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

By Francisco Alvarado, 

Miami World Center site.

Miami World Center site.

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. Miami World Center spokesman Aaron Gordon said he could not comment on the lawsuits because he did not represent Falcone in those deals.

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 In the complaint, which was withdrawn earlier this month, Derington claimed he was fired after he objected to, among other malfeasance, demands that he falsely promised subcontractors work on the project in exchange for their campaign contributions to local candidates.

Specifically, Derington alleged 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 suit because a settlement was in the works.

In a written statement, 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 fraudlent 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 publically 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 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.

In June 2014, a jury concluded that Falcone and his brother committed civil theft when they purchased 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 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.

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. However, under Florida law, the amount automatically tripled to $6 million because the jurors found “clear and convincing evidence” that the Falcones acted with criminal intent, 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.”

Broward Health begins lobbyist registration – 12 years and millions in contracts late

By Dan Christensen, 

Broward Health's corporate headquarters in Fort Lauderdale

Broward Health’s corporate headquarters in Fort Lauderdale

Broward Health’s long-lost lobbyist registration policy is, at last, resurrected. Lobbyists looking to influence district policy or the award of profitable contracts must now publicly identify themselves and their clients.

Six lobbyists have registered since the program began Sept. 12 – all representatives of large, out-of-state pharmaceutical or hospital and medical supply companies like Sandoz, Genentech and Carefusion.

Who to watch out for going forward: politically connected local lobbyists like William “Billy” Rubin and Fred Karlinsky, who’ve operated behind the scenes at Broward Health in the past.

Rubin is a confidant of Gov. Rick Scott. Karlinsky was co-chair of Scott’s 2014 statewide campaign finance committee. The governor appoints the board of commissioners that governs the billion-dollar public health system whose legal name is the North Broward Hospital District. reported in May that for 12 years Broward Health had ignored its own lobbyist registration rules, adopted in 2004, allowing lobbyists to operate freely behind the scenes.

That was news to Broward Health’s current board of commissioners.

Broward Health Chairman Rocky Rodriguez and Commissioner Sheela VanHoose

Broward Health Chairman Rocky Rodriguez and Commissioner Sheela VanHoose

Said Chairman Rocky Rodriguez, “You assume these things are being taken care of.” Said Commissioner Sheela VanHoose, who spent two months on the board’s legal affairs committee holding workshops to establish a lobbying policy, “It was a little shock to see.”

Broward Health CEO Pauline Grant announced in May that registration would begin in June, but it took much of the summer to actually get a system in place.

The revised rules require lobbyists to pay an annual $40 fee for each client “before any advocacy can take place.” Lobbyists must declare under oath that the information they provide is “true and correct.” That includes their yes or no response to this question: “Do you have any direct or indirect business association, partnership or financial relationship or live in the same household with or are related to any Broward Health board member, board committee member, employee or agent?”

So far, no lobbyist has answered yes.

Lobbyists must also file annual expenditure reports under oath “disclosing each lobbying expenditures [sic] to any person or entity,” including such items as food and beverage, travel and entertainment expenses. Those reports, however, don’t have to be filed until the July 30 of the fiscal year after registration, so they will likely not be timely.

Unlike the Florida Legislature, the district does not require lobbyists to disclose how much they are being paid to lobby.

The district’s revised lobbying policy forbids “lobbyists and lawyers” from lobbying any Broward Health board members, employees or agents “during the consideration of any contracts and contract negotiations and related discussions. This prohibition shall include, but not be limited to, physician contracts, professional service contracts, services contracts, design-build contracts and construction contracts.”

A list of registered lobbyists is published online.

Broward Health awarded many multi-million dollar contracts during the years its lobbying policy was not enforced. One of the biggest, and most unusual, was an unprecedented 25-year, no-bid deal in 2012 that outsourced the district’s radiation oncology services to 21st Century Oncology, the Fort Myers-based cancer care company. reported in February that at the time of the deal Gov. Scott had an indirect ownership interest in 21st Century Oncology via his $210,000 investment in Vestar Capital Partners, the private equity firm that owns 21st Century.

The governor’s office has said Scott had “no conversation or contact about Vestar Capital or 21st Century Oncology with the North Broward Hospital District.”

Still, Scott’s good friend, lobbyist Billy Rubin, has lobbied at the district and counts 21st Century Oncology among his clients, according to the website of his firm, The Rubin Group.

Miami City Attorney’s Office in another fight – this time with the county ethics commission

By Francisco Alvarado, 

Miami-Dade Ethics Commission wants to know if a Miami assistant city attorney lied to the city commission about a controversial megayacht marina and resort project planned for Watson Island.

Miami-Dade Ethics Commission wants to know if a Miami assistant city attorney lied to the city commission about a controversial megayacht marina and resort project planned for Watson Island.

A City of Miami senior assistant city attorney is trying to block the Miami-Dade Commission on Ethics and Public Trust from reconsidering its decision six months ago to not sanction her for breaking local ethics rules.

In a recent petition filed with the appellate division of the Miami-Dade Judicial Court, Robin Jones Jackson claims the ethics commission doesn’t have the authority to reopen a closed complaint. The complaint alleged that she knowingly gave false statements to city commissioners two years ago when they approved changes to a massive Watson Island development project.

On July 13, the ethics commission voted 3-2 to rehear Jackson’s case after weighing new information presented by Coral Gables-based attorney Samuel Dubbin, who represents Stephen Herbits, a community activist who filed the complaint against the assistant city attorney.

Herbits has been locked in a long-running legal battle with the city to stop a megayacht marina and resort project on Watson Island being developed by Flagstone Property Group. In 2014, the city commission approved a restructured lease agreement with the developer. Herbits claims Jones Jackson was untruthful when she informed city commissioners that Miami was on the hook for $58 million in damages if the deal didn’t go through.

Herbits maintains the city had no liability and that Jones Jackson made her recommendation knowing that the amended lease agreement violated the city charter, thus making the new deal with Flagstone null and void.

“The ethics commission recognized there were serious questions about the quality and objectivity of a staff investigation, so it voted to revisit it,” Dubbin told Florida Bulldog. “No county law prohibits [the commission] from doing so. Otherwise, the commission has no authority over the integrity of the complaint process.”

Miami Senior Assistant City Attorney Robin Jones Jackson

Miami Senior Assistant City Attorney Robin Jones Jackson

Jones Jackson is challenging the ethics commission at a time the City Attorney’s Office faces accusations it’s beholden to developers. Last week, four city commissioners rejected their colleague Ken Russell’s attempt to fire Jones Jackson’s boss Victoria Mendez over her handling of a zoning matter in Coconut Grove. Russell said he lost confidence in Mendez because she withheld public records from him that showed she helped a developer’s attorney bypass a city board’s approval on behalf of his client.

Ethics commission executive director Joe Centorino and ethics commission advocate Michael Murawski, who presents cases to the board, declined comment for this story. Jones Jackson and her lawyers, Joseph Serota and Laura Wendell, did not respond to emails and phone messages requesting comment.

According to Jones Jackson’s petition, the ethics commission lacks jurisdiction to reopen closed investigations that ended in findings of no probable cause. On March 29, the ethics commission found no probable cause to Herbits’ complaint. Her attorneys argue that four months later Dubbin was allowed to make his case in an unusual public session as to why there is probable cause.

The ethics commission acted after Dubbin successfully lobbied his point that Herbits was entitled to present his arguments because he was a personally aggrieved party. Dubbin said the county ordinance governing the ethics commission allows complainants to show they have been personally affected by the alleged violation.

“Irreparable injury”

“The actions of the ethics commission departed from the essential requirements of law, deprived Jones Jackson of her right to due process and confidentiality,” her petition claims. “And its decision has caused and will continue to cause irreparable injury.”

The case shows how difficult it is for citizens who file complaints to prove public officials committed ethics violations. According to a transcript of the July 13 meeting, Dubbin assailed the ethic commission’s practice of adjudicating cases without allowing complainants to present evidence that help prove their allegations or dispute Murawski’s recommendations of no probable cause. Cases are decided in sessions closed to the public and in which only Murawski and attorneys for the accused are permitted to address the board.

Dubbin said he analyzed every complaint adjudicated by the ethics commission from July 2014 to July 2016. He found that Murawski has recommended no probable cause in 66 percent of those cases, and that the ethics commission approved 98.5 percent of Murawski’s recommendations.

Dubbin said Murawski never asked him or his client for documents they had showing Jones Jackson was well aware that Flagstone had already defaulted on its lease and could not sue the city.

“For whatever reason, the advocate never asked for that information, never,” Dubbin told the ethics board. “Some of it was in their file and it was ignored by the advocate.” The lawyer also accused Murawski of “making subjective determinations about Mr. Herbits’ credibility based upon collateral information and incorrect information.”

Dubbin told ethics commissioners there is no county law that prevents them from reversing an earlier decision. “There is nothing in your rules that precludes you from reconsidering it or from sending it back for a reinvestigation,” he said. “And anything that is not precluded, I would submit is allowed.”

Murawski, a former prosecutor, countered that the ordinance creating the ethics commission doesn’t allow for the board members to reconsider cases. He also warned them they would be opening the door to other complainants demanding that their cases be reheard. “From a practical standpoint, I would ask you to take a good hard look at whether or not you want to set a precedent of having … people come back and say, ‘No, no, Murawski screwed up, he didn’t do a good investigation,’ ” the advocate said. “There should be a certain finality for all of the parties involved that’s based on what we have done here and the conclusions that we’ve made.”

However, ethics commission board member Marcia Narine Weldon said she would not have made the motion or voted in March to find no probable cause against Jones Jackson had she seen the documents Dubbin presented.

“The reason I was so troubled with this the last time is I think you ought to be held to a higher standard if you are the city attorney,” Weldon said. “As attorney for the people and attorney for the city, she has to be held to a higher standard.”

Widow of ex-South Florida al Qaeda figure reported in Pakistan hostage swap

By Dan Christensen, 

Al Masra's front page story last month with the story of Pakistan's release of al Qaeda boss Ayman Zawahiri's two daughters and the widow of ex-Miramar resident Adnan Shukrijumah.

Al Masra’s front page story last month with the story of Pakistan’s release of al Qaeda boss Ayman Zawahiri’s two daughters and the widow of ex-Miramar resident Adnan Shukrijumah.

Nearly two years after Pakistan’s army said it killed fugitive terrorist leader and ex-Broward resident Adnan El Shukrijumah, the FBI still hasn’t verified his death. But news reports this month say al Qaeda recently claimed that Shukrijumah’s widow was one of three women released by Pakistan in exchange for the son of the country’s former army chief.

The other women reportedly handed over to al Qaeda in the exchange were the adult daughters of Ayman al Zawahiri, who took over as leader after Osama bin Laden was killed by U.S. forces in May 2011.

The Long War Journal, a project of the nonprofit, nonpartisan Foundation for the Defense of Democracies, first reported the story Sept. 2. Al Qaeda’s unverified claims about the exchange were made in late August in Al Masra, a magazine published by an organization linked to al Qaeda in the Arabian Peninsula.

The U.S. State Department had offered a $5 million reward for information leading to the capture of Shukrijumah, chief of al Qaeda’s North American operations, before the 39-year-old former Miramar resident was reported slain during a helicopter gunship assault on a hideout in a mountainous region of northwest Pakistan on Dec. 6, 2014. Shukrijumah’s widow and four children were reportedly taken into custody following a gun battle.

The reward has since been canceled, but the FBI continues to list Shukrijumah as one of its “Most Wanted Terrorists.”

In 2003, FBI Director Robert Mueller announced the government's manhunt for Adnan Shukrijumah

In 2003, FBI Director Robert Mueller announced the government’s manhunt for Adnan Shukrijumah

“The United States Government has not yet confirmed the death of El Shukrijumah,” the FBI said in a statement released to Florida Bulldog last week. “He will remain on the FBI’s Most Wanted Terrorists List until the time a confirmation is made.  The confirmation process, which is international in scope and quite involved, remains ongoing. Therefore, the FBI will not comment on it.”

Shukrijumah, indicted in 2010 for his alleged role in plots to attack New York City’s subway system and London’s Underground, was a key figure in the FBI’s Sarasota investigation of a Saudi couple, Abdulazziz and Anoud al-Hijji, that declassified FBI documents say had “many connections” to “individuals associated with the terrorist attacks on 9/11/2001.” The couple came to the FBI’s attention after neighbors reported they’d moved abruptly out of their home and returned to Saudi Arabia about two weeks before the attacks – leaving behind their cars, clothes, furniture and other personal items.

Florida Department of Law Enforcement reports obtained by Florida Bulldog say that Wissam Hammoud, a terrorist associate imprisoned on unrelated charges, told the FBI in 2004 that Abdulazziz al-Hijji introduced him to Shukrijumah at a soccer game at the property of the Islamic Society of Sarasota and Bradenton in 2000 or 2001.

The Long War Journal and the Hindustan Times reported this month that al Qaeda sources first announced the release of the three women in early August. At the time, no mention of an exchange was made, but The Journal added, “Independent accounts indicate the global jihadist organization had been trying to secure their release in exchange for the kidnapped sons of Pakistan’s elite.”

Shukrijumah’s widow

The Journal said Al Masra identified Shukrijumah’s widow as Sumaiya Murjan Salem. She was identified as the daughter of the late Sheikh Murjan Salem al Jawhari. In an interview, Journal reporter Thomas Joscelyn described Salem al Jawhari as a “Zawahiri loyalist, a guy who was prominent in ideological circles.”

Shukrijumah’s widow and Zawahiri’s daughters, and their children, were reportedly sent to Egypt. Al Qaeda’s boss, 65, was born in Egypt.

The Journal reported that al Qaeda claimed the women were released in exchange for the son of General Ashfaq Pervez Kayani, who stepped down as army chief in 2013. Before that, he headed Pakistan’s Directorate General for Inter-Services Intelligence.

The Indian Express later cited unnamed “Pakistani military sources,” as denying that there was a swap for the younger Kayani, but said the sources conceded that the women were exchanged, for the son of former Prime Minister Yousuf Raza Gilani.

Ali Haider Gilani, however, was rescued in a joint U.S.-Afghan raid in May.

The Journal reported that As Sahab, “a propaganda arm for al Qaeda’s senior leadership,” had released a threat in mid-July about the “treacherous” Pakistani army’s detention of the women. It identified Umaymah al Zawahiri and Fatima al Zawahiri, both in their mid-30s, as the wives of dead al Qaeda commanders. Sumaiya Salem was listed as Shukrijumah’s widow.

“Al Qaeda accused the Pakistanis of holding the three women and their children on the ‘orders of American intelligence’ since 2014,” The Journal story said. “The jihadists claimed at the time that the negotiations to free them had ‘failed.’ Al Qaeda said it would hold the Pakistani government and its ‘American masters’ responsible.”

“On Aug. 5, al Qaeda’s social media channels lit up with news that Zawahiri’s daughters and Shukrijumah’s widow had been released,” the story said.

Gov. Scott’s blind trust and a company with a massive pollution problem

By Dan Christensen, 

Gov. Rick Scott

Gov. Rick Scott

When Gov. Rick Scott put $133 million of his assets into a blind trust two years ago, he included his shares of Mosaic, 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.

Scott’s ownership interest in Mosaic was relatively small – he valued it at about $14,000 on the list of assets he placed in the blind trust – yet it provides another example of how the governor’s sprawling personal finances conflict, or appear to conflict, with his official duties.

Does Gov. Scott still have an ownership interest in Mosaic? Has it increased? On Wednesday, his office released a statement saying the governor is unaware of any sales, purchases or changes in the trust because it is “under the control of an independent financial professional.”

The trustee is New York-based Hollow Brook Wealth Management, whose chief executive is longtime Scott crony Alan Bazaar.

U.S. Securities and Exchange Commission documents filed earlier this year state that Bazaar also serves as an advisory board member of G. Scott Capital Partners, the private equity firm co-owned by First Lady Ann Scott and run by a trio of the governor’s former employees at Richard L. Scott Investments. Both the governor and Mrs. Scott have been substantial investors in Scott Capital’s investments.

Republican Gov. Scott’s handpicked Secretary of the Department of Environmental Protection, Jon Steverson, is now overseeing Mosaic’s response to the massive dump of contaminated water that occurred in late August when a 45-foot wide sinkhole opened at Mosaic’s New Wales fertilizer manufacturing plant in Mulberry, about 55 miles east of Tampa.

The Mosaic plant sinkhole in what was a large pond atop a gypsum stack. When the sinkhole opened, millions of gallons of acidic wastewater drained into an aquifer used for drinking water. Photo: WFLA Tampa

The Mosaic plant sinkhole in what was a large pond atop a gypsum stack. When the sinkhole opened, millions of gallons of acidic wastewater drained into an aquifer used for drinking water. Photo: WFLA Tampa

“Governor Scott will hold all responsible parties accountable for their actions and has directed the Department of Environmental Protection (DEP) to expedite their investigation,” Scott’s communications director Jackie Schutz said in a Wednesday statement. “Governor Scott has also directed the Department of Health to partner with DEP in their investigation to ensure all drinking water in the area is safe. We know Mosaic has taken responsibility, but our job is to ensure 100 percent safe drinking water.”

Earthjustice is a large nonprofit environmental law firm. Informed that Gov. Scott previously disclosed his ownership of Mosaic stock, Senior Associate Attorney Bradley Marshall said, “We’re always concerned about the governor’s ties to industry. We certainly do think the governor has not been a good protector of the environment in Florida. We’ve already seen veterans at DEP fired for doing their jobs.”

Mosaic, based in Plymouth, Minnesota, is a Fortune 500 company (NYSE: MOS) with extensive operations in Florida, where it employs 4,000 workers. According to the company’s web site, it mines phosphate rock from nearly 200,000 acres of Mosaic-owned land in Central Florida and potash from mines in Canada. The products are processed into crop nutrients that are shipped around the world. Mosaic’s revenues last year were about $9 billion.

Mosaic politically active

Mosaic Fertilizer LLC, the company’s principal operating subsidiary in Florida, is politically active. State records show it fields a team of 14 executive branch lobbyists in Tallahassee. Since 2008, Mosaic entities have contributed about $1.9 million to political candidates and causes, with about $840,000 going to the Republican Party of Florida and the Florida Republican Senatorial Campaign Committee, records show.

In October 2015, Mosaic Fertilizer LLC agreed to a nearly $2 billion settlement with the U.S. Environmental Protection Agency (EPA) regarding charges that its New Wales facility and other plants in Florida as well as Louisiana improperly handled 60 billion pounds of hazardous waste. Specifically, EPA inspectors found that Mosaic had mixed certain types of highly corrosive substances like sulfuric acid from its fertilizer operations with phosphogypsum and wastewater from its mineral processing. Sulfuric acid is used to extract phosphorus from mined rock.

Phosphogypsum is the radioactive byproduct that’s created when phosphate is turned into fertilizer.

An EPA press release at the time said the settlement “will ensure that wastewater at Mosaic’s facilities is properly managed and does not pose a threat to groundwater resources.’’

Gypsum stacks at a a phosphate plant in Florida Photo: Engineering and Mining Journal

Gypsum stacks at a a phosphate plant in Florida Photo: Engineering and Mining Journal

The sinkhole formed beneath one cell of a mountainous phosphogypsum stack topped with a 250-million-gallon pond filled with acidic wastewater from the fertilizer manufacturing process.

According to the company, plant workers noticed a decline in the water level on Aug. 27. While Mosaic quickly notified the DEP and the EPA, no public announcement was made until Sept. 15.

“A sinkhole formed under the west cell that we believe damaged the liner system at the base of the stack,” said the company’s initial press release. “The pond on top of the cell drained as a result, although some seepage continues.”

Mosaic went on to say it “immediately implemented additional and extensive groundwater monitoring and sampling regimens and found no offsite impacts.”

Company officials who appeared Tuesday before the Polk County Commission reiterated, “No water from the stack has migrated off our property.” The company also apologized for not notifying the public sooner.

Gov. Scott’s blind trust – his second while in office – was created under the terms of a secret trust agreement signed in June 2014. His office has declined to make the agreement with the trustee public.

Scott acquired Mosaic while in office

Gov. Scott acquired his Mosaic investment while in office. His first blind, created in April 2011 a few months after he was sworn in, disclosed no ownership of Mosaic shares.

Florida’s qualified blind trust law was passed by the Legislature and signed into law by Scott in 2013. The idea was to prevent conflicts of interest by blinding public officials and the public to their holdings, and also afford those who use them immunity from prohibited conflicts.

“The Legislature finds that if a public officer creates a trust and does not control the interests held by the trust, his or her actions will not be influenced or appear to be influenced by private considerations,” the law says.

But Florida’s blind trust law, crafted with mega-wealthy Gov. Scott in mind, did not contemplate that such a trust could at times become a see-through entity, making it ineffective.

For example, in March 2014 Florida Bulldog reported that SEC records showed Gov. and Mrs. Scott had recently sold $17 million worth of shares in Argan (NYSE:AGX), a company whose principal subsidiary builds and operates power plants in Florida and elsewhere.

Florida Bulldog reported in July 2014 about Scott ownership of shares in a natural gas pipeline firm, Spectra Energy, looking to build the $3-billion Sabal Trail pipeline across North and Central Florida.

In 2013, Florida’s Public Service Commission – five members appointed by Gov. Scott – unanimously approved construction of Spectra’s controversial pipeline venture with Florida Power & Light. Florida’s Department of Environmental Protection subsequently approved it, too.

What didn’t become known until the following year, however, was that Scott had investments totaling $110,000 in Houston-based Spectra and DCP Midstream Partners, a natural gas limited partnership 50 percent owned by Spectra. Scott only disclosed those interests in June 2014 when he closed his first blind trust and created his second blind trust while qualifying to run for re-election.

Florida’s ethics laws generally prohibit public officials like the governor from owning stock in businesses subject to state regulation, or that do business with state agencies. A similar prohibition exists on owning shares in companies that would “create a continuing or frequently recurring conflict” between an official’s private interests and the “full and faithful discharge” of his public duties.

The governor has said he was unaware of his Spectra investments because they were in his blind trust.

In February, Florida Bulldog reported that in 2012 Scott owned a $210,000 stake in a private equity firm that owned Fort Myers-based 21st Century Oncology when it was awarded a unprecedented 25-year, no-bid contract to supply radiation oncology services to taxpayer-supported Broward Health. An all-Republican board of commissioners appointed by Scott and his Republican predecessor made the award.

A spokeswoman for the governor said Scott wasn’t aware that 21st Century had sought the Broward Health contract and that no one at the private equity firm, Vestar Capital Partners, or 21st Century, had asked him to try to influence the hospital district’s selection process.

Broward courts accused of nurturing double standard of justice for poor, minorities

By Dan Christensen, 

Broward Chief Judge Peter Weinstein, left, and Public Defender Howard Finkelstein

Broward Chief Judge Peter Weinstein, left, and Public Defender Howard Finkelstein

A letter from the U.S. Justice Department urging state judges across the country to eliminate “common” court practices that illegally trap poor defendants in cycles of debt and jail is reverberating in Broward with accusations that courts here favor the well-off.

Broward Public Defender Howard Finkelstein once again is leading the charge for systemic reform as evidenced by a series of testy recent written exchanges with Broward Chief Judge Peter Weinstein. Among other things, Finkelstein wants the courts to scrap the use of so-called “convenience bail bonds” the poor often cannot afford, and accuses judges of fostering a “double standard” of justice by ignoring the disparate treatment of minorities and the indigent.

“This jurisdiction’s practices have effectively institutionalized racism by disproportionately incarcerating poor minorities for decades,” Finkelstein concluded Sept. 2 in his most recent letter to Weinstein.

In an interview on Friday, Weinstein replied, “I don’t know where he gets that from. Every judge ascribes to the saying that justice is blind and ignores race, creed, national origin and gender in ruling. Howard can absolutely write what he wants, but that doesn’t necessarily make it so.”

The Department of Justice’s March 14 letter, signed by Deputy Assistant Attorney General Vanita Gupta, followed a gathering of judges, court administrators, lawmakers, prosecutors, defense attorneys and others last December to discuss fines and fees imposed by state and local courts. The letter said the convocation, held in the wake of the department’s investigation of racially troubled Ferguson, Missouri, “made plain that unlawful and harmful practices exist in certain jurisdictions throughout the country.”

U.S. Attorney General Loretta Lynch described those illegal practices as “the criminalization of poverty.”

The letter explained it was issued to help the courts ensure that they operate fairly, noting the illegal enforcement of court fines and fees can have “profound” effects on low-income persons accused of “misdemeanors, quasi-criminal ordinance violations or civil infractions.”

“Individuals may confront escalating debt; face repeated, unnecessary incarceration for nonpayment despite posing no danger to the community;

lose their jobs; and become trapped in cycles of poverty that can be nearly impossible to escape,” the nine-page letter said. “To the extent that these practices are geared not toward addressing public safety, but rather toward raising revenue, they can cast doubt on the impartiality of the tribunal and erode trust between local government and their constituents.”

A caution from Justice

Among other things, the letter cautioned that courts “must not employ bail or bond practices that cause indigent defendants to remain incarcerated solely because they cannot afford to pay for their release.”

Finkelstein, a state constitutional officer, filed a public records request with the Broward court to obtain a copy of the Justice Department’s letter. Weinstein later explained that he “did not provide the letter to any stakeholder as it was addressed to the courts to assist with review of local practices and procedures.”

Weinstein said Friday he’s waiting on Florida’s Office of the State Court Administrator. “They’re reviewing it and will come back and advise us,” he said. “But I really don’t believe we are doing some of the things we are accused of. We don’t put people in jail because they can’t pay a fine.”

According to Finkelstein’s Sept. 2 letter, however, “Individuals are often held in jail following a magistrate hearing for a minor offense simply because they cannot afford to post the bond.”

Beyond the fundamental question of fairness is the impact that bond requirements have on Broward’s chronically overpopulated jail system, which has been under a federal consent decree and monitoring for decades.

In July, the Sun-Sentinel reported the findings of court-appointed jail population expert Dr. James Austin, who said Broward’s jails typically house 4,500 to 4,600 people, with 5,144 beds, but when the population exceeds 85 percent of capacity – or about 4,400 inmates – the system becomes strained.

According to the paper, Austin’s report went on to say that at the time of his analysis in 2015 about 300 inmates were being held on bonds of $100 or less.

The Eighth Amendment to the U.S. Constitution says “excessive bail shall not be required, nor excessive fines imposed.” Federal courts have interpreted that to mean that a defendant’s bail cannot be set higher than an amount that’s likely necessary to ensure his presence at trial.

Defendants charged with first-degree misdemeanors like petty theft or possession of a small amount of marijuana must post a $100 bond to get out. Those charged with a misdemeanor of the second degree, such as disorderly intoxication or loitering will need $25.

But even those small amounts can be difficult to scrape up for the homeless or the otherwise down and out.

‘Follow other jurisdictions’

In his summer correspondence, Finkelstein urged Weinstein to “follow other jurisdictions and begin implementing the release of misdemeanants without monetary bond.” He cited Calhoun, Ga., which in January “implemented recognizance release procedures” following a federal judge’s order.

The chief judge responded to Finkelstein that Broward judges do consider non-monetary releases “and divert as many individuals as possible to the Broward County Sheriff’s Pre-Trial Release Program.” The program includes screening, assessment and, for those who get out, monitoring.

Yet current bond practices that allow moneyed defendants to post a bond and walk free until trial “disproportionally affects minorities and the indigent,” according to Finkelstein.

“Diverting individuals to the pre-trial release program creates a double-standard wherein those with money are not required to be supervised by the Sheriff’s Office, while those without money require supervision,” Finkelstein wrote in his Sept. 2 letter.

In Friday’s interview, Weinstein said he is opposed to releasing all misdemeanor defendants on their own recognizance, noting that a “staggering” number of warrants are issued every year for defendants who fail to show up for trial.

“Whether to release is within the discretion of the judge,” Weinstein said. He cited domestic violence as a crime that is inappropriate for such treatment.

“Domestic violence may be a misdemeanor, but the amount of psychological abuse and previous physical abuse that a spouse may have suffered may place them at risk of serious emotional harm an even death,” Weinstein said.

In 2015, following complaints from State Attorney Mike Satz’s office, the court revised its bond schedule to require misdemeanor defendants charged with violent offenses such as battery, arson and domestic violence to appear before a First Appearance court judge before being eligible to post bond.

Finkelstein, however, argues that Broward’s bond schedule should be abandoned and that all defendants should be brought before a First Appearance court judge “to allow for individualized release conditions.”

“Individual determinations, however, require a 24-hour magistrate. This circuit has decided not to place such a ‘hardship’ on the judiciary, but instead place the true hardship on the indigent,” Finkelstein wrote.

Jack Nicklaus, partners pay $400K to settle charges they filled wetlands at golf club

By Francisco Alvarado, 

The Bear's Club golf course in Jupiter.

The Bear’s Club golf course in Jupiter.

Golf legend Jack Nicklaus has given up a legal battle over federal accusations that his companies violated the Clean Water Act by disturbing environmentally protected wetlands in The Bear’s Club, a private golf course community he built 17 years ago.

Last month, U.S. District Judge William P. Dimitrouleas signed off on a consent decree between the federal government and The Bear’s Club Founding Partners Ltd, four related companies and three of Nicklaus’ development partners to settle a lawsuit filed last October by the Department of Justice. The defendants are required to pay a $400,000 civil penalty and offset the environmental impact done to two patches of wetlands in The Bear’s Club 369-acre property that were filled.

Eugene Stearns, a Miami-based lawyer representing The Bear’s Club Founding Partners, told Florida Bulldog that his client did not admit to any wrongdoing. “The $400,000 is a fraction of what it would cost to litigate this case to its conclusion,” Stearns said. “It was a business decision, and The Bear’s Club believes it didn’t violate any federal law.”

South Florida U.S. Attorney Wifredo Ferrer said in a statement that the $400,000 penalty “sends a message to anyone who fails to abide by our nation’s environmental laws that they will be held accountable for their non-compliance.”

He added: “When wetlands are filled in violation of the Clean Water Act, the loss is felt not only today, but by all generations to come.”

In 1999, the U.S. Army Corps of Engineers issued Nicklaus and his business partners Ivan Charles Frederickson and Robert Whitley a permit allowing them to fill certain wetlands in their massive Jupiter property for the purpose of building a residential golf community. However, the Corps also required The Bear’s Club to preserve certain wetlands in their natural state.

According to its web site, the 270-acre The Bear’s Club was founded in 1999 by Nicklaus and his wife, Barbara. Nicklaus is chairman of the board. Membership is by invitation only.

In the complaint, government attorneys accused The Bear’s Club and its developers of filling close to an acre of wetlands in 2010 without permission from the Corps. The prosecutors alleged it was done to relocate a tee box, improve golfing conditions on the club’s 15th hole and make room for the development of five residential lots. Nicklaus and company ignored the Corps’ denial to modify the original building permit, which included an easement agreement to set aside several acres as protected wetlands, the lawsuit alleged.

Stearns disputed the government’s interpretation of what the original 1999 permit allowed The Bear’s Club to do on the property. He said his client was allowed to make changes to conservation easements as long as he received approval from the South Florida Water Management District. Stearns said The Bear’s Club did not have to go back to the Corps.

“The Bear’s Club got state approval and paid state mitigation fees,” Stearns said. “Then the feds came along and were like, ‘Oh no, we didn’t approve it.’ ”

Stearns also criticized the Corps for going after The Bear’s Club for what he called “minor infractions” when the federal agency should be focused on minimizing the impact of the contaminated runoff water from Lake Okeechobee.

“Who is pumping waste into the Indian River every day?” Stearns said. “Yet, here we are talking about two tiny areas of a golf course that is the perfect marriage between the environment and private development. The Bear’s Club has preserved more wildlife and nature than it has taken away.”

9/11 terrorists, submersibles and an untold Fort Lauderdale story

By Dan Christensen, 

A submersible diver propulsion vehicle like those purchased by a 9/11 hijacker.

A submersible diver propulsion vehicle like those purchased by a 9/11 hijacker.

On September 12, 2001, Fort Lauderdale businessman Bill Brown’s morning routine began like most others. After dropping his young daughter off at day care, the widower drove to work at his marine accessories store, The Nautical Niche.

What Brown says happened next was anything but ordinary. The parking lot of his store at 2301 S. Federal Highway was filled with federal agents and police.

“As soon as I arrived, they asked if we could go inside and talk,” said Brown. “They gave me a name and asked me who the person was. I wasn’t familiar with the name and I said, ‘Why do you ask?’ An agent said that he and several other men were the ones who flew into the World Trade Center and the Pentagon” the day before.

Confused, Brown replied that he knew nothing about the attacks. “Well, your phone number was the most prominent on his call list and it looks like you had a substantial relationship together,” an agent said. “We want to know his association with you.”

Agents from the FBI, CIA, U.S. Customs and Immigration were present that morning, but it was the FBI that took the lead, Brown said. They copied his sales records and later had Brown take a lie detector test in which he was asked only a couple of questions about his patriotism.

“I gave them complete access to our computer and anything I had,” Brown said. “We come to find out…they were customers of mine.”

Bill Brown

Bill Brown

Brown said it was determined that one or more hijackers had purchased between four and eight K-10 hydrospeeder submersibles in multiple transactions at a cost of $20,000 apiece. The now-retired Brown, 60, recalled that one or two of those high performance diver propulsion vehicles was shipped to Singapore, while another was sent to a location in the Northeast U.S. He recollects that shell companies were used in some transactions.

“They were sent all over,” said Brown, who told the South Florida Business Journal in 2002 that his store, which catered to the desires of super-rich yacht owners, had gross revenues of more than $6 million in 2000.

Brown, who Florida corporate records show sold his business in 2007, does not recall the shipping addresses, or the names of the recipients for those pre-9/11 transactions. Nor does he remember the name of the hijacker(s) who purchased them, either in person or via the internet.

A ‘significant cell’ broken

Brown does remember, however, that an FBI agent later told him the Singapore sale was traced back to its recipient and that “a significant cell” of terrorists was broken up as a result.

The FBI in Miami declined a detailed request for comment. Instead, a spokesman suggested that a reporter file a Freedom of Information request, a process that can take years.

The matter remained out of public view for 15 years until Brown came forward after seeing an advance newspaper article about Thursday’s 9/11 panel discussion at Nova Southeastern University hosted by the Florida Bulldog. He said investigators from the 9/11 Commission, or its predecessor, Congress’ Joint Inquiry into 9/11, never contacted him.

The Joint Inquiry’s co-chairman, former Florida U.S. Senator Bob Graham, said in an interview that he was unaware of the FBI’s 15-year-old investigation of the submersibles purchase by a 9/11 hijacker.

“This is potentially significant. Why were we not made aware of this? You’ll need to ask the FBI why they didn’t feel, as they apparently felt with information about what happened in Sarasota, that this wasn’t worthy of sending up the line.”

Graham referred to an FBI investigation of a Saudi family in Sarasota who moved abruptly out of their upscale home about two weeks before the terrorist attacks, leaving behind their cars, clothes, furniture and other personal items.

Florida Bulldog, working with author Anthony Summers, disclosed the existence of that investigation in September 2011, and reported that agents found evidence – including gatehouse entry logs and photos of license plates – that Mohamed Atta and other hijackers had visited the residence of Abdulaziz and Anoud al-Hijji. Reports later released by the FBI said the family had “many connections” to persons associated with the terrorist attacks.

The FBI quickly identified the hijackers using flight manifests, information in recovered baggage and documents found where the hijacked jets crashed in New York, Washington and Pennsylvania. Some names, like that of ringleader Mohamed Atta, appeared in news stories the next day.

What plans the al Qaeda hijackers or their leaders had for the submersibles is not known. However, in 2003 the Christian Science Monitor reported that “one of the biggest concerns” of U.S. officials at the time was that terrorists were targeting ports and ships. The newspaper cited a Department of Defense exercise “Impending Storm” that simulated several types of ship-borne attacks on U.S. cities.

al Qaeda and mini-subs

In 2013, CNN reported about a 17-page letter found at Osama bin Laden’s Pakistan compound that laid out a detailed al Qaeda strategy for attacking targets in the U.S. and Europe. The letter was written to bin Laden in March 2010 by senior al Qaeda planner Younis al-Mauretani, and among other things discussed using “mini-submarines” to plant explosives on undersea pipelines, CNN said.

Brown kept no business records after he sold The Nautical Niche, and his story is not documented in local public records. For example, Fort Lauderdale police have no record of a service call to The Nautical Niche on September 12, 2001. A department records official, however, said that back then calls to assist another agency were sometimes not documented.

Brown has talked privately about his experience over the years.

“He told me about the incident that happened to him back then,” said Broward Assistant State Attorney Tim Donnelly. “His dad worked in the Kennedy Administration.”

Donnelly was the prosecutor who tried and convicted Robert Stapf in September 2001 for the 1998 stabbing murder of Brown’s wife, Caron.

“I was on the witness stand in trial,” said Brown. “Someone came crashing in the courtroom’s back door screaming, ‘We’re under attack! Someone flew into the World Trade Center!”

Donnelly recalled that Judge Dan True Andrews quickly suspended court for the rest of the day. The next morning, the feds were waiting for Brown at The Nautical Niche.

Brown’s former bookkeeper and sales assistant, Adelle Savage of Delray Beach, said he told her what happened shortly after she began working at The Nautical Niche in 2002 or 2003.

‘I can attest to that’

“In the course of conversation…he told me about how when he arrived that morning all the cops and agents were there. They thought he was connected before they realized that he had no idea who he was selling to,” said Savage. “I can attest to that.”

Savage also said that on several occasions Miami FBI agents David Grazer and George Nau came to the store to see Brown. Brown identified the same agents in a separate interview, saying he “maintained a relationship with the FBI handlers who kept on eye on me.”

“Obviously, my life was at risk for cooperating with the feds. We didn’t know if some of these people were still down here or what,” Brown said.

Brown described The Nautical Niche, which displayed a yellow submarine in its front window, as a kind of Sharper Image for yacht owners. The Business Journal’s 2002 story reported The Travel Channel had “included The Nautical Niche on its list of places for a show called, ‘How to Spend a Million.’ ”

Brown said his clientele were often billionaires, like Microsoft co-founder Paul Allen, and included various Middle Eastern royalty, including members of Saudi Arabia’s ruling House of Saud.

The Nautical Niche’s sale of the submersibles that interested federal agents, however, was different from the company’s other large transactions because the purchasers paid cash. “They would go to my bank and make counter deposits,” said Brown. The amounts deposited were about $5,000, low enough to avoid federal reporting requirements.

At the time of the sales, Brown didn’t question the transactions. “In the yachting business there’s a lot of anonymity. You don’t ask questions. People like their privacy.”

All Aboard Florida’s plan for passenger train service from Miami to Orlando in jeopardy

By Ann Henson Feltgen, all-aboard-florida

All Aboard Florida’s plan to operate regular passenger train service between Miami and Orlando is in jeopardy following a federal judge’s order questioning the company’s ability to borrow $1.75 billion in taxpayer-subsidized federal bonds to pay for the project.

At the same time, in a lawsuit filed by two Florida counties looking to block the project, the judge found that the U.S. Department of Transportation (DOT) ignored federal law when it issued bonding authority for Phase II of the private rail project from Cocoa to Orlando.

Another hearing in the case is set for Sept. 13, the same day DOT and All Aboard Florida (AAF) must file their formal answers to the complaint.

Phase l of the ambitious project, creating a passenger route and terminals at three stops along the Florida East Coast railroad line between Miami and Cocoa, is well underway. It is Phase II that is now precarious.

AAF, whose parent company – Florida East Coast Industries – is owned by the hedge fund Fortress Investment Group, approached the state more than two years ago with a plan to build and operate a privately owned railroad that would allow passengers to travel from Miami to Cocoa and from there to Orlando. AAF claims that trains would shave at least an hour off the drive time by car.

Railroad depots are under construction in Miami and Fort Lauderdale; a second set of tracks is being installed, and new engines and passenger cars are being built. AAF estimates that both phases will now cost more than $2.9 billion, excluding the cost of easements and land purchases it has already made.

But a lawsuit by Martin and Indian River counties, which challenged DOT’s bonding authority in federal court in Washington, D.C. in April 2015, has gained traction as their attorneys fended off DOT’s motion to dismiss the case while uncovering evidence that All Aboard Florida has little or no money in hand to begin Phase II construction.

Judge finds ‘legitimate questions’

On Aug. 16, after listening to both sides, U.S. District Court Judge Christopher R. Cooper said the evidence he saw raised “legitimate questions” about AAF’s commitment to Phase II without obtaining DOT’s private activity bonds.

Private activity bond-based “financing is not just the ‘current financing plan’ for the project – it appears to be the only financing plan,” the judge said.

Cooper’s finding allowed the two counties to continue to pursue their lawsuit alleging DOT violated the National Environmental Protection Act (NEPA) as well as federal law by approving $1.75 billion in tax-free bonds.

AAF, contacted several times by Florida Bulldog with requests for comment, did not respond. A U.S. Department of Transportation spokeswoman said the agency would not comment on pending litigation.

Any project that qualifies as a major federal action, which this project does according to the judge’s ruling, must comply with NEPA. The act provides for project reviews in this case by the Federal Railroad Administration, U.S. Army Corps of Engineers, U.S. Coast Guard, Federal Aviation Administration, Federal Highway Administration, U.S. Fish and Wildlife Service and the National Marine Fisheries Service.

An Environmental Impact Statement analyzes “a wide range of potential environmental and other consequences of the project and identified and evaluated measures that would avoid, minimize or mitigate impacts that would result from the project,” according to court documents.

A draft of that document was made public and comments taken, but then it was basically shelved, according to Indian River County Attorney Dylan Reingold.

“The evaluations were completed, but no record of decision was ever published,” said Reingold.

That action took place after AAF applied for a $1.6-billion loan through the Railroad Rehabilitation and Improvement Financing program in early 2014. Such loans are for the development and improvement of railroad tracks, equipment and facilities. The loan wasn’t approved, and AAF court filings say the company is no longer seeking that loan.

All Aboard Florida’s plan

In August 2014, AAF made another attempt at financing. It asked the U.S. Department of Transportation for $1.75 billion in tax-exempt bonds, which would mean up to $600 million in lost tax revenue over 10 years, according to court documents.

Four months later, DOT provisionally agreed to finance the $1.75 billion using tax-exempt private activity bonds (PABs). But the agency added several conditions, including a requirement that the bonds be sold by July 1, 2016, a deadline later extended to Jan. 1, 2017. The project must also complete the NEPA environmental review and prohibited from using the bond proceeds until 45 days following the issuance of the final environmental impact statement.

According to attorney Reingold, however, “they did this backwards. You have to go through a full NEPA analysis and Historic Preservation evaluation before authorizing allocation of funds.”

While DOT took the position that NEPA review was not required because the project is not a major federal action, Judge Cooper disagreed.

“The Court finds that the project does constitute major federal action,” he wrote in his ruling.

Without waiting for the NEPA findings, All Aboard Florida attempted three times last year to sell the bonds, each time with different terms, according to the judge’s findings. There were no takers, according to court records.

“NEPA is far more important than people realize,” said Steven Ryan, an attorney representing Martin County in this case. “This is a major procedural violation of environmental law.”

AAF initially told the court that it had $405 million in private debt funding held in escrow to begin construction of Phase II. In later court filings, however, AAF officials said that the $405 million is not for Phase II along with an apparent explanation of what the money is to be used for. The explanation was redacted from the public record.

That change was troubling for the court.

“Contrary to the court’s earlier understanding, [documents] do not show that AAF had already arranged financing for a significant portion of Phase II’s cost,” the judge wrote.

The need for taxpayer-subsidized bonds

AAF has said it can finance the project without government funding, yet also that it would be difficult if not impossible without the taxpayer-subsidized bonds.

AAF president Michael Reininger stated in a deposition that not approving the sale of the tax-exempt PABs “would certainly disrupt the current financing plan, make the project more expensive to complete and may delay its progress.”

In a letter to Paul Baumer of DOT’s Office of Infrastructure Finance and Innovation that emerged during discovery, Reininger went further, calling the funding a “linchpin for completing our project” and “a crucial factor in ensuring our project is financed and completed.”

According to The Bond, there is little interest in the market for high-risk, high-return bonds for a variety of reasons.

The owner of AAF’s parent company apparently cannot help. Court documents state that Fortress’ market capitalization has shrunk by nearly half in the past 14 months.

Likewise, Florida East Coast Investments, AAF’s parent company, has significant debt obligations coming due in three to four years, according to court documents.

While AAF appears to have no funding for Phase II, it does have equity in train stations, which it could sell, according to Ryan.

“You know, all along AAF has claimed that this is a private entity, but it is totally dependent on subsidies,” he said. “They should knock off this fiction. They have their hands in every government pocket they can find.”

Miami U.S. Attorney’s Office accused again of spying; A ‘mole’ in the defense camp?

By Dan Christensen, 

Defense lawyers Marc Nurik, left, and J. David Bogenschutz

Defense lawyers Marc Nurik, left, and J. David Bogenschutz

For the second time this summer, Miami federal prosecutors stand accused of spying on the defense – this time in the case of an alleged $28-million, international sweepstakes fraud.

As described in court papers, the “invasion of the defense camp” appears to have begun in February when one of four defendants in the case cut a secret plea deal with the U.S. Attorney’s Office and began working undercover.

The informant, John Leon of Wilton Manors, participated in defense team strategy sessions for three months as a government “mole,” obtaining documents and listening to privileged discussions about witnesses and other sensitive defense matters and reporting back to the government, the documents say.

The fallout: defense accusations that the case has been irretrievably “tainted” due to constitutional violations of the attorney-client privilege.

“For a period exceeding two months, Leon, acting as a government informant with the government’s acquiescence, invaded the defense camp where he learned critical defense strategies by actively participating in numerous meetings, after already accepting a government plea and agreeing to cooperate,” say court papers filed by attorneys Marc Nurik of West Palm Beach, J. David Bogenschutz of Fort Lauderdale and Marshall Dore Louis of Miami.

Assistant U.S. Attorney H. Ron Davidson, while acknowledging that defendant Leon became a covert “government cooperator,” told U.S. District Judge Darrin P. Gayles in a July 8 pleading that Leon “never shared privileged information with the United States, the United States never asked for privileged information and the defendant’s motion lacks any merit.”

The judge, however, has sided so far with the defense. On Aug. 3, after an initial hearing, he ordered the government to turn over to the defense all “rough notes” of interviews of Leon by Internal Revenue Service agents who helped build the government’s fraud case. The defense had sought the agents’ notes, contending the government had “carefully sanitized” memos of interviews with Leon produced to the defense.

‘The ends of justice’

The same day, Judge Gayles also granted a continuance in the case and reset the trial date for Nov. 28, saying “the ends of justice outweigh the interests” of a speedy trial.

What’s expected to follow this fall is a full-blown hearing on whether felony charges of mail fraud, money laundering and conspiracy should be dismissed against the remaining defendants – Matthew Pisoni, Marcus Pradel and Victor Ramirez – due to government misconduct.

“An evidentiary hearing is exactly what is required to determine how to resolve these blatant [constitutional] violations, and the appropriate sanction for these pervasive violations,” attorneys Nurik and Bogenschutz said in court papers.

U.S. Attorney Wifredo A. Ferrer’s office declined Florida Bulldog’s request for comment.

In June, prominent Miami defense lawyer Howard Srebnick accused both the FBI and the U.S. Attorney’s Office of spying on the defense in a $55- million Medicare fraud case by illegally and obtaining copies of confidential defense documents. More specifically, it was alleged a government-approved copying service had surreptitiously provided agents with duplicates of documents culled by the defense team from 220 boxes of evidentiary records in preparation for trial.

The Florida Bulldog reported last month that those allegations of government misconduct dissipated weeks later when the U.S. Attorney’s Office abruptly gave all three defendants generous plea deals involving no prison time. The defendants had each faced lengthy jail terms if convicted.

The copying service, Imaging Universe, was fired. The U.S. Attorney’s Office conducted an internal inquiry, but declined to make public its findings. Srebnick withdrew his motion with the accusations after securing a deal for his client. Consequently, the judge never ruled on the merits.

The alleged scam

Pisoni was president of the now-defunct Mail Tree, Michael McKay, Spin Mail and other Florida companies that the government contends were used in the fraud. Pradel, Ramirez and Leon worked with him in the alleged scam.

The four were indicted together on May 7, 2015 for participating in a sweepstakes scheme that began in 2006. The indictment says victims were falsely notified by mail that they’d won a substantial prize, but needed to pay a fee of up to $50 to redeem their winnings.

Authorities have said the defendants collected more than $25 million from hundreds of thousands of victims in the U.S. and abroad, using shell companies and international bank accounts to lauder their loot.

Even before they were indicted, the four had learned they were under investigation “and circled the wagons in a Joint Defense Agreement,” the government said. A JDA is a contract in which defendants extend the attorney-client relationship among them to facilitate the sharing of privileged information.

But last winter, unknown to his fellow defendants, Leon and his Fort Lauderdale attorney, Omar F. Guerra Johansson, began plea negotiations that resulted in his Feb. 17 plea agreement with the government.

“His cooperation was kept covert because Leon was cooperating with the government against a non-charged defendant,” prosecutor Davidson wrote. “Moreover, the government specifically instructed Leon not to share privileged information.”

Leon’s plea deal became public on April 20 when the indictment against him was dropped and a single new conspiracy charge was filed. He’s now facing a maximum penalty of five years’ imprisonment. Before, like the others, he faced a maximum of 80 years in prison.

Page 1 of 4112345»102030...Last »


Notify me by email when new stories are published.

Bulldog Archives