Huge debt-relief fraud in Pompano Beach bilks $70 million from thousands of victims

By Joseph A. Mann Jr., FloridaBulldog.org 

Jeremy Lee Marcus, accused of bilking thousands of consumers in a $70 million fraud, as pictured in a February 2016 press release by his Helping America Group.

In a debt-relief scheme that affected about 15,000 people across the country, three telemarketing executives headquartered in Pompano Beach and using a branch in Panama bilked victims out of an estimated $70 million, according to the Florida Attorney General’s Office, the Federal Trade Commission (FTC) and the attorney working to retrieve assets in the complex case.

A civil complaint filed recently in federal court in Fort Lauderdale by the Attorney General’s office and the FTC alleged that telemarketers at several of the companies managed from the Pompano Beach office building offered to consolidate personal debts for customers, pay off, settle or obtain dismissals for these obligations and improve their credit ratings.

Customers were allegedly convinced to pay from a few hundred to more than a thousand dollars per month to one of the so-called debt-relief companies that were part of the scheme, according to the complaint.

In most cases, no payments were made to reduce these debts. Moreover, customers ended up becoming victims: They incurred even greater indebtedness thanks to fake loans obtained from the companies, loans that were supposedly being used to pay their pre-existing debt. Some customers were sued by their old creditors or were forced into bankruptcy.

Running since 2013 with a headcount reaching around 150 managers, telemarketers, administrative staff and others, this South Florida-based operation was shut down in May by a federal judge who issued a preliminary injunction and asset freeze order affecting the individuals and companies involved.

The court also appointed a Receiver, Jonathan E. Perlman, a shareholder at the Miami-based law firm Genovese Joblove & Battista and an attorney with extensive experience in receivership roles. His formidable task is to sift through the maze of companies, accounts and financial operations to recover funds for defrauded customers.

Defendants – human and corporate

On May 8, the FTC and the State of Florida filed a complaint seeking an injunction with the U.S. District Court of the Southern District of Florida. (Case No. 17-cv-60907-Altonaga) The defendants in the case were Jeremy Lee Marcus, who was described by the Receiver as the CEO and an owner of the group of companies in the debt relief operation; Craig Davis Smith, the COO and also an owner; and Yisbet Segrea, an executive who ran the office in Panama, plus dozens of corporate defendants controlled by the individual defendants. These included 321Loans Inc., Financial Freedom National Inc., Helping America Group, Marine Career Institute Sea Frontiers Inc., Instahelp America Inc. and Breeze Financial Solutions.

Receiver Perlman believes there could be more than 80 companies involved as corporate and related defendants, but that 23 are currently investigation targets since they offer the best potential for recovery, he told the Florida Bulldog.

The Pompano Beach office building described by authorities as the headquarters for the multi-million dollar fraud. Photo: Joseph A. Mann Jr.

The companies operated as a “common enterprise” through an interrelated network with commingled funds, all allegedly controlled by the three defendants, the complaint says.

According to the FTC and Florida Attorney General’s complaint, these are the basics: The defendants made their money by promising customers large debt consolidation loans at attractive rates, or by telling customers they were taking over the task of servicing consumers’ pre-existing debt relief accounts. In both cases, customers paid the defendants millions of dollars under the false premise that these alleged debt-relief companies would pay off, settle or obtain dismissals of consumers’ debts and improve their credit ratings.

In fact, there were no actual loans. Defendants kept most of the loan payments and paid very little or nothing toward reducing their customers’ debts. Eventually, the victims found out that no one was paying their original debts, their accounts were in default and their credit scores had suffered. In some cases, original creditors filed lawsuits against the consumers and some were forced into bankruptcy.

One scam victim, Derek S. from Vero Beach, told about his experience with the debt-relief group in an April affidavit.

Two years ago, he said, he did a Google search for a debt consolidation firm and found Helping America Group (HAG), one of the corporate defendants. “At that time, I was current on my debts and was making the minimum payments monthly,” he said in the affidavit. “I was looking for a company to consolidate my debt and to make one lower monthly payment.”

A fake loan

After calling HAG and learning about their services, Derek was told that another defendant firm, 321Loans, would be making the loan to him and would pay off his creditors. The loan, a fake, was for a total of $10,835 plus interest at 9.99 percent. He was also told to stop paying his creditors, not to talk to them and that another group firm, Breeze Financial, would help improve his credit score.

He started making monthly payments to Paralegal Support, still another firm in the group, and subsequently called several times to ask for a progress report. He was told “it would take time to negotiate the debt.”

A few months later, he called two of his creditors, who said they never heard of HAG or 321. He tried to cancel his agreement but was not allowed to do so until after he had filed complaints with the Florida Attorney General and the Better Business Bureau. Last December, 321Financial – another element in the scheme — issued a cancellation letter and a refund of $200.13.

“I paid thousands of dollars to HAG/321 and they did not do anything they promised,” he said. “My debt effectively had been doubled.”

The joint state-federal complaint filed last May states that the defendants were in violation of the Federal Trade Commission Act, the FTC’s Telemarketing Act (covering consumer fraud and abuse) and the FTC’s Telemarketing Sales Rule (TSR). The Florida Attorney General brought the action under the state’s Deceptive and Unfair Trade Practices Act and the Telemarketing Act.

The defendants, who are free, have denied any wrongdoing. While the current case against the defendant group is a civil action, a criminal suit could be filed in the future, according to an attorney familiar with fraud actions.

The FTC and the Florida Attorney General’s office declined to comment on the progress of the case, since it is still open.

Finding customers and making the pitch

The scheme attracted potential victims by using Internet advertising and websites, direct mail and unsolicited phone calls. The defendants also bought presumably legitimate debt-relief firms and acquired their clients’ names as well as personal and financial information. Here’s how it allegedly worked:

  • Companies in the group used ads on their websites or sent personal letters to the potential client’s home address. Sometimes falsely identifying themselves as nonprofits, they offered low-interest loans so a consumer could combine all debts and make one payment at a more favorable interest rate. For example, a typical letter sent by one of the group companies, 321Loans, offered up to $35,000 at 4 to 7 percent interest to cover debts from credit cards, private student loans, accounts in collection, medical bills, etc. The letter said the credit was pre-approved.
  • The group supplied its Pompano Beach telemarketing staff with training manuals that taught “The Art of the Sale.” Some nuggets from the manuals: “The more time you spend qualifying (researching) the prospect, the less time you will waste pitching unqualified people for hours only to find they HAVE NO $$$,” and “so remember your ABC’s – Always Be Closing!”
  • When people called a “customer approval center” (or when sales staff made unsolicited phone calls), prospects were told that a loan would be made to cover the full amount of their debt, plus interest. The loan would be used to pay off all indebtedness, and the lucky consumer would only have to make monthly payments that were much less than what they were paying. The companies told consumers they could provide low-interest loans because their nonprofit status allowed them to borrow at favorable rates.
  • While potential clients were still on the phone, telemarketers emailed them a link to a document designed to look like a loan agreement. Consumers clicked on highlighted areas to initial and sign the agreement, which committed them to pay back the loan and fees, wherever applicable. The 50 to 75 page document in fact contradicted the sales pitch made by the telemarketers.
  • Consumers agreed to have their bank accounts debited immediately for their first loan “repayment” or for a processing fee. Then monthly “repayments” were automatically taken from their accounts, ranging from $200 to over $1,000.  Few or no payments were made to creditors, and a consumer with, say, $8,000 in old debts, would owe the pre-existing amount, plus the $8,000 “loan” taken out from a defendant company.
  • When consumers were told by original creditors that none of their bills had been paid, dismissed or settled, the defendant companies strung them along with false explanations, such as more time was needed to validate the consumers’ debts or to confirm payoff amounts. Clients who called to complain were given excuses and treated badly. Sometimes, the only contact number available was disconnected.
  • In another aspect of this scam, the group, using mostly outside legal counsel, worked with some clients who were sued by creditors before the operation was shut down in May, according to the Receiver’s Amended First Interim Report filed in June. In these cases, the group’s attorneys ironically won large claims for clients related to supposed violations of the Telephone Consumer Protection Act or the Florida Consumer Collection Practices Act by credit card companies. But clients only received a small portion of the damages. For example, one client received $1,000 from a law firm working with the group after a credit card company paid a total of $80,000. Many cases followed a similar pattern, and some customers apparently were not aware of the amount of the total settlement.

Recovering assets for victims

“I’m essentially the CEO of this defunct enterprise,” Perlman, the court-appointed Receiver, told the Florida Bulldog. “My main goal is to conserve and protect all the assets of the receivership.”

Assets – cash and a wide range of real estate – include a 50,000 square foot headquarters building at 1410 SW 3rd St., Pompano Beach. Other tenants in the building who were unrelated to the defendant group continue to provide revenue to the receivership.

So far, the receivership has served over 30 banks with orders for records, and continues to look for other financial institutions that might be a source of assets.

Perlman told a Florida Bulldog reporter that the information his office has gathered so far indicated that “the amount taken from customers has been $70 million, and continues to rise.” It will increase as more bank records come in. The estimate in May was $50 million.

“We come in unannounced and serve papers to all the institutions we know about,” he said. “We try to obtain money and other assets voluntarily. If not, you take it to the judge.”

While the receivership is identifying and seizing assets related to the case, reimbursement to victims will come after the asset search is completed and the current civil proceeding resolved.
Perlman’s team has set up a website, www.321loansreceivership.com, to inform victims and the public about developments in the receivership process. Currently, he is the Temporary Receiver, but has petitioned the court to be named Permanent Receiver.

Overlooked class action against Democratic Party and Wasserman Schultz turns nasty

By Francisco Alvarado, FloridaBulldog.org 

Hillary Clinton, Debbie Wasserman Schultz and Bernie Sanders

An ongoing legal battle playing out in Fort Lauderdale federal court over the Democratic National Committee’s presidential nominating process has devolved into accusations of harassment and intimidation conducted by unknown political operatives.

Last month, an attorney representing 150 Democratic voters in a little-noticed class action lawsuit against the DNC and its former chairwoman, U.S. Rep. Debbie Wasserman Schultz, sought court-ordered security guards for himself, his clients, and his co-counsels and their employees following a string of bizarre incidents in June, including strange phone calls and emails by individuals disguising their voices and a mysterious break-in at the home of one of the plaintiffs.

On June 15, Senior U.S. District Judge William Zloch denied Fort Lauderdale lawyer Cullin O’Brien’s motion after determining that his request would overburden the U.S. Marshals Service because the plaintiffs reside in 45 states and Washington, D.C. The judge also noted that O’Brien had not provided any evidence directly linking the incidents to the DNC and Weston-based Wasserman Schultz.

“The undertaking would in all likelihood require the entire U.S. Marshals Service to direct all of its efforts and attention to this specific case,” Zloch wrote in his order.  “The Court notes that plaintiffs’ motion contains absolutely no factual nexus between Defendants and the conduct set forth in the motion.”

O’Brien did not respond to two phone messages and an email request for comment. Mark Caramanica, an attorney for Wasserman Schultz, referred questions to DNC lawyers Bruce Spiva and Marc Elias, who also did not return two phone messages and emails requesting comment.

DNC attorneys Bruce Spiva, left, and Marc Elias.

Elizabeth Beck, an attorney for the plaintiffs, told Florida Bulldog that it was not her legal team’s intent to show that the DNC and Wasserman Schultz were involved in the incidents. “We are not saying the DNC or the congresswoman ordered the harassment against us, the plaintiffs and our staff,” Beck said. “We don’t know who is doing it, but it did happen.”

The stakes are high for the DNC and Wasserman Schultz. The complaint accuses both of fraud, negligent misrepresentation, unjust enrichment, breach of fiduciary duty and negligence by rigging Democratic primaries to favor former Secretary of State Hillary Rodham Clinton over U.S. Sen. Bernie Sanders. More than half of the plaintiffs are Sanders supporters who donated money to his campaign. The lawsuit claims the 150 Democrats are entitled to punitive damages in addition to refunds for their political donations.

Despite the explosive accusations in the lawsuit and the subsequent motion seeking court-ordered protection, there has been no coverage of the case in mainstream media outlets, including South Florida’s newspapers, since it was filed in June 2016.

‘Funny Business’

Beck and her husband, Jared Beck, are Miami-based personal injury lawyers who decided to support Sanders in early 2016. “I was phone banking and also hosted phone banks to teach other people,” Elizabeth Beck said. “I joined a lot of Facebook groups where I was sharing information and political memes. That’s when I started hearing about all this funny business happening during the primaries in various states.”

Attorneys Elizabeth and Jared Beck

She said her suspicions that the DNC was in the tank for Hillary Clinton were confirmed when Russian hackers publicly released internal documents from the committee on the Internet. “The lawsuit was filed based on that information,” Beck said. “Everyone, including the people who hired us, reached the same conclusion that the process was rigged.”

Beck also launched a Facebook page that has grown to more than 57,000 followers and started the political action committee JamPAC. She uses the JamPAC’s website to post updates and documents related to the lawsuit.

According to the 39-page complaint, the DNC and Wasserman Schultz violated DNC’s charter and bylaws that say the party chair “shall exercise impartiality and evenhandedness” and “shall be responsible for ensuring that the officers and staff of the DNC maintain impartiality and evenhandedness.” Further, that while Wasserman repeatedly made public statements between September 2015 and May 2016 that she was committed to running a neutral primary, the congresswoman and the DNC was on team Clinton from the beginning of the 2016 presidential election cycle, the lawsuit claims.

To support their claims, the plaintiffs cited internal DNC documents obtained by Russian hackers and published on the Internet by purported hacker Guccifer 2.0. For example, on May 26, 2015 the DNC issued a memo outlining the party’s goals in providing a contrast between the “GOP field and HRC [Hillary Rodham Clinton].” The memo also added the DNC would use “specific hits to muddy the waters around ethics, transparency and campaign finance attacks on HRC.”

The DNC has confirmed that the emails are legitimate.

During an April 25 motion hearing, DNC lawyer Spiva argued the plaintiffs don’t have standing to bring the lawsuit because the courts don’t have jurisdiction over how political parties decide to pick their candidates. “The Supreme Court and other courts have affirmed the party’s right to make that determination,” Spiva said. “Those are internal issues that the party gets to decide basically without interference from the courts.”

DNC ‘not obligated’ to follow own rules

The DNC is not obligated to follow its charter and its bylaws, Spiva added. “We could have voluntarily decided that we’re gonna go into back rooms like they used to do and smoke cigars and pick the candidate that way,” he said. “That’s not the way it was done. But they could have. And that would also have been their right.”

Beck told Florida Bulldog she was taken aback by Spiva’s legal argument since Wasserman Schultz had always denied the DNC was playing favorites. “It’s a pretty outrageous position to take,” she said. “It was very different from what the congresswoman had been saying on national TV during the primaries.”

A little over a month later, things got even more strange. On June 1, Beck sent an email to DNC attorneys to inform them that her secretary had received a phone call from an unknown individual seeking information about the case. “The caller refused to identify himself/herself,” Beck wrote. “My secretary stated that it sounded like the caller was using a voice changer because the voice sounded robotic and genderless.”

Fort Lauderdale Attorney Cullin O’Brien

Beck also noted that the phone number that showed up on the caller ID was the same one for Wasserman Schultz’s Aventura district office. According to a June 1 reply filed in court by the congresswoman’s lawyers, Wasserman Schultz had no knowledge of the call being made and did not authorize it.

“Further, it is highly unlikely that the call did in fact originate with that office, as no one is currently working in the office associated with the subject number — or has anyone been working there for several months — due to ongoing repairs,” the reply states. “Given that the matter involves congressional phone lines, the incident has been reported to Capitol Police.”

The following day, Fort Lauderdale attorney O’Brien received three phone calls from an unknown number from a person who identified himself only as “Chris” inquiring about the lawsuit, according to the motion requesting protection. During the second phone call, “Chris” allegedly said, “This is bigger than you and your family and your law partners” and made a reference to news about the mysterious death of Assistant U.S. Attorney Beranton Whisenant in Fort Lauderdale. O’Brien also submitted under seal 11 emails allegedly sent by “Chris.”

Whisenant’s body was spotted floating just off Hollywood beach shortly before dawn on May 24. The cause of death has not been released, but the Miami Herald has reported that Hollywood police have said Whisenant suffered some trauma to his head.

On June 3, plaintiff Angela Monson from Dassel, Minn., said she woke up around 5:45 a.m. to use her laptop computer only to find it in a different spot from where she had last left it, which she thought was odd, according to an affidavit she filed as part of the motion for protection. “When I plugged in my laptop, it made a snapping noise and did not turn on,” Monson said. “When I turned it over, the bottom cover of the laptop fell off.  I then noticed that the bottom cover, which is attached to the laptop with 10 screws, had all the screws missing.”

After noticing that two patio doors she had locked the night before were unlocked, Monson called local police to file a report about a possible break-in, her affidavit states. The same day, O’Brien claims he received a call from the far-right militia group Oath Keepers offering him and his clients protection.

Rick Scott, Mike Pence: When campaign fundraising met tax incentives for Scott’s company

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott, left, accompanies then Indiana Gov. Mike Pence to a Feb. 5, 2016 fundraiser for Pence at the Fort Lauderdale office of the Tripp Scott law firm. Photo: Conrad & Scherer law firm

Two months after Florida Gov. Rick Scott helped then-Indiana Gov. Mike Pence fundraise in Fort Lauderdale last year, Pence announced a $650,000 incentives package for a company owned in large part by Scott.

Pence’s offer of Indiana taxpayer subsidies for Continental Structural Plastics came as Scott’s Florida contributors poured more than $125,000 into Pence’s gubernatorial re-election campaign. Scott kicked in another $5,000 personal check to fellow Republican Pence’s campaign.

The Tampa Bay Times called Scott’s personal contribution to Pence “unusual” because Scott “has never given more than $500 to a Florida candidate other than himself.” It also noted that Pence had “picked up more campaign cash from Florida than any other state, except Indiana and Washington, D.C.”

Pence’s gubernatorial campaign ended abruptly on July 15, 2016 when Donald Trump tapped him as his vice-presidential running mate. But before that the vice president had been in a tight re-election fight amid sagging approval ratings.

The Feb. 5, 2016 fundraiser for Pence was held at the office of the Tripp Scott law firm. Among those present was prominent Fort Lauderdale lawyer William Scherer, a Scott supporter and frequent donor to Republican candidates. Scherer could not be reached for comment. (Disclosure: Scherer, managing partner of Conrad & Scherer, is a donor to the nonprofit Florida Bulldog.)

Conrad & Scherer’s website includes a brief press release with photos of Pence and Scott at the fundraiser. The site says Scherer and Gov. Scott discussed “creating new jobs for Florida residents.”

Indiana election records show that for the first six months of 2016, until Trump chose Pence, nearly two dozen Scott supporters sent checks to Pence. They include two affiliates of Charters Schools USA; Jupiter investor Lawrence DeGeorge; prison operator The Geo Group, its political action committee, chief executive officer George Zoley and several other company executives; Next Era Energy PAC, run by the owner of Florida Power & Light; the Tripp Scott law firm and five of its attorneys.

Indiana’s incentives deal for CSP

On April 11, 2016, back in Indiana, Gov. Pence disclosed that the Indiana Economic Development Corporation – a group he chaired – had offered Continental Structural Plastics (CSP) $600,000 in conditional tax credits and $50,000 in training grants. CSP was to expand its 323-worker operation in the city of Huntington and add 80 jobs by 2020. CSP makes lightweight composite materials used in cars and airplanes.

“CSP’s growth speaks volumes about this company and its talented Hoosier employees,” Pence said in his announcement. “As CSP grows its operations here in Indiana, Hoosiers can rest assured that this administration will continue to pursue the kinds of policies that make our state a destination for investment and growth.”

But instead of adding jobs, CSP recently notified Indiana workforce officials of a “temporary” mass layoff of 164 workers at its Huntington plant after one of its customers planned to be idle, according to local news accounts. The layoffs are to start July 31.

Pence’s announcement did not mention that his friend, Rick Scott, owned a substantial stake in CSP, or that Florida First Lady Ann Scott had an additional large investment through the Connecticut-based investment firm G. Scott Capital Partners.

Before he became governor, Scott headed Naples-based Richard L. Scott Investments. His firm and CSP management bought the company together. “We acquired CSP in early 2005 with the belief that there was an opportunity to build a great company,” Scott said in a statement published in 2006 in Automotive News.

After he became governor, the mega-wealthy Scott put his assets – including CSP – into a Florida blind trust that put his assets under the control of an allegedly independent trustee and gave him legal immunity from conflicts of interest his diverse investments might pose. The arrangement is problematic, however, because the chief executive of the trustee, Hollow Brook Wealth Management, is longtime Scott crony Alan Bazaar.

As governor, Scott has disclosed his financial interest in CSP on several occasions, most recently in 2014 when he shuttered his first Florida approved blind trust and opened a second one while qualifying for re-election. He valued his shares in the CSP investment partnership then to be worth $43.9 million. The value of the First Lady’s CSP investment, via G. Scott Capital Partners, was not disclosed. In March 2016, CSP said in court papers that most of its stock was privately held by G. Scott Capital.

CSP sold

On Jan. 3 of this year, CSP was sold for $825 million to a subsidiary of Teijin Ltd. Florida Bulldog reported in June that Gov. Scott appears to personally have pocketed $200 million in the deal.

When CSP’s sale was announced, the Japanese conglomerate further identified RLSI-CSP Capital Partners LLC – Rick Scott’s partnership entity – as owning two thirds of CSP’s common stock. The governor owned 37 percent of RLSI-CSP Capital Partners.

Gov. Scott has declined to be interviewed about CSP, and his spokespersons have said that because his investments are in a blind trust he “has no knowledge of anything that is bought, sold or changed in the trust.”

Gov. Rick Scott at May 17, 2016 groundbreaking ceremony for United Technologies’ Center for Intelligent Buildings in Palm Beach Gardens. As part of the deal to bring the project to Florida, Scott approved $4.9 million in tax incentives for Carrier, a United Technologies subsidiary.

Vice President Pence was involved in a similar, but larger incentives package that attracted national attention last November when he and President Trump announced a deal with Carrier to keep its gas furnace plant in Indiana. The company was going to move the plant and about 800 manufacturing jobs to Mexico – a job export plan Trump used during the campaign – but changed its mind after talks with Trump and Indiana’s pledge of $7 million in tax breaks over a decade.

While some Republicans – notably former Alaska Gov. Sarah Palin – label such taxpayer-funded incentives “special interest crony capitalism,” they are the centerpiece of Gov. Scott’s plan to create jobs in Florida.

Interestingly, Scott, like Pence, spearheaded a large cash incentives deal for Carrier. That $4.9 million agreement via the Governor’s Quick Action Closing Fund involved development of United Technologies’ showcase “Center for Intelligent Buildings” in Palm Beach Gardens. The deal with Carrier, a subsidiary of United Technologies, was inked in June 2015, but needed local approvals that didn’t come for months. Gov. Scott attended a groundbreaking ceremony for the project on May 17, 2016.

Hallandale freezes payments for city development, jobs programs citing waste & fraud

By William Gjebre, FloridaBulldog.org 

Hallandale Beach City Manager Roger Carlton

Hallandale Beach City Manager Roger Carlton has ordered what could be a multi-million dollar freeze on all payments under two city jobs and business development programs, saying they “have lost their way.”

Carlton acted about what he said was “waste” and possible fraud weeks before a report by county investigators became public last week that accused City Commissioner Anthony Sanders of failing to disclose payments he received from a local community group awarded city funds, including money under the two programs, with his backing.

In a June 5 memorandum obtained by Florida Bulldog, Carlton, who was appointed city manager by a new reform-minded city commission majority, expressed outrage about the flawed city programs and public apathy about them.

“I am angry about this situation,” Carlton wrote. “… It is extremely disappointing that there is no outrage in the community about these programs. No demands for reform have been publicly made to date. No complaints regarding the fact that public funds, which should have been utilized effectively to build capacity of local contractors, or help individuals find work can be found.”

In a preliminary July 7 report, the Broward Inspector General’s office said Commissioner Sanders “engaged in a pattern of misconduct” when he “failed to disclose payments” made to him, other family members and his church, Higher Vision Ministries, by a jobs development group, Palms Community Action Coalition (PCAC) during a three-year period. Sanders voted to give PCAC three grants and backed seven funding agreements under the Community Benefit Program (CBP), resulting in the PCAC receiving a total of $893,320 from 2013 through 2015, according to the report.

Carlton’s directive was aimed at the CBP and the Hallandale Opportunity Project (HOP), the city’s administrative arm created to monitor job development, including placement and training, and the purchase and use of local subcontractors and residents, by firms that won contracts. Those gaining contracts under the program pledged a percentage of the contract to hire residents and subcontractors and/or earmark funds to train and create jobs for residents.

“It’s not a pretty outcome,” Carlton said in a brief interview with the Florida Bulldog, adding “millions of dollars” are at stake. The city manager also said the city will “recover as much as possible” of any misused funds.

“I have directed the Finance Department and the Capital Improvement Division to cease making any payments to consultants, contractors, design/engineering firms and/or individuals under the CBP/HOP program until a complete review … can be completed,” Carlton said in his memo.

Exception to freeze for a handful

“The only exception to this payment freeze,” he wrote, “will be to those individuals and firms who are doing actual physical work or are in a verifiable training program at a job site, and who are qualified participants due to their employment and residency status.”

Jeremy Earle, assistant city manager, has been placed in control of the troubled programs and was directed to reform them. The city’s review of the programs, Carlton’s memo said, “will include an analysis of waste, fraud and abuse.” It added, “Without equivocation, there has been waste. Fraud and abuse will be determined.”

“If necessary,” Carlton stated, “the results of our review will be brought to the appropriate authorities for their determination.”

In his memo, Carlton said the city must retool the programs – not terminate them — and make them effective by using “best practices across the country… We must also eliminate providers that are not contributing to program goals.”

The new controversy surrounding the Hallandale’s CBP is similar in some aspects to that involving the city’s troubled Community Redevelopment Agency, which came under investigation by the Broward Inspector General Office five years ago. The findings: The city’s CRA lacked effective city oversight, agency funds were mixed with city funds, a good deal of spending lacked documentation, and policies changed frequently or were not adhered to. The IG found $2.2 million in questionable CRA expenditures from 2007 to 2012, including inappropriate loans and grants to local businesses and nonprofits.

The IG’s new probe – as reported by Florida Bulldog in June 2016 – was already underway when Carlton took over as city manager on Feb. 6, 2017.  He didn’t like what he found surrounding the CBP and HOP.

“During the past six years, the CBP and the HOP programs have lost their way for a complex variety of reason,” Carlton said in the memo. Successful bidders for city contracts “have contributed to the CBP and HOP at a rate which has grown so rapidly since the recovery of the Great Recession, that there are not enough small contractors of unemployed/underemployed workers in the city of Hallandale Beach to feed into the program.”

The programs ran afoul, he stated, because:

  • Program personnel for both the city and companies awarded contracts were hired often without a competitive process or without demonstrating the ability met the goals of the programs.
  • City monitoring staffers were not given “uniform standards or criteria… to follow” and were not included in negotiations to understand CBP provisions of each contract; and sanctions for failing to comply were less severe than the cost of complying.
  • “City administrators did not demand the excellence and fair-dealing required for the effective use of public funds. That is our fault, and the city administration will resolve these issues going forward.”
  • “The city commission also needs to shoulder some of the responsibility for the difficulties in this program. The rumors, confrontations, accusations and innuendos regarding abuses in the CBP/HOP are not new. When my predecessor brought a series of reforms on October 19, 2016, these reforms were approved by the city commission in a 3/2 vote…, but were not made a priority. The turmoil that swirled around city hall at the time, in part, allowed the need to implement the reforms as a priority of the organization to go unmet.”

In its July 7 report, the Broward IG also stated that Commissioner Sanders solicited and received contributions from developments seeking to do business with the city under the CBP program during the period of the investigation.

The IG report revealed some possible payment discrepancies that could receive closer review by the city:

  • PCAC had an agreement to pay $1,000 a month to Higher Vision to transport job trainees to Sheridan Technical College in Hollywood, with payments totaling $31,000. But the report said no services were provided after May 16, 2015. It also said the city provided free bus passes to the trainees to get to the school.
  • The city provided $17,000 from October 2014 to September 2015 for PCAC to send 10 women to Sheridan Technical to receive training as nurse aides. But six of them dropped out.

New York boots Armor Correctional; In Florida, Armor boss named to powerful commission

By Dan Christensen, FloridaBulldog.org 

Dr. Jose Armas, owner and president of Armor Correctional Health Services, right, and Gov. Rick Scott

The company that provides health-care services to thousands of jail inmates across Florida, including Broward and Palm Beach counties, has been kicked out of New York for allegedly “placing inmates’ health in jeopardy.”

Armor Correctional Health Services paid $350,000 in penalties and agreed not to bid on or enter into any contract to provide jail health services in New York state for three years, settling formal charges brought in July 2016 by New York Attorney General Eric T. Schneiderman. The lawsuit was filed after a dozen inmates died since Armor was hired, including five found to have received inadequate medical care, Schneiderman’s office said.

“For-profit jail providers must ensure that appropriate medical care is provided in jails, where many inmates suffer from complex medical needs,” Schneiderman said when the settlement was announced in October. “This settlement sends a clear message that companies who fail to provide the required health services to inmates won’t be tolerated in New York State.” Armor Correctional provided comprehensive medical services to the Nassau County Correctional Center.

Five months later, however, Florida Gov. Rick Scott appointed Armor Correctional founder and president Dr. Jose “Pepe” Armas to a coveted seat on the powerful Constitution Revision Commission that will recommend changes next year to the Florida Constitution.

Armas and companies he controls have contributed nearly $300,000 to Scott’s election campaigns, his Let’s Get to Work political committees and to the Republican Party of Florida.

“Armas is a distinguished physician and healthcare executive whose focus on patient-centered care has defined his career,” Gov. Scott’s office said in announcing his appointment to the commission in March.

New York Attorney General Eric Schneiderman

A spokeswoman for Armas at Miami’s EvClay Public Relations sought to downplay Armor Correctional’s New York troubles, saying the company had made a “business decision” to pull out of New York three years before the settlement. Similarly, she described Armas as “solely” an investor in Armor and “not involved in its daily operations.”

Florida corporate records, however, have for years listed Armas as Armor’s president. And the company’s federal income tax returns from 2009 through 2013 state that Armas owned 100 percent of Armor. They also show that in 2012-2013 Armor paid Armas $9.6 million in dividends.

What happened in New York wasn’t the first time an Armas-led company has been in trouble.

In 2013, Armas’s MCCI Group Holdings LLC paid $1.6 million to the U.S. Department of Justice to settle a whistleblower lawsuit under the False Claims Act alleging that MCCI had violated the federal Anti-Kickback Statute and the Anti-Inducement Act. MCCI denied the allegations, but also paid another $300,000 in attorney fees to the whistleblower’s attorney.

“MCCI reached a settlement to avoid the delay, inconveniences and expense of litigation,” said Armas spokeswoman Melisa Chantres.

At the time, MCCI owned and operated medical clinics in Miami-Dade and contracted with Humana, which was also named in the qui tam suit, to provide care, including prescription drugs, to Medicare and Medicaid beneficiaries.

The complaint, filed in federal court in Miami, did not allege any wrongdoing by Armas himself, but contended that MCCI broke the law “by providing to its current and potential Medicare beneficiaries free services and gifts, such as transportation, meals, beauty and salon services, massages and entertainment,” according to the settlement agreement. The illegal activities allegedly took place between 2000 and 2012.

Scott’s Medicare fraud case

Long before Scott became governor in 2011, he was the founder and CEO of health-care titan Columbia/HCA and at the center of a much larger Medicare fraud case. Scott quit Columbia/HCA amid an FBI probe in 1997, and the company he built later paid a record $1.7 billion in criminal and civil fines.

MCCI was named in another South Florida whistleblower case filed by Dr. Mario M. Baez in 2012 and made public last year. Baez accused MCCI, Humana and several Palm Beach County physicians of “upcoding,” a fraudulent billing scheme in which health-care providers charge Medicare, Medicaid and other insurance payers for more expensive services than were performed.

Last month, the U.S. formally intervened in the case to recover damages against only one of those defendants, Dr. Isaac Kojo Anakwah Thompson, and not against MCCI. Assistant U.S. Attorney Mark Lavine did not explain in court papers why the government declined to intervene against MCCI or Humana. Thompson, Baez’s former partner, was sentenced to 46 months’ imprisonment in July 2016 after pleading guilty to health-care fraud.

Baez could have filed an amended False Claims Act complaint to proceed against MCCI in the name of the United States, but did not do so. MCCI spokeswoman Chantres said the company was never served legal notice of the lawsuit and called Baez “a complete stranger to MCCI.”

Fort Lauderdale attorneys Christina Currie and Greg Lauer

In Broward, Armas’ Armor Correctional, its doctors and Broward Sheriff Scott Israel are defendants in a federal civil rights lawsuit in the death of William Herring Jr., 22, a mentally ill inmate who starved to death in December 2012 while allegedly being deprived of treatment.

The lawsuit filed last December by Fort Lauderdale attorneys Greg Lauer and Christina Currie notes that Armor was being paid $25 million a year by the sheriff’s office to provide comprehensive health care to county inmates.

“However instead of holding true to its promise Armor chose to maximize profits. Armor knew that the result of putting profits before patients would be that some inmates with serious medical conditions would not get the care that they were entitled to,” the lawsuit says.

The complaint goes on to identify five other Broward inmates who it says died “slow, horrible and preventable deaths in the same jail” from 2011-2012 because of Armor’s decision to maximize profits. The five are identified as: William Campbell, arrested for DUI; Gary Joseph Smith, arrested for possession of cocaine; Calvin Goldsmith, arrested for trespassing; Raleigh Priester, arrested for throwing a rock at a city employee; Arthur Sacco, arrested for an unspecified misdemeanor.

Broward Public Defender Howard Finkelstein’s office represents many inmates under Armor’s care. He said what he’s observed about Armor is disturbing.

“If you have a family member who is in jail and their life depends on Armor for medical treatment, you’re in trouble,” Finkelstein said. “The name of the game with Armor is to withhold treatment until the inmate is released, sent to prison and it becomes someone else’s treatment, or dies.”

Chantres said Armor does not comment on pending legal matters, but noted the company “strives to deliver excellent patient care daily.”

Miami judge rules out FOIA trial, says FBI document on 9/11 funding to remain secret

By Dan Christensen, FloridaBulldog.org 

Miami U.S. District Judge Cecilia Altonaga. Photo: Federal Bar Association, South Florida Chapter

Secret FBI information about who funded the 9/11 attacks will remain hidden indefinitely after a Miami federal judge reversed herself last week and decided that the FBI was not improperly withholding it from the public.

At the same time, Judge Cecilia Altonaga ruled out holding a Freedom of Information Act (FOIA) trial to evaluate the need for such continued secrecy nearly 16 years after the 9/11 attacks. A trial would likely have included testimony from government witnesses in support of continued secrecy as well as others like Bob Graham, the former Florida senator who co-chaired Congress’s Joint Inquiry into 9/11 and believes the FBI documents should be made public.

“The court sees no need for further facts to be elicited at trial,” Altonaga wrote in her seven-page order granting the FBI’s request to keep secret large portions of an FBI slide show titled “Overview of the 9/11 Investigation.” The FBI had argued the information was exempt from public disclosure because it “would disclose techniques and procedures for law enforcement investigations or prosecutions.”

Altonaga’s decision reversed her May 16 order that the 60-page document – referred to in court papers as “Document 22” – that was shown to the 9/11 Review Commission on April 25, 2014, should be largely opened for public inspection. The commission is also known as the Meese Commission, after its most prominent member, Reagan-era attorney general Ed Meese.

Florida Bulldog attorney Thomas Julin said the judge “should have ordered the FBI to stand trial for its decision to withhold information about its investigation.” He added that an appeal is being considered.

“The order requires the FBI to release information that was illegally redacted. That information will shed light on 9/11, but we did not get everything we wanted,” said Julin. “Much of what we did get confirmed the Bulldog’s reporting about Sarasota has been 100 percent correct and the FBI lied to the public about that. This case may be headed to the Supreme Court.”

Graham disappointed by ruling

Sen. Graham was disappointed by the judge’s ruling. He said the FBI’s 9/11 overview likely contains “important information relating to the funding of 9/11 and presumably the role of Saudi Arabia in doing so. Knowledge of these facts could change public opinion and governmental actions as to the liability of the Saudis as allies and the wisdom of us supplying them with hundreds of billions of dollars of military armaments.”

Bob Graham

Graham said, “The court essentially accepted without detailed substantiation the FBI’s assertions that techniques and procedures would potentially be compromised. I believe a trial was needed at which those unsubstantiated statements would be challenged with questions such as, ‘Over the 16 years since the events of 9/11 occurred have these techniques and procedures which proved to be so ineffective in preventing 9/11 been continued?’”

Florida Bulldog, working with Irish author Anthony Summers, first reported in September 2011 about a secret FBI investigation into a Saudi family living in Sarasota who abruptly departed their home in an upscale, gated community about two weeks before the 9/11 attacks – leaving behind their cars, clothes, furniture and food in the refrigerator. A senior counterterrorism agent said authorities later found phone records and gatehouse security records that linked the home of Abdulaziz and Anoud al-Hijji to 9/11 hijackers, including Mohamed Atta.

The FBI kept its Sarasota investigation secret for a decade. Former Sen. Graham has said the FBI did not disclose it to either the Joint Inquiry or the original 9/11 Commission.

An April 2002 FBI report released by the FBI during the litigation confirmed that account, saying agents found “many connections” between the Sarasota Saudis and “individuals associated with the terrorist attacks on 9/11/2001.” The FBI has since sought to discredit that report, saying the unnamed agent who wrote it had no basis for doing so.

The lawsuit forced the FBI to review 1,858 pages of records and to release parts of 713 pages. The FBI withheld 1,145 pages.

“The FBI violated FOIA by failing to respond to the Bulldog’s request for the Meese Commission records,” said Julin. “The Bulldog would not have gotten any of the records if it had not filed the lawsuit.”

The FBI PowerPoint pages Judge Altonaga has now ruled should remain under wraps include:

  • Two pages titled “Funding of the 9/11 Attacks” and “Early to Mid-2001 Additional Funding”
  • Pages titled: “Early to Mid-2000: Pilots/Intended Pilots Arrive U.S.”; “Investigative Findings” regarding hijacker “Identification” and “Financial. Ample Financing was provided”; “Early to Mid-2001: Non-pilots arrive U.S.”; “July-August 2001: Knife Purchases”; “August 2001: Reserving 9/11 Tickets”
  • Four pages titled “Ongoing Investigation”

Who bankrolled the 9/11 attacks is the central question at issue in complex civil litigation in New York in which 9/11 victims – survivors and relatives of the nearly 3,000 dead and businesses that suffered property damage – are seeking enormous damages from the oil-rich monarchy of Saudi Arabia. The country has denied any role in funding the September 11 attacks.

Seeking 9/11 Review Commission files

Florida Bulldog, through its corporate parent Broward Bulldog Inc., sued the FBI in June 2016, seeking records of the 9/11 Review Commission, a congressionally authorized body whose duties included reviewing new evidence not considered by Congress or the original 9/11 Commission. The Review Commission, whose members were chosen, paid and spoon-fed information by the FBI, issued its report in March 2015.

The FBI released a heavily redacted copy of its 9/11 Overview in February. The FBI cited national security, privacy and other reasons to withhold much information, including Exemption 7(E) of the Freedom of Information Act, which protects law enforcement “techniques and procedures.”

On May 16, Judge Altonaga ruled that the FBI had “failed to meet its burden in establishing Exemption 7(E) applies to the redacted information” in the 9/11 Overview because “much of it does not discuss any FBI investigative techniques and procedures; instead the material often encompasses facts and information gathered FBI suspects.”

In early June, the FBI asked Altonaga to reconsider her ruling, arguing that while the overview doesn’t “discuss techniques and procedures, the information contained in the document could still reveal” them. For example, the FBI said it had withheld a photograph taken by a security camera because its release “would disclose the location of the security camera,” possibly enabling future terrorists to circumvent detection.

Attorneys for Florida Bulldog countered that security measures have changed “immensely” since 9/11 and the government had not shown that security measures “that supposedly would be revealed would be of any utility to future terrorists.”

Altonaga’s new order doesn’t address that argument, but nevertheless sided with the FBI, saying the redactions are “necessary to prevent disclosure of FBI techniques or procedures.”

Former Sen. Graham said what’s happened, including the FBI’s resistance to disclosing classified information about 9/11 and who was behind it, is evidence that the Freedom of Information Act needs significant reform.

“The most fundamental question now is whether the Freedom of Information Act as currently written and administered is a barrier to Americans’ fundamental right to know what their government is doing,” Graham said.

Judge Altonaga’s order requires the government to draft a proposed final summary judgment order for the court’s consideration by July 11.

 

Lauren’s Kids funnels $3.1 million to politically connected public relations firm

By Francisco Alvarado, FloridaBulldog.org 

Tallahassee’s Sachs Media Group produced this billboard in 2014.

A nonprofit run by Broward State Sen. Lauren Book and lavished with millions of dollars in state handouts by lawmakers paid a Tallahassee public relations firm with considerable political clout $3.1 million between 2012 and 2015.

The payments by Lauren’s Kids to Sachs Media Group accounted for 28 percent of the charity’s $10.8 million in expenses, according to Lauren’s Kids most recent available tax returns. In the same period, the Florida Legislature awarded Lauren’s Kids – which employs Sen. Book as its $135,000-a-year chief executive and counts powerful lobbyist Ron Book, her father, as its chairman – $9.6 million in grants.

The nonprofit’s payouts to Sachs Media for 2016 are not publicly available. A spokeswoman for Lauren’s Kids did not respond to requests to view that information.

Florida Bulldog reported last week that Sen. Book, using a loophole in state conflict-of-interest rules, voted last month to approve a state appropriations bill that included $1.5 million for Lauren’s Kids.

Millions of taxpayer dollars flowed through the nonprofit to Sachs Media as it both promoted Lauren’s Kids and cultivated Sen. Book’s public persona as a survivor of child sex abuse. Critics say the domination of Lauren’s Kids by the senator and her lobbyist-father raises concerns that the work Sachs Media does is more about making her look good, not raising awareness about unreported cases of child sex abuse.

“There is nothing wrong with an individual promoting that they have done good work,” said Daniel Borochoff, founder of Chicago-based CharityWatch. “However, it would appear the father can pull some weight to push the organization in a direction that would be beneficial for the daughter. It is more likely for that to happen more so than helping kids.”

If that’s the case, then the Books and Sachs Media are abusing the public’s trust, Borochoff added. “Nonprofit money is supposed to be used for a public benefit and not to enhance the aspirations of the charity’s officers,” Borochoff said. “But sometimes there is an overlap and it can become a side effect for someone running a charity.”

‘Proud of our work’

Sachs Media founder and chief executive Ron Sachs did not return two phone messages seeking response to a list of detailed questions emailed to him on June 12. Instead, Sachs Media president Michelle Ubben provided Florida Bulldog with a written statement noting that the firm is “not currently engaged by Lauren’s Kids.”

“We are particularly proud of our work to help the Lauren’s Kids foundation develop sexual abuse prevention curricula for grades K-12, and to raise awareness of the signs of child abuse and public reporting requirements,” Ubben’s statement read. She referred specific questions about the firm’s work with Lauren’s Kids to the nonprofit’s spokeswoman and former Sachs Media account executive Claire VanSusteren.

Ron Sachs

“We have worked with Sachs in the past to raise awareness about child sexual abuse,” VanSusteren said in an emailed statement. “[Sachs] has, over the course of several years, completed communications work and engaged a variety of subcontractors related to deliverables for state contracts.”

A former news reporter and editor who did stints as spokesman for Florida governors Reubin Askew and Lawton Chiles, Ron Sachs founded his company in 1996, specializing in corporate branding, marketing and crisis management. His early victories included a 1998 campaign to inform voters on amendments proposed by the Constitution Revision Commission and helping repeal an automatic 20 percent phone rate hike tacked onto a bill in 2003.

Six years later, Sachs landed more than $130,000 worth of work from the Associated Industries of Florida, according to a 2011 Florida Trend article. The same year, Sachs Media was retained by an anonymous group of oil and gas producers called Florida Energy Associates to do a campaign promoting the removal of the prohibition on drilling in the state’s offshore waters.

Sachs Media has also counted the Florida Chamber of Commerce among its clients, producing a web-based public affairs program called “The Bottom Line.”  Another program, “Florida Newsmakers,” features one-on-one interviews with top state bureaucrats answering softball questions. According to an online database of state contracts, Sachs Media has also been awarded small and large media jobs by various state agencies.

For instance, the Florida Lottery paid Sachs Media $150,000 in February 2013 for an educational multimedia campaign. A year later, the Department of Veterans’ Affairs paid Sachs Media $3,720 for table throws stamped with the department’s emblem. The Department of Environmental Protection awarded the firm a $316,250 contract in 2014 to produce a public awareness campaign about the importance of sea turtle nesting beaches in Florida’s Panhandle.

Sachs media faced criticism

Sachs Media has faced criticism over its business practices in recent years. In 2014, the firm dropped a lawsuit it had filed against the family of a paralyzed Broward County man after a public outcry over Sachs Media’s heavy-handed tactics against its former client, who was left brain damaged by the car of a speeding Broward County sheriff’s deputy. Sachs had claimed Eric Brody’s relatives owed the firm $375,000 for four years of public relations and media outreach services.

A year later, a state audit of a $296,105 Sachs Media contract with the Florida Department of Veterans’ Affairs found that the agreement did not clearly establish the tasks to be performed by the firm, did not contain documentation requirements, did not sufficiently identify the activities or services to be provided and included three amendments for an additional $135,421.

“In general, the agreement had no scope of work or deliverable issues,” the audit states. “The amendments did not fall within the original scope of work and did not clearly establish the tasks the provider was required to perform.” (Ubben did not comment on the dropping of the lawsuit and on the audit’s findings.)

According to Sachs Media’s website, the firm was retained by Lauren’s Kids in 2007, the year the nonprofit was founded. “Lauren’s Kids engaged our firm to conceptualize and bring to life a breakthrough strategy that would get people aware, educated, and mobilized to prevent this dark, societal secret – child sexual abuse,” a statement on the website reads. “We branded the Lauren’s Kids Foundation and generated extensive, multi-year media coverage – including the cover of Newsweek – around an annual 1,500-mile walk for awareness throughout Florida.”

In addition, Sen. Book and her cause have been featured by Nancy Grace, USA Today, Lisa Ling, Jane Velez-Mitchell and various local media outlets due to Sachs Media’s public relations work, the website states.

Sachs Media was also involved in helping Sen. Book market and promote her autobiography “It’s OK to Tell” and her annual walk from Key West to Tallahassee, as well as producing billboards, public service announcements and a curriculum for grades K-12 about child sex abuse prevention. The curriculum features web-based video lessons starring Sen. Book and reading materials that recount how she was sexually abused by her nanny during her teen years.

In 2015, Sachs Media conducted an online survey for Lauren’s Kids that found more than one-third of female respondents and one-fifth of male respondents had admitted to being sexually abused as children. However, the accuracy of the online survey, which national polling experts dismiss as being unreliable and inaccurate, could not be verified because Sachs Media declined to provide its methodology and backup data to Florida Bulldog.

The payments

Here’s the breakdown of Lauren’s Kids payments to Sachs Media as detailed in the nonprofits tax returns:

  • $670,032 for “public relations.” That accounted or 33 percent of Lauren’s Kids’ $2 million in expenses that year.
  • $957,977 for “program support,” or 63 percent of Lauren’s Kids $1.5 million in expenses.
  • $579,772, or 20 percent of expenses.
  • $966,100 for programming support. Sachs subcontractor, The POD Advertising, was paid $349,800, with both accounting for 28 percent of Lauren’s Kids expenses that year.

The owner of a Miami-based public relations firm who requested anonymity said the amount of money Lauren’s Kids has paid Sachs Media is shocking. “It’s pretty outrageous that a PR firm is billing that much to a nonprofit,” the owner said. “Usually, you are taking on charities on a pro-bono basis or providing them with a significant discount.”

Claire VanSusteren

Sen. Book, a Plantation Democrat, and Ron Book did not respond to requests for comment. However, Lauren’s Kids spokeswoman VanSusteren defended the work performed by Sachs Media, noting the campaigns have taught Floridians the importance of openly discussing child sex crimes.

“We have received countless calls and messages from parents, educators and law enforcement officers sharing stories of children coming forward and disclosing abuse thanks to our curriculum program,” she said. “At the end of the day, nothing is more important than protecting childhood. That’s what it’s all about.”

For example, she said, Sachs managed content production and communications related to a Lauren’s Kids public awareness campaign called “Don’t Miss the Signs” developed in partnership with the Florida Department of Children and Families.

She claimed that reports of abuse to the DCF hotline rose by 30 percent during the campaign and that Lauren’s Kids has received positive feedback from numerous teachers and police officers about the “Safer, Smarter” curriculum Sachs Media produced. In her statement to Florida Bulldog, VanSusteren included testimonials from unidentified teachers and guidance counselors.

One was from a self-described educator at James M. Marlowe Elementary School in New Port Richey who said, “I love the fact that it’s simple and easy to implement. I love the fact that there isn’t a lot of prep time needed for the lessons.”

Yet, the testimonial said nothing about the curriculum’s effectiveness in preventing child sex abuse.

Miami-Dade Schools gives fat, multi-year lobbying contract to Trump-connected lobbyist

By William Gjebre, FloridaBulldog.org 

Lobbyist Brian Ballard

Seeking an edge in Republican-dominated Washington politics, Miami-Dade public school officials awarded a federal lobbying contract to an influential Florida firm whose chief officer played a significant role in the election of President Donald Trump last fall.

On the recommendation of Superintendent of Schools Alberto Carvalho, the Miami-Dade School Board on Wednesday awarded a contract that could pay Ballard Partners up to $540,000 over five years beginning July 1. The initial three-year contract pays up to $324,000 and can be extended for two years and pay up to an additional $216,000.

The firm, which earlier this year opened an office in Washington D.C., will “provide federal legislative consulting services to assist in advocating the Board’s interest before the South Florida Congressional Delegation, federal legislative committees, and the Executive Branch, including the Secretaries of Education, Commerce, Health and Human Services and Justice,” according to the school board’s agenda item on the matter.

Brian D. Ballard, president of the firm, was a key factor in the awarding of the contract, especially with his link to Trump. He has represented Trump on business matters in the state – on and off – for at least 10 years.

Ballard declined to discuss business matters in which he represented Trump. “I don’t talk about my clients’ ” business, he said.

“I think his relationship with the administration is value added,” said Iraida Mendez-Cartaya, MDCPS associate superintendent, Intergovernmental Affairs, Grants Administration and Community Engagement. Her office requested the issuance of proposals for firms interested in representing the school district in Washington.

“You know it’s about relations and who can open doors … and this specific firm outlined expertise,” Mendez-Cartaya said.

Asked about the role his relationship with Trump played in the selection, Ballard said in an earlier interview that he’d leave speculation for others to address. But he added, “I think it can prove to be value added. I think I can work with this administration.”

The Trump connection

Ballard Partners’ website spells out the connection, especially its most recent involvement leading to Trump’s election. “Brian’s political portfolio includes significant roles in presidential campaigns including the historic election of President Donald J. Trump. He was an integral player in the President’s successful Florida campaign serving as Chairman of the Trump Victory and leading the campaign’s finance efforts in Florida.

Brian Ballard is listed as Trump’s Florida Finance Chairman in this campaign fundraiser announcement

“Brian also had the honor of serving as a member of the Electoral College casting his vote for President Trump. The President-elect appointed Brian to serve as Vice Chairman of the Inaugural Committee and as a member of the Presidential Transition Finance Committee.”

Ballard’s other presidential campaigns involved John McCain in 2008 and Mitt Romney in 2012 when he chaired the Florida Finance Committee for those two Republican Party nominees.

The selection of Ballard by the Miami-Dade school district marks its reentry into the national political scene with a lobbying firm to represent it. The district has been without a federal lobbying firm for nearly 10 years, having cut the expenditure due past fiscal hardships; district staffers took on the work during that time.

Ballard Partners beat out four other firms for the contract. Ballard Partners has offices around the state, including Tallahassee, Coral Gables, Tampa, Jacksonville, Orlando and West Palm Beach.

Speaking of representing the Miami-Dade and its new Washington offices, Ballard said, “It’s exciting for us.” Representing Miami-Dade schools, he said, “can be an important public service.”

“We have a track record of success and expect to be successful,” Ballard said. Aside from ties to Trump, Ballard said many of the Washington legislators served in Tallahassee, adding, “We have a relationship [with them].”

While the company will be a new player, Ballard’s Washington staffers are veterans of Florida and Washington politics. They include Sylvester Lukis, with more than 40 years of experience in representing clients in Florida and Washington; Otto Reich, former ambassador to Venezuela; Susie Wiles, who was a key player in Trump Florida campaign; Dan McFaul, who has been involved in Washington politics for 20 years, including serving as a staffer on Trump’s transition team; and Robert Wexler, who served as a Democratic member of Congress from 1997-2010 and in the Florida Senate for six years.

Using ethics loophole, Sen. Lauren Book votes to give her nonprofit $1.5 million

By Francisco Alvarado, FloridaBulldog.org 

Sen. Lauren Book’s page on Florida Senate web site.

Broward State Sen. Lauren Book voted “yes” last month to approve a state appropriations bill that included $1.5 million for Lauren’s Kids, the nonprofit she founded and leads as its $135,000-a-year chief executive officer.

A gaping loophole in Florida Senate ethics rules allowed Book to cast her vote despite her apparent conflict of interest. The same loophole also meant she didn’t have to disclose her conflict publicly.

Senators are forbidden by ethics rules from voting “on any matter” in which they or an immediate family member would privately gain – except when it comes to votes on the annual General Appropriations Act. Abstaining senators must also disclose the nature of their interest in the matter, according to the 335-page Florida Senate Rules and Manual.

“Legislators are allowed to vote on issues that may benefit their profession,” said Ben Wilcox, research director for the nonpartisan watchdog Integrity Florida. “But it becomes questionable when it is a direct appropriation to an entity that a legislator controls and that would directly benefit that legislator.”

Lauren’s Kids, whose chairman is prominent lobbyist Ron Book, the senator’s father, has in a just few years become one of the Florida Legislature’s most favored private charities. Since 2012, Lauren’s Kids has bagged more than $10 million in taxpayer-funded handouts.

Gov. Rick Scott went along with the latest $1.5 million appropriation for Lauren’s Kids while approving Florida’s $83 billion 2017-18 budget earlier this month.

How that appropriation came to be is a story itself. Lauren’s Kids only asked for $1 million.

Where did extra $500,000 come from?

But more than six weeks after the Florida legislative session ended, nobody is answering questions about how Lauren’s Kids snagged that additional $500,000. Not Sen. Book. Not Ron Book. Not Sen. Bill Montford, the Tallahassee Democrat who sits on the education appropriations subcommittee and sponsored a funding request for $1 million on the nonprofit’s behalf on Feb. 22. And not Rep. Jeanette Nunez, R-Kendall, who sponsored the bill in the House. Each did not respond to detailed requests for comment.

Sen. Bill Montford, D-Tallahassee and Rep. Jeannette Nunez sponsored funding requests for Lauren’s Kids in the state Senate and House

Lauren’s Kids spokeswoman Claire VanSusteren, however, provided a written statement on June 12 summarizing how Lauren’s Kids intends to use the funds and defending the organization’s mission to increase reporting of child sexabuse incidents.

“There is no investment greater than in our children’s safety, and research shows that school-based education is an extremely effective vehicle for prevention and early intervention,” the statement read. “Lauren’s Kids is proud to partner with Florida educators to help arm students with knowledge about personal safety and accessing help.”

VanSusteren did not respond to a follow-up list of questions emailed on June 15 that again requested an explanation of how Lauren’s Kids’ funding request got bumped up from $1 million to $1.5 million between April 27 and May 8. That’s when House and Senate members went into conference committees to hash out the final budget bill. Sen. Book was a conferee for the appropriations conference committee on health care and human services. Montford was a conferee on the committee for education.

Wilcox said Sen. Book should be forthcoming about the additional $500,000 Lauren’s Kids received. “At the very least, she should be as transparent as possible on how that funding was decided,” he said. “It already doesn’t look good to the public given it is a dicey relationship for her in the first place as a sitting legislator who is also a recipient of taxpayer dollars.”

Lauren Book, 32, is a freshman legislator from Plantation. She assumed office just seven months ago after running unopposed and has quickly ascended the state’s political ranks. She is the Democratic Leader Pro Tempore and chairwoman of the Senate environmental preservation and conservation committee. She also sits on the appropriations, health policy and rules committees. Her father’s clients contributed significantly to her campaign and political action committee.

In March, Sen. Book told Florida Bulldog she was advised by Senate counsel “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, who was sexually abused by her nanny in her early teens, said she resigned from the board of directors of the foundation that raises money for Lauren’s Kids and that her salary was restructured to “ensure that no public dollars were used to compensate me for my work.”

At the time, Sen. Book said the Florida Department of Education requested that the Legislature provide $1 million in funding for Lauren’s Kids to continue its “Safer, Smarter” curriculum, a program that teaches students, teachers and parents how to spot signs of child sex abuse and the importance of reporting sex crimes against children.

Lobbyist Ron Book, the senator’s father. Photo from the documentary “Untouchable” by David Feige

The curriculum is made available to children at all grade levels in public and charter schools in all 67 Florida counties, but school districts are not required to teach it. For instance, Indian River County Public Schools and Orange County Public Schools do not use the “Safer, Smarter” curriculum, according to spokespersons for both districts. Miami-Dade Public Schools, the largest school district in the state, uses “Safer, Smarter” at only 80 out of 392 schools, said spokesman John Schuster.

“The curriculum is implemented as classroom guidance lessons facilitated by the school counselor or school social worker,” Schuster said. “The counseling professionals choose the classes where the students will receive the curriculum.”

Data lacking on curriculum results

Schuster said Miami-Dade Public Schools does not track or have any data confirming that the “Safer, Smarter” curriculum has resulted in the reporting of child sex-abuse incidents that would otherwise go undetected. “These reports are made directly to the Department of Children and Families and are anonymous,” he said. “We have no access to this reporting information.”

In VanSusteren’s June 12 statement, she defended Lauren’s Kids work by citing an unverified and questionable  2015 poll the organization commissioned that concluded one in three girls and one in five boys will be victims of sexual abuse by the time they graduate 12th grade. By applying those statistics to the overall public schools student population in Florida, there are “at least 540,000 child victims currently enrolled Florida’s K-12 schools,” the statement read.

VanSusteren insisted 95 percent of child sex abuse is preventable through education and awareness, and that the “Safer, Smarter” curriculum works. “Students who receive education about personal safety and accessing help in unsafe situations are three times more likely to speak up if they are being harmed,” VanSusteren said. “The funds allocated to Lauren’s Kids during fiscal year 2017-2018 will be used to continue our work to bring life-saving resources to Florida classrooms – as recommended in the Department of Education budget, as well as the Governor’s budget.”

However, the Florida Department of Education did not make the funding request for the curriculum, said department press secretary Audrey Walden. She explained the Legislature and the governor must first approve the funding and the department then disperses the funds to Lauren’s Kids and other nonprofit groups that get state money. Organizations must apply to the department and provide a breakdown on how the funds will be spent.

In its March 31 application, Lauren’s Kids stated it would spend $800,000 to print and distribute educational materials and maintain two websites associated with the “Safer, Smarter” curriculum; $100,000 to produce a digital conference; and two separate $50,000 expenditures for an evaluation survey, online training modules for teachers and principals and an educational fair.

“Please note that the department does not require schools to use the curriculum referenced,” Walden said. “It is implemented in schools at the discretion of each school district.”

According to an online legislative database used to track the Lauren’s Kids appropriation, Sen. Montford sponsored a $1 million funding request the same day that Kelly Mallette, governmental affairs director for Ronald L. Book P.A., lobbied the subcommittee on behalf of Lauren’s Kids and three other nonprofits the firm represents.

Montford, who is also the chief executive of the Florida Association of District School Superintendents, has sponsored previous funding requests for Lauren’s Kids. He sits on the appropriations, health policy and rules committees alongside Sen. Book.

According to Montford’s 2016 campaign finance reports, Ron Book, his wife Patricia and his law firm each gave $1,000 to the senator’s re-election effort. Ronald L. Book P.A. also contributed $2,500 in 2014 to a now-defunct political action committee chaired by Montford.

On the House side, the re-election campaign of Rep. Nunez, who sponsored a $1 million funding bill on behalf of Lauren’s Kids, also got $1,000 contributions from Ron Book, his wife and his law firm. Montford and Nunez did not respond to four messages left with their legislative assistants the week of the June 5-9 special session.

FBI asks Miami judge to reconsider, keep secret ‘sensitive details’ about 9/11

By Dan Christensen, FloridaBulldog.org 

The 9/11 hijackers

The FBI is pushing back against a federal judge’s findings that certain classified details about the funding of the 9/11 attacks and the 19 al Qaeda suicide hijackers should be made public.

Specifically, the government is asking Miami U.S. District Judge Cecilia Altonaga to reconsider her May 16 ruling that would largely open for public inspection a 60-page FBI slide show titled “Overview of the 9/11 Investigation.” The FBI showed the overview to the 9/11 Review Commission in secret on April 25, 2014.

The FBI released some of the overview’s pages in full earlier this year, but many more were either partially blanked out or withheld completely for privacy or other reasons. The overview and numerous other FBI records are the focus of an ongoing Freedom of Information Act (FOIA) lawsuit brought by Florida Bulldog one year ago.

Here’s what an FBI official told the court last week about four blanked-out PowerPoint slides regarding “the transfer of money prior to and funding of the attacks”:

“The release of this information would reveal sensitive details about how much money was being moved around, when it was being moved, how it was being moved, the mode of transfer and locations the FBI had detected movements in. Disclosure of this information would provide a playbook to future subjects on how much money one can move around in certain forms without attracting attention,” FBI record chief David M. Hardy said in his sixth declaration in the case.

Questions about who financed the 9/11 attacks are at the heart of sprawling civil litigation brought against the Kingdom of Saudi Arabia and others by survivors and relatives of the nearly 3,000 people who died that day. The plaintiffs and their lawyers contend that the kingdom, its official charities and others were responsible. Saudi Arabia has strenuously denied any wrongdoing.

Florida Bulldog’s Miami FOIA case seeks records of the 9/11 Review Commission. The Bulldog also sued the FBI in 2012 in federal court in Fort Lauderdale seeking records about its 2001-2002 Sarasota investigation of a Saudi family who moved abruptly out of their upscale home two weeks before 9/11 – leaving behind cars, clothes, furniture and other personal possessions. The probe was triggered by neighbors’ calls to authorities, but the FBI never disclosed its existence to Congress or the original 9/11 Commission.

Six months after that initial FOIA case was filed, the FBI released a small batch of records, including an April 2002 report that said agents found “many connections” between the Sarasota Saudis and the hijackers. In 2014, the FBI told the 9/11 Review Commission in closed session that the agent who wrote the 2002 report had no basis for doing so, but did not further explain or identify the agent.

Also in 2014, Fort Lauderdale U.S. District Judge William Zloch ordered the FBI to produce its records about the matter. The FBI turned over all classified records about 9/11 maintained in its Tampa field office — 80,000 pages. The judge continues to review those documents for possible public release.

Trial date sought

Judge Altonaga’s order last month granted in part and denied in part an FBI motion for summary judgment, notably on the lawfulness of the FBI’s redactions of certain information from several records that it has produced. The FBI, however, has not restored any of those redactions, and attorneys for the Bulldog have asked the judge to set a date for trial this summer.

“At trial, the FBI will be required to offer admissible evidence through witnesses – not through inadmissible hearsay by declaration – to attempt to sustain the redactions,” wrote attorney Thomas Julin in a June 2 “Joint Status Report” to the court. “The Bulldog will have the opportunity, in accordance with due process, to cross-examine any FBI witnesses presented.”

The government asked Judge Altonaga to reconsider her prior ruling the same day. The judge has not yet decided whether an FOIA trial is needed, but if one does happen it would be highly unusual.

Hardy, who heads the FBI’s Records/Information Dissemination Section (RIDS), went on in his most recent declaration to discuss other redacted pages in the 9/11 Overview. He said they were withheld to protect FBI “techniques and procedures not well-known to the public as well as non-public details about the use of well-known techniques and procedures.” Hardy’s descriptions shed some light on what’s in those records.

One page, withheld in full, “is a photo taken by a security camera.” The FBI does not identify the photo’s subject, the date it was taken or its general location.

“This was withheld because the release of this picture would disclose the location of the security camera at the site where the photo was taken. The disclosure would allow future subjects to know where to find the security camera so as to avoid the area in which the camera points, thereby circumventing detection or the ability for the FBI and law enforcement to try to obtain an image of the subject.”

Two more pages from the overview section about the FBI’s “ongoing investigation,” also completely withheld, contain “information about a conspirator and his actions taken in preparation for the attacks. This is sensitive information, which if revealed, would put at risk the collection techniques used to obtain such information. It also reveals sensitivities that future subjects could exploit in the future while planning and performing an attack.”

‘Under the radar’

Another page the FBI wants to remain hidden “contains specific factors deemed pertinent in the analysis of the actions of the hijackers’ concerning financial transactions before September 11, 2001. Disclosure of this information would reveal what the FBI already knows about the hijacker’s [sic] financial actions and how they were able to stay ‘under the radar.’”

The FBI’s Hardy similarly advocates for secrecy regarding:

  • The kinds of weapons and identification the conspirators carried.
  • Information about the arrival of the pilots, intended pilots and conspirators in the U.S.
  • Information about when the conspirators moved to their respective departure cities and the timing of their plane ticket purchases.
  • “A timeline of telephone records and money transfers between conspirators.”
  • Information about “previous flights the conspirators took before the attacks to include the collection and timing and locations of flights.”

Finally, Hardy said that information about “investigative leads derived from forensic analysis” and “leads and the sources of data the FBI finds useful to or significant in its analysis” should also remain veiled.

“The places the FBI does not look for information can be just as telling as the places it does look for information,” Hardy wrote.

In responding to Hardy’s assertions in court papers filed Monday, attorneys for Florida Bulldog noted that the “referenced techniques apparently are those techniques that the 9/11 hijackers evaded on September 11, 2001. One would hope that different techniques are in place today.”

“If anything, the PowerPoint slides might reveal outdated, failed law enforcement acts or omissions,” wrote attorney Julin. “The 9/11 attacks on the United States are a consequence, at least in part, of the failure of the FBI and other law enforcement agencies to detect and halt them.”

The government has until Monday, June 19 to file a reply. The judge will then decide whether the case will go to trial.

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