its chief executive.

Funding sources not disclosed

Let’s Preserve the American Dream’s 2015 income tax return shows the non-profit generated more than three quarters of its $1.6 million in annual revenue through contributions, grants and gifts. However, the sources for those funds are not disclosed on the tax returns. Reached via email, Tyson declined to comment on who or which companies financially support Let’s Preserve the American Dream. He also would not explain why Let’s Preserve the American Dream did not use its Political Action Committee (which has the same name) to donate the $1.3 million that went to Consumers for Smart Solar. Had the money gone through the PAC, Let’s Preserve the American Dream would be required to disclose its donors.

According to campaign finance reports, the Let’s Preserve the American Dream PAC was disbanded on Oct. 6 after raising and spending $33,000 since 2015. The group collected $10,000 apiece from FP&L and The Mosaic Company, the owner of the Central Florida fertilizer plant where 215 million gallons of contaminated wastewater recently drained into an aquifer that provides drinking water for millions of Floridians.

Another Consumers for Solar backer, the National Black Chamber of Commerce, also does not disclose the source of the contributions, gifts and grants it receives, according to its 2012, 2013 and 2014 tax returns. However, a brochure for the group’s 2015 annual convention at the Diplomat Resort & Spa in Hollywood lists several energy and fossil fuel companies as sponsors, including Gulf Power, Koch Industries and Chevron.

The black chamber, which generated $1.3 million in revenue in 2014, donated $200,000 to Consumers for Smart Solar through its National Black Chamber of Commerce Free Trade Initiative, a 501c(4) non-profit organization that had its tax-exempt status revoked by the Internal Revenue Service for not filing tax returns for three consecutive years.

With no tax-exempt status, the Free Trade Initiative can essentially engage in political activities without any restrictions, said Steve R. Johnson, a Florida State University tax law professor. “The revocation of tax-exempt status does not prohibit them in any way from making contributions,” Johnson said. “It can spend money on any kind of lobbying activity.”

Harry Alford, the black chamber’s longtime president, did not return two phone calls seeking comment.

The 60 Plus Association, a Virginia-based senior citizen advocacy group that supports privatizing Social Security and ending the federal estate tax, has contributed $1.69 million to Consumers for Smart Solar since last year. Like the black chamber and Let’s Preserve, 60 Plus does not disclose its donors.

However, tax filings for Freedom Partners, an organization that receives substantial financial support from industrialists Charles and David Koch, shows it gave $15.7 million to 60 Plus in 2012. American Encore, another organization supported by the Kochs, gave 60 Plus a combined $14 million between 2010 and 2012. James Martin, 60 Plus chairman, did not return a phone call seeking comment.

According to Moncrief, “Everyone knows 60 Plus is a front group for the Koch brothers trying to appeal to seniors.”

Glickman said voters deserve to know that the three non-profits backing Consumers for Smart Solar are indebted to energy and fossil fuel corporations. “Power companies are spending tens of millions of dollars to deceive people into voting for Amendment 1,” she said. “Don’t be misled by this deceptive campaign.”

Miami-Dade Commissioner questions value of $3.7 million Beacon Council subsidy

By Francisco Alvarado, FloridaBulldog.org 

Miami-Dade Commissioner Xavier Suarez

Miami-Dade Commissioner Xavier Suarez

An elected official’s recent inquiry into The Beacon Council, a private agency that is tasked with keeping companies in Miami-Dade and attracting new ones, revealed that 10 firms that supposedly received assistance in the past year have either zero presence or no employees based locally.

County Commissioner Xavier Suarez said his investigation raises doubt about whether Miami-Dade should continue subsidizing The Beacon Council, which it does to the tune of $3.7 million a year.

“My instinct tells me we could use that money more effectively for micro-loans and insurance subsidies for small businesses,” Suarez told Florida Bulldog. “Just about anything else but giving money to The Beacon Council bureaucracy makes more sense.”

Dyan Brasington, The Beacon Council’s executive vice president of economic development, defended the agency’s performance in an email statement that claimed the agency facilitated the creation and retention of 2,840 jobs in the past fiscal year.

“These jobs contribute an estimated $50 million to the local economy and help families thrive and prosper while generating additional indirect jobs,” Brasington said. “The companies that have expanded or located to Miami-Dade will spend $188.2 million in new capital investment and occupy over 1 million square feet of commercial space.”

Suarez colleague Daniella Levine Cava, a Beacon Council board member, also defended the agency’s track record. “I think the Beacon Council has done a good job in the narrow aspect of economic development,” the county commissioner from South Dade said. “What they have done has not been effectively communicated to the public.”

However, Suarez’s probe turned up some troubling evidence when members of his staff attempted to verify The Beacon Council’s assertions in its Third Quarter Key Performance Indicators Report. During the first week in August, Suarez’s staffers conducted on-site visits to the addresses of the 10 firms that were provided to The Beacon Council, according to an Aug. 22 memo the county commissioner sent the agency’s then-CEO Larry K. Williams.

For instance, on Aug. 10, Suarez aide Joanne Padron visited The Doral Professional Center at 7950 NW 53rd St., where Alpha Trade, a construction materials import and export business that received Beacon Council assistance, supposedly had an office suite. Instead, Padron found Offix Solutions, a shared-office space for multiple companies with a single receptionist, who informed her that no one from Alpha Trade was available to meet with her.

Padron was also unable to find any state incorporation records for Alpha Trade or its phone number. On Oct. 21, during a visit to Offix Solutions, the receptionist told a Florida Bulldog reporter that there was no Alpha Trade located in their shared office space and that the company’s CEO, Sergio Santa Ana, was not listed in their directory. “I’ve got an Alpha International,” she said. “But there’s no one with the name Sergio Santa Ana. Maybe they went out of business.”

Santa Ana did not respond to a request for comment sent to an email address listed on Alpha Trade’s Facebook page, which lists the Offix Solutions location as the company’s location.

Another Suarez aide, Ela Pestano, stopped by 2330 Ponce de Leon Boulevard in Coral Gables on Aug. 12 to verify the existence of GeoGlobal USA, a start-up company that is going to import and sell home goods and furniture in the United States and Mexico, according to The Beacon Council’s third-quarter report. The agency claims it helped GeoGlobal by providing contacts, referrals, training and workforce recruitment assistance.

Pestano informed Suarez she found an accounting firm, Hernandez & Co., at 2330 Ponce de Leon Boulevard, but no GeoGlobal. She also visited another address in Doral that GeoGlobal listed in its state incorporation records that turned out to be the headquarters for A Customs Brokerage, a shipping and logistic company. Padron told her boss that individuals at Hernandez & Co. and A Customs Brokerage had never heard of GeoGlobal.

Florida Bulldog visited Hernandez & Co. and A Customs Brokerage the same day as Offix Solutions. A woman at the accounting firm said GeoGlobal was her client and uses 2330 Ponce de Leon Boulevard as a mailing address. She declined to provide Florida Bulldog with a contact person for GeoGlobal. At A Customs, a company representative also said GeoGlobal was a client that used their address, but was not physically located there.

Suarez’s aides turned up similar results for the eight other firms identified in The Beacon Council’s third-quarter report.

According to a Sept. 2 memo from Williams to Suarez, The Beacon Council’s then-CEO informed the commissioner that it was not unusual for new companies like Alpha Trade and GeoGlobal to have temporary office space before establishing a permanent address. “Given the nature of decision making for corporate relocations and expansions, the outcome of your staff’s outreach does not surprise me,” Williams said. “The person knowledgeable about the transaction is not the person at the reception desk and is sometimes in a different office.”

In his response to Florida Bulldog, Brasington said CEOs and executives whose companies receive Beacon Council assistance must attest in writing to the work the agency provides their businesses. “Company leaders often do not share information about location or expansion decisions with employees or even middle management, which is why some employees may not be aware of the assistance provided by The Beacon Council,” Brasington explained. “The economic development process of educating and then recruiting or retaining businesses can be lengthy.”

However, the same week Williams sent Suarez the letter, he resigned as Beacon Council CEO to assume the same role for Atlanta’s Technology Association of Georgia, where he was previously a vice president. The commissioner’s inquest occurred just as The Beacon Council — which relies on $3.7 million in county permitting fees for its $5.2 million annual budget — became an issue in the county mayor’s race. Miami-Dade School Board member Raquel Regalado, who is in a runoff with County Mayor Carlos Gimenez, has made eliminating The Beacon Council one of her campaign promises.

Suarez told Florida Bulldog he held a public meeting earlier this month with Levine Cava and Beacon Council chairman and Greenberg Traurig co-managing shareholder Jaret Davis to discuss his findings. “I stated my views that a lot of people in the business community don’t see the sense in giving $3.7 million to The Beacon Council for promoting economic development,” Suarez said. “I am leaving it in the hands of my colleague, who expressed some of the same concerns I have.”

Levine Cava told Florida Bulldog that The Beacon Council does have room for improvement, but doesn’t believe it should be cut off from county funding. “I found The Beacon Council’s response to Suarez to be credible,” she said. “In each case, there was a logical explanation for what his staff found. There is nothing that cries out a problem exists.”

Developer’s trail of lawsuits backdrop claim of illegal campaign contributions

Miami World Center site.

Miami World Center site.

Editor’s note: The Oct. 19 story below about lawsuits involving developer Arthur Falcone did not note that Tom Derington, his accuser in a recent lawsuit, was found guilty of bank fraud in federal court in Texas in 1999. Derington served 11 months in prison, five years on supervised release and was ordered to pay $48,565 in restitution.

Further, Derington, also known as Tommy Claude Derington, was wanted in Travis County, Texas on a state charge of harrassment that involved an alleged death threat he made against his son-in-law. A police affidavit filed in August described Derington as having an “extensive criminal history with multiple arrests and convictions, including aggravated assault causing serious bodily injury, delivery of controlled substance and impersonating a public servant, among other charges.”

The story also reported that in June 2014 a civil jury assessed $2 million in court costs and attorney fees against Falcone and his brother in a fraud lawsuit stemming from their purchase nine years earlier of Heritage Manor, a Boca Raton cemetery. A judge later reduced those fees to $900,000.

Falcone could not be reached for comment before the story ran. His spokespersons have since called Derington’s complaint “meritless.”

Derington sued Falcone in federal court in September, but soon withdrew the lawsuit only to refile it later in state court. Derington told the Miami Herald he withdrew the suit because a settlement was in the works. Falcone’s spokesperson said that statement is “completely false.”

By Francisco Alvarado, FloridaBulldog.org 

Arthur Falcone, a Boca Raton-based developer behind a downtown Miami project at the center of illegal campaign contribution allegations, has blazed a trail of lawsuits accusing him of swindling business associates and creditors out of tens of millions of dollars during the height of the real estate market crash.

According to two complaints filed in Miami-Dade and Palm Beach circuit courts, as well as filings in Fort Lauderdale bankruptcy court, Falcone committed fraud in three separate real estate-related transactions involving a cemetery, a national development company that went bankrupt and a prominent real estate broker who helped him secure various properties for the 10-block condo, hotel and retail site in downtown known as Miami World Center.

Falcone did not respond to two messages left on his office voicemail and two email requests for comment.

In a fourth and most recent lawsuit filed Sept. 14 in Miami federal court, a construction and plans examiner named Tom Derington sued three companies tied to Falcone and a business partner developing Miami World Center for wrongful termination. In the complaint, which was withdrawn and refiled in state court earlier this month, Derington claimed he was fired after he objected to, among other things, demands that he falsely promise subcontractors work on the project in exchange for their campaign contributions to local candidates.

Derington was convicted of bank fraud in 1999 and spent nearly a year in federal prison.

Specifically, Derington alleged that an executive for Square Edge, a construction company managing the Miami World Center project, instructed him to raise money for the re-election campaigns of Miami-Dade Mayor Carlos Gimenez and County Commissioner Audrey Edmonson, as well as the campaign of Teresa Sarnoff, who last year lost a bid for the Miami City Commission seat vacated by her husband Marc Sarnoff.

“Square Edge provided Plaintiff with a list of names to demand contributions from, sometimes under the false pretense that the proposed professional or subcontractor would get work on the Paramount Ft. Lauderdale project or Miami World Center project, which the Defendants then did not deliver upon,” read the lawsuit by Derington, who said he was fired over his “numerous objections” to improper business practices.

Derington told the Miami Herald last week he withdrew his federal suit because a settlement was in the works. A spokesman for Falcone later called that assertion “completely false.”

A Falcone spokesman called Derington’s complaint “meritless,” stating that Derington “is not and was never an employee of any company tied to Falcone.”

In a written statement, Miami World Center spokesman Aaron Gordon denied any wrongdoing by the Miami World Center developers: “Their fundraising efforts have always been above board and in compliance with the law, which ultimately led to this lawsuit being withdrawn.”

Arthur Falcone

Arthur Falcone

Falcone, along with his brothers Edward and Robert, have been major real estate players in South Florida since the mid-1980s. In 1989, Falcone established Transeastern Homes, a firm that specialized in buying distressed homes in foreclosure brought on by the national recession. The company grew into one of the largest private homebuilders in the U.S. and by 2005, Falcone and his brothers were looking to cash out.

In August of that year, Transeastern merged with Hollywood-based Technical Olympic USA, or TOUSA, another national builder, in a deal that gave Arthur and Edward Falcone 50 percent ownership of the new company. TOUSA paid $857 million to acquire Transeastern’s assets and operations.

However, the joint venture floundered within a year. In November 2006, Falcone hit TOUSA with a notice of default after the company failed to pay him tens of millions of dollars still owed on the deal, according to a 2010 lawsuit filed by TOUSA’s creditors against Falcone, his brother and several entities they controlled.

$50 million fraudulent transfer?

The complaint alleged the Falcones induced a fraudulent transfer of more than $50 million from TOUSA, which went bankrupt by 2008, as part of a settlement releasing the brothers from their ownership stake and any liabilities arising from the company’s implosion as a result of the housing crash.

“The Defendants were intimately familiar with the crashing Florida homebuilding market, were well aware of the financial distress suffered by the Transeastern JV, were familiar with TOUSA’s operations and its various entities, and were privy to internal and publicly available information reflecting the severity of the housing crisis and its impact on the Debtors’ businesses,” the lawsuit alleges. “Upon information and belief, the Defendants received the value of the Fraudulent Transfers, lacking good faith, and with knowledge of their avoidability.”

At the time, Falcone issued a press statement that dismissed the lawsuit as meritless. “Just because in hindsight TOUSA’s creditors think they overpaid, it doesn’t mean they can now go to the courts and demand their money back,” Falcone wrote. “Imagine if you bought your home a few years ago for $300,000 and now it’s worth $150,000. You can’t just go back to the seller and demand your money back. That’s the market.”

The fraudulent transfer claims against the Falcones individually were later dropped. Other counts continue alleging the fraudulent transfer of funds against TEP Holdings, of which Arthur Falcone is chairman and chief executive officer. The case remains pending.

Edie Laquer

Edie Laquer

The same year TOUSA went bankrupt, Miami real estate broker Edie Laquer sued Falcone alleging he squeezed her out of a promised 10 percent ownership stake in Miami World Center without compensating her. Laquer also brokered the deals for the first seven properties used to assemble the site. In April of last year, the 3rd District Court of Appeal reversed the trial court’s decision dismissing Laquer’s complaint. Her lawyers successfully argued that even though the properties went through foreclosure, she should have remained in the Falcone partnership that purchased the parcels from the banks. The case was later settled.

In June 2014, a jury concluded that Falcone and his brother committed civil theft when they purchased the Boca Raton cemetery Heritage Manor from a pair of widows for $6.1 million nine years earlier. The two women sued the Falcones after finding out that their then-attorney, Michael Masanoff, received an allegedly under-the-table payment of $100,000 from the brothers. According to the widows’ trial lawyers, the cemetery was actually worth $40 million in 2005 when the deal closed.

The judge later overturned the jury’s finding of civil theft against the Falcones because the jury awarded no damages relating to the sale of the business and land. The plaintiffs are appealing.

Jurors awarded only $2 million in court costs and attorney fees to the adult children of the plaintiffs Elishka and Kathleen Michaels, who died during the drawn-out legal battle. A judge later reduced the award to $900,000. Under Florida law, the amount automatically tripled because the jurors found “clear and convincing evidence” that the Falcones acted with criminal intent to obtain the plaintiffs’ business and land, according to the jury form.

During the trial, Masanoff — who was disbarred and is now a real estate developer — testified that the Falcones encouraged him to breach his fiduciary duty to the widows, in addition to concealing the $100,000 payoff. In court motions and at trial, Falcone attorney William Cornwell dismissed Masanoff’s testimony by citing a confidential settlement he reached with the Michaels family members.

The Falcones’ appeal of the verdict is pending. In a brief phone interview, Cornwell told Florida Bulldog that the jury reached the wrong conclusion. “We believe the verdict will be overturned,” he said. “And we are vigorously pursuing an appeal.”

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