“Serious concerns” about court orders altered by BSO prompt Broward judges’ meeting

By Dan Christensen, BrowardBulldog.org 

Broward County Court Judges Sharon Zeller, right, and Ginger Lerner-Wren

Broward County Court Judges Sharon Zeller, right, and Ginger Lerner-Wren

Concerned that the sheriff’s office has altered the terms of misdemeanor probation orders without informing judges, Broward’s top county court judge has called a meeting of judges for next week to assess what’s happening.

“It is apparent that there is a practice of modifying the terms of probation without the knowledge or input of the judiciary,” Administrative Judge Sharon Zeller said in a recent memo to all criminal division judges that announced the Dec. 10 meeting.

“This raises serious concerns: the legality of probation, with probation, instead of the court, determining the terms of probation; modifying terms of probation without knowledge of the court, and enforcement.”

No law or administrative order of the Broward court authorizes the Broward Sheriff’s Office to engage in the little-known practice of unilaterally changing court-ordered reporting requirements to reduce how often defendants must report in person to a probation officer.

Florida Statute 948.03 gives judges the sole authority to “determine the terms and conditions of probation.”

As BrowardBulldog.org reported last month, Broward County Court Judge Ginger Lerner-Wren discovered what BSO was doing in early October while questioning a defendant. She quickly found that dozens of her probation orders had been changed, and prohibited the practice in her courtroom, calling it “outside the law” and “not in the interest of public safety.”

A probation officer later told the judge in open court, “This is occurring in order to alleviate workforce shortages or pressures.”

In an interview, Judge Zeller said that an attorney for the circuit court, Alexandra Rieman, has researched the matter and “believes that Judge Lerner-Wren is correct.” Zeller said a new administrative order of the court might be needed to address the problem.

“It seems easily solvable,” Zeller said.

DOSAGE PROBATION

BSO Community Programs Director David Scharf, who oversees probation, said in an interview that BSO adopted the practice as policy about 2009, but he declined several requests over the past month to make public a copy of that policy.

The practice, known as “dosage probation,” is based on what Scharf said are “evidence-based” risk assessments of probationers to determine how many doses, or times, a probationer must report in person to an officer. He cited language in standard misdemeanor probation order forms that he said authorizes probation officers to modify conditions imposed by a judge. The form tells defendants that “each month you will make a full and truthful report in person to your probation officer, unless otherwise directed by your probation officer.”

Thousands of misdemeanor defendants are adjudicated guilty every year and many are sentenced to varying terms of probation. Asked how many times BSO changed court-ordered reporting requirements for misdemeanor defendants last year, Scharf declined to answer.

Judge Zeller said she does not plan to ask BSO to provide such an accounting, but said individual judges may do so.

Probationers instructed not to report are nevertheless required to pay BSO the full cost of supervision, a monthly fee of $75.

Take the case of Christopher Thurlow, a Fort Lauderdale man found guilty last April of battery and sentenced to “make a full and truthful report in person to your probation officer” once a month for 12 months. A standard special condition of probation required him to pay the full cost of his supervision, $900, at a rate of $75 a month.

Court and BSO records show BSO later deemed Thurlow a medium risk, placing him on what’s known as Level 2 supervision. Level 2 offenders are told to report in person every other month – or six times a year. In the months they aren’t required to show up for an in-person assessment, they mail in a form with several questions including, “Have you used alcohol excessively or any controlled substances this month?”

No matter how often he reports in person, however, BSO still requires Thurlow to pay the full $900 for 12 months of reporting supervision. “Probationers do pay monthly costs of supervision regardless of their report in status,” BSO spokeswoman Keyla Concepcion explained.

BIG MONEY IN SUPERVISION

Misdemeanor probation supervision fees represent a significant sum for BSO. During the fiscal year that ended Sept. 30, BSO supervised 12,500 misdemeanor probationers and collected $2.8 million in such fees, according to information provided by BSO.

BSO’s probation workload is crushing. Last year, BSO employed just 31 probation specialists to handle the onslaught of probationers.

The State Attorney’s Office has taken a wait-and-see approach, with a spokesman indicating sympathy for Judge Lerner-Wren’s concerns, but saying it’s “not directly our fight.”

In a Nov. 18 memo about the matter to her fellow judges, Judge Lerner-Wren mentioned receiving a call from Sheriff Scott Israel days after BrowardBulldog.org reported the story.

He “wanted to say he was 95 percent in agreement. He also stated he only wants to work with the judges and his office will gladly comply with whatever a judge wants for his or her division,” said Lerner-Wren.

Lerner-Wren, who declined to be interviewed about her conversation with the sheriff, also cited “pertinent” Florida law, including the Separation of Powers provision of the Florida Constitution.

“It seems logical to conclude that unless county criminal division judges transmit a directive to BSO to curtail the systemic practice of changing sentencing orders of probation without court notification or court approval, this practice will continue,” she wrote.

BSO’s practice of altering probation terms could also run afoul of another constitutional provision which expressly grants victims of crime “the right to be informed, to be present, and to be heard when relevant, at all stages of criminal proceedings.”

In Thurlow’s case, for example, the battery victim was not informed about a Nov. 13 hearing at which his terms of probation were discussed, according to a transcript of the proceedings.

Hallandale commissioners cash-in on new travel allowance policy they approved

By William Gjebre, BrowardBulldog.org hallandalecityhall

Hallandale Beach’s new travel reimbursement policy has paid big dividends to city commissioners less traveled.

Five Hallandale Beach city commissioners pocketed nearly $35,000 of their unspent travel allowances last month under the new policy they enacted last year. Previously, unspent travel funds were returned to the city’s general budget.

The new policy, in place since Oct. 1, 2013, allows commissioners to take home any money that’s left in their individual travel accounts at the end of the city’s fiscal year.

Four commissioners got checks from the city shortly after Hallandale Beach’s fiscal year ended on September 30. A fifth commissioner, Alexander Lewy, got his travel allowance payout when he resigned in May. The payouts represented salary boosts of up to 53%.

Mayor Joy Cooper was the only commission member to turn down the payout. Cooper, who spent more city funds traveling than all of the other commissioners, declined $2,781 in unspent funds from her $15,000 travel budget, according to city officials. Cooper traveled extensively to attend local, state and national meetings and conferences.

The five commissioners combined spent $10,145.

“I have no problem receiving it,” said Vice Mayor Bill Julian of his additional income. “It was budgeted money and better than asking for a pay raise.”

“If they wanted a raise they should have voted for one,” said Cooper, who responded in an email to the BrowardBulldog.org. “Elected officials should be here to serve the public, not make a living.”

Julian, who spent only $201 on city travel, got the biggest travel payout, $11,882. His $10,000 allowance as a commissioner was increased by another $2,083 when he was appointed vice mayor to succeed Alexander Lewy, who resigned in May. The increase was to cover more extensive traveling expected of Julian after he took over for Lewy.

Julian said he was “surprised” when he received a note from City Manager Renee Miller increasing his travel budget. The additional funds, he added, were authorized under the new city commission travel policy approved.

This was the total of Julian’s travel spending for the city last year: $125 to attend three local community functions before becoming vice mayor, and another $80 to attend a church sponsored dinner-dance in Dania Beach after he became vice mayor.

“I didn’t go on many trips,” Julian said. He explained that he is the chief caregiver for his 91-year-old mother and found it difficult to be away for “more than a day or two.”

Commissioners Michelle Lazarow and Anthony Sanders each had travel accounts of $10,000. Lazarow spent $2,527 and was reimbursed $7,473. Sanders spent $3,844 and got a check for $6,156.

Commissioner Leo Grachow, appointed to the commission in May to replace Lewy, spent $76 from a pro-rated $4,167 travel account. He received a payout of out $4,091. Grachow lost a re-election bid this month to Keith London, who was sworn in to replace Grachow on the commission on Nov. 17.

Former Vice Mayor Lewy’s travel account for his seven months in office the past fiscal year was $8,750. He spent nearly $3,500 and got paid more than $5,200.

Excluding Cooper, the five commission members received payouts for unspent travel totaling $34,855, or 77.4 percent of their budgets totaling $45,000. Under federal laws, the travel payouts are considered income and taxable.

City commissioners received an annual salary of $22,378 last year. The travel payouts boosted the city income for Julian, by 53 percent; Lazarow, 33 percent; and Sanders, 27%.

Sanders, who did not respond to requests for comment, joined with Julian and Lazarow in voting to approve the travel reimbursement policy in a 3-2 vote in July 2013. Cooper and Lewy were opposed.

Lazarow, said via email that she now has some concerns about the policy and plans to ask the city commission to review it.

“In light of what has transpired since the policy was enacted, I do not believe the item [was] properly vetted, and as result, I will be bringing this back for reconsideration in the near future,” Lazarow stated.

Meanwhile, the city commission will be operating under the same travel policy during the current fiscal year that began Oct. 1.

Not yet sworn in, Curbelo facing FEC’s questions about campaign finances

By Francisco Alvarado, BrowardBulldog.org 

Miami Congressman-Elect Carlos Curbelo

Miami Congressman-Elect Carlos Curbelo

After running a campaign promising to restore public trust and integrity to the seat he won on Election Day this month, Congressman-Elect Carlos Curbelo is already drawing scrutiny from federal regulators.

On November 14, an auditor with the Federal Elections Commission notified Curbelo campaign treasurer Ed Torgas that an amended quarterly campaign finance report filed in late October is riddled with inaccurate or incomplete information about the donors who gave to the Miami Republican’s run for Congress.

In the 11-page letter, FEC campaign finance analyst Ryan Furman cited the Curbelo campaign’s failure to disclose $52,875 in contributions from political action committees in its initial report filed on October 15. That document said Curbelo only got $40,500 in PAC money.

“Please provide clarifying information as to why this activity was not disclosed in your original report,” Furman wrote.

Torgas could not be reached. Curbelo and a spokeswoman for his campaign did not return phone messages seeking comment. BrowardBulldog.org reported November 1 that Curbelo’s campaign was forced to amend its quarterly report on October 29 because donations from 21 PACs were omitted in its original filing.

The campaign also listed tens of thousands of additional dollars of PAC contributions in the wrong place on the quarterly report – under individual donor contributions – meaning that anyone going to look up the campaign’s PAC contributions would find an incomplete list.

After the Curbelo campaign relabeled the misidentified PAC contributions and added the missing ones, the amended report showed he actually received $93,500 from political committees, including private interests like the National Federation of Independent Business ($2,500), conservative former Congressman Allen West ($5,000) and House Republican leaders like House Majority Whip Rep. Steve Scalise, R-La. ($2,000).

Campaign staffers told BrowardBulldog.org that the omissions and misidentified contributions were the result of a glitch with a new software program they were using.

Curbelo beat the incumbent, Democrat Joe Garcia, by capturing 52 percent of the vote to Garcia’s 48 percent. In television and radio spots, as well as on the stump, Curbelo told voters that if elected he would avoid election scandals that dogged Garcia and David Rivera, the Miami Republican who held the seat from 2010 to 2012.

Over the summer, federal prosecutors in Miami identified Rivera as an unindicted co-conspirator who helped finance a ringer candidate against Garcia in the 2012 Democratic primary. Garcia’s ex-campaign manager is under federal investigation for allegedly doing the same against Rivera in the 2010 Republican primary.

Wadi Gaitan, Curbelo’s spokesman until last week, previously told BrowardBulldog.org the campaign always addressed any inaccurate finance reports as soon as staffers discovered them.

“Our campaign takes satisfaction in the fact that we have always adhered to the law – from following election regulations to meeting FEC deadlines,” Gaitan said.

Since organizing in July 2013, Curbelo’s campaign has been beset with problems reporting its finances. Prior to the November 14 notice, the FEC sent the campaign more than a half-dozen so-called “RFAI letters,” or Requests for Additional Information, demanding explanations for missing or unclear information that candidates are required by law to make public.

In its November 18 letter, the FEC identified seven problems with the campaign’s October 29 amended report, in addition to the PAC contributions that had not been listed or were placed in the wrong category.

For instance, Curbelo’s campaign accepted six contributions from individuals and one contribution from a PAC that exceeded the maximum limit allowed by federal law. The contribution cap for individuals is $2,600; $2,000 for PACs.

A committee for Publix Supermarkets gave $6,000. Curbelo’s mother Teresita and Big Sugar scion Jose “Pepe” Fanjul Jr. were among the donors who the FEC said gave more than the maximum. She gave $5,200 and Fanjul gave $5,000.

The FEC also admonished the Curbelo campaign for a number of other violations, including a failure to list the employers for more than three-dozen individual donors, and the full names of several PACs.

FBI probes whistleblower claim of $130 million scam; Plaza Health Network under scrutiny

By Francisco Alvarado, BrowardBulldog.org 

Plaza Health Network's headquarters at 1800 NE 168th St., North Miami Beach. Witnesses saw FBI agents carting off computers and boxes of patient records there for several days last year.

Plaza Health Network’s headquarters at 1800 NE 168th St., North Miami Beach. Witnesses saw FBI agents carting off computers and boxes of patient records there for several days last year.

Since being founded 64 years ago as a convalescent home for elderly Jewish people and war veterans, Plaza Health Network has nurtured a reputation for providing top-notch services to senior citizens of all denominations who can no longer take care of themselves.

But a little-noticed whistleblower’s lawsuit filed in Miami federal court by an ex-Plaza executive alleges the non-profit company scammed the federal government for $130 million.

The FBI, the Miami U.S. Attorney’s Office and attorneys with the civil division the Department of Justice are investigating as a result of accusations made by Steven Beaujon, Plaza Health’s chief financial officer from September 2002 to February 2012. Beaujon stands to collect a substantial reward if his allegations prove true.

According to Beaujon’s 2012 lawsuit, Plaza Health chief executive William Zubkoff, and its board of directors, led by past chairman and Miami Beach real estate developer Russell Galbut, concocted a scheme to dole out secret kickbacks to dozens of south Florida physicians who referred hundreds of Medicaid and Medicare patients to Plaza Health’s eight nursing and rehabilitation centers.

Russell Galbut, left, and William Zubkoff

Russell Galbut, left, and William Zubkoff

Plaza Health allegedly used the patients to submit false claims to Medicaid and Medicare for therapy services that were never provided or charged at inflated cost. A convicted stock swindler ran the company’s therapy program, Beaujon said.

Likewise, the complaint accuses Zubkoff and the board of fraudulently inflating the value of Plaza’s real estate assets to obtain low-interest rate loans from the U.S. Department of Housing and Urban Development.

Galbut and Zubkoff declined comment. Plaza’s current board chairman Ron Lowy, a criminal defense and civil attorney who represents real estate companies owned by Galbut, said Beaujon’s complaint is without merit and the ongoing federal investigation has not found any criminal wrongdoing on the part of Plaza’s management team.

“The government has not taken any type of formal action against Plaza Health Network,” Lowy said. “The lawsuit was filed by a disgruntled employee who asserted all types of outrageous claims.”

Nicole Navas, a Justice Department spokeswoman, said she cannot comment on pending investigations.

GALBUT’S DEEP TIES TO MIAMI BEACH POWER STRUCTURE

A 62-year-old attorney and builder, Galbut has deep ties to Miami Beach’s political power structure where his family has been developing real estate since the 1970s. They began by converting apartment buildings into condos. Today, their company, Crescent Heights, is one of the largest development firms in the country.

In Miami Beach, Galbut and his family own several iconic properties including the site of the shuttered South Shore Hospital, the Alexander Hotel, the Castle Beach Club, 100 Lincoln Road, and the Shelbourne Hotel, which recently reopened after undergoing a $90 million renovation.

In the 1980s Galbut’s law firm was associated with Alex Daoud, a city commissioner elected mayor in 1985 only to see his career end in 1991 with a felony bribery conviction and an 18-month prison sentence.

Galbut, who is building himself an ostentatious 17,000-square-foot penthouse on top of a South Beach parking garage his company is developing, is a big political contributor. In 2013, he and his companies gave $6,000 to a political action committee supporting two city commissioners. Election records show that Galbut and his companies donated $113,750 to various Republican congressional candidates in 2008, 2010, 2012, and the recent midterm election.

Galbut and Zubkoff joined the board of directors for Hebrew Homes for the Aged, Plaza Health’s predecessor company, in 1995 as vice-president and secretary, respectively. A year later, Galbut was elected chairman. Zubkoff was hired as president and CEO in 2007.

Plaza’s seven-member board also includes four people with close ties to Galbut: his brother Abraham Galbut, his cousin Joan Brent, Ben Rozsansky, who works full-time at Galbut’s company Crescent Heights, and chairman Ron Lowy. 

Steven Beaujon, former Plaza Health chief financial officer-turned- whistleblower

Steven Beaujon, former Plaza Health chief financial officer-turned- whistleblower

Under the Galbut and Zubkoff administration, Hebrew Homes changed its name to Plaza Health Network and added six locations with 933 total beds in Allapattah, Aventura, Little Havana, South Beach, North Miami, and North Miami Beach.

According to Beaujon’s whistleblower lawsuit, Galbut and his brother-in-law orchestrated Plaza Health’s alleged scheme to illegally siphon Medicaid and Medicare funds, while paying kickbacks to as many as 55 physicians. Federal law prohibits payments to doctors for referring Medicaid and Medicare patients.

To hide the true nature of the payments, Plaza Health entered into bogus contracts with the doctors to provide medical treatment at its eight facilities. Beaujon alleged, however, that the physicians were not required to show up for work and did not have to submit time sheets for the hours they supposedly worked.

Between 2008 and 2011, Plaza paid $2 million to 11 of the 55 doctors, according to a chart in Beaujon’s lawsuit.

The lawsuit says patients referred by doctors on Plaza Health’s payroll were placed in a physical therapy program run by Herman Epstein – an employee with no medical background and no physical therapy certifications, but a 1999 securities fraud conviction.

FROM BOILER ROOM TO THERAPY ROOM

The criminal case stemmed from Epstein’s participation in a New Jersey boiler room operation that targeted elderly victims.

According to the lawsuit, Epstein’s job at Plaza Health was to fabricate and inflate the number of hours that Medicaid and Medicare patients supposedly received physical therapy. Between 2008 and 2011, the company billed the government programs for $130 million in bogus physical therapy services, the complaint alleges.

Beaujon asserted he was punished with a demotion and minimal pay raises because he kept warning Galbut about Plaza’s illegal activities.

In either February or March 2013, about a year after Beaujon sued, FBI agents raided Plaza Health’s Aventura corporate office and two of its nursing homes, according to three nursing assistants employed by the non-profit who asked for anonymity.

One nursing assistant who worked at the Aventura office said she saw four agents wearing FBI windbreaker jackets carting off computers and boxes of patient records for several days. Another nursing assistant said she also saw FBI agents coming in and out of the Sinai Plaza Rehabilitation and Nursing Center at 201 NE 112th St.

“They would come out with boxes and go back in for more,” she said. “It was something very serious because management had to get out and let the agents do what they had to do.”

Plaza chairman Lowy confirmed the raids took place.

In an October 16, 2013 motion, Assistant U.S. Attorney Franklin Monsour Jr. notified Judge Federico Moreno, who is presiding over Beaujon’s whistleblower case, that the Department of Justice was not intervening in the lawsuit because its investigation had not been completed.

“However, the government’s investigation will continue,” Monsour wrote.

Both employees who witnessed the feds taking records told BrowardBulldog.org that they began hearing rumors the board of directors was looking for an exit strategy after the federal raid.

Indeed, state records show that on Sept. 13, 2013, during the Hebrew holiday of Yom Kippur, Plaza Health informed the Florida Department of Health that it was closing its nursing home at 320 Collins Ave. and would lay off 159 employees. As recently as August of this year, the company contracted with business consulting firm Marcus & Millichap to produce a valuation report on all its nursing homes.

A Plaza Health administrator, who also requested anonymity, said Galbut and the other board members want to find a national for-profit nursing home operator to sell the business to.

“It’s the destruction of the highest quality senior care not-for-profit network in our community,” the administrator said.

Lowy insisted that Plaza Health is no longer in trouble with the feds and that the nursing homes are not for sale. He also added that the company has complied with every subpoena and request for documents by the federal government.

Lowy blamed the union representing Plaza Health’s nurses and nursing assistants, SEIU, for spreading misinformation.

“We are sad that there are entities trying to foster fear that people will lose their jobs,” Lowy said. “We are doing everything possible to make Plaza the best nursing home system in the country.”

An election result you likely missed: anti-corruption referendum wins big in Tallahassee

By Dan Christensen, BrowardBulldog.org anticorruption

Lost in the hubbub of a heated election season headlined by a down to the wire governor’s race, voters in Tallahassee approved a first-of-its-kind municipal anti-corruption referendum intended to limit the influence of big moneyed special interests in local politics.

The new policy, backed 2 to 1 by city voters, amended Tallahassee’s charter to enact bold ethics and campaign finance reforms that supporters say is the beginning of a national grassroots campaign aimed at stopping “the legalized corruption that has come to define modern politics.”

Under the new rules, which have drawn scant media attention outside Tallahassee, city leaders must establish a tough ethics code within six months, and create an independent ethics board to assist the city commission in drafting the code, and then to administer and enforce it.

More notably, candidates for mayor and city commission may no longer accept campaign contributions in excess of $250 per election. And in a twist on public financing for political campaigns, registered voters who contribute to municipal candidates in Tallahassee are eligible to receive a refund from the city equal to the amount of their contributions, up to a maximum of $25.

If successful, the strategy would empower small donors to dilute the undue influence of big money donors.

“This will encourage the common, ordinary citizen to be involved in the election process,” said Peter Butzin, the chairman of Common Cause Florida. “We need to take back local government one local governmental institution at a time.”

Butzin estimated refunds from the city’s general revenues would cost about $200,000 in an election cycle based on the city’s population of about 185,000. “It’s a system we think will be free of any corruption or administrative problems relating to fraud because it will be super easy to administer,” Butzin said.

Pushing to pass the referendum was an unusual coalition of reform-minded conservatives, including tea party groups, and more liberal, good-government interests like Common Cause and the Tallahassee League of Women Voters. Represent.us, a non-partisan, nonprofit based in Northampton, Massachusetts that’s looking to pass similar measures in cities and states across the country, brought them together.

Josh Silver, director of Represent.us

Josh Silver, director of Represent.us

“Tallahassee was our proving ground,” said Represent.us Director Josh Silver. “We got a huge amount of support, but not from the major political parties and that’s because these political parties are entrenched and both are routinely selling out their values to special interest donors.”

Silver, who zeroed in on Tallahassee with the help of Integrity Florida Executive Director Dan Krassner, said his side won without buying a dime’s worth of political advertising.

“We didn’t pay for a single ad,” he said. “People care about democracy, but they get fired up about corruption.”

The vote was a victory for Citizens for Ethics Reform, the local coalition that collected more than 20,000 signatures over the summer to get the anti-corruption measure on the November ballot – more than twice the required number.

One of those who rang doorbells was Anita Davis, a former Leon County commissioner and ex-president of the Tallahassee branch of the National Association for the Advancement of Colored People (NAACP).

“I had very few people that said no. They wanted to know how they could help,” said Davis, a co-chair of Citizens for Ethics Reform.

“We are now the model for the nation,” said the coalition’s other co-chair Catherine Baer, who also chairs The Tea Party Network. “The diversity of our partnership contributed to the success of it. Opponents had a hard time painting it far right or far left.”

Supporters say local action is needed due to the failure of Congress and state legislatures to address the threat to democracy posed by modern corruption schemes.

“America’s anti-corruption laws are dangerously out of date. With so many perfectly legal ways to exchange money in return for favorable treatment from politicians, “quid-pro-quo” bribery has become obsolete. Our broken system requires the people to buy access to their own government — This is the new face of corruption in the United States,” says the Represent.us web site.

Tallahassee sought to block a vote on the anti-corruption referendum as the movement gained steam over the summer.

In August, Tallahassee City Attorney Lewis Shelley sued Citizens for Ethics Reform complaining that the ballot language was “unclear.” But Leon County Chief Judge Charles A. Francis disagreed, and city commissioners later approved putting the matter on the ballot.

Josh Silver, of Represent.us, said the referendum vote is not vulnerable to legal challenge. A Washington lawyer who specializes in campaign finance law agreed.

“The Supreme Court’s Citizens United decision had a huge impact on state races, but only deals with independent expenditures, not contributions. Similarly, last year’s McCutcheon decision did away with aggregate limits on contributions to all candidates, but didn’t outlaw limits to a single candidate,” said the attorney, who declined to be named.

Represent.us has a diverse board of advisors whose political affiliations range from progressive to conservative.

They include Theodore Roosevelt IV, an investment banker and great-grandson of the former president; Richard Painter, an ethics advisor to President George W. Bush; Douglas E. Schoen, Democratic campaign strategist; Norman J. Ornstein, resident scholar at the American Enterprise Institute for Public Policy Research and Tom Whitmore, of DC Tea Party Patriots.

What’s next?

Silver said Represent.us is surveying the country in search of a dozen more cities where the Tallahassee model might be applied in the next two years. The ultimate goal: to get Congress to pass the American Anti-Corruption Act, which among its numerous provisions would prohibit members of Congress from raising funds from the interests they regulate or from acting to benefit those who spend heavily to influence their elections.

“Tallahassee voters have spoken out that they are tired of the corrupting influence of money in politics and they want a better way forward,” said Integrity Florida’s Dan Krassner, who is also a spokesman for Citizens for Ethics Reform. “This anti-corruption victory proves that conservatives and progressives can and will unite behind bold reforms.”

BSO quietly changes court’s probation orders; Broward judge blows the whistle

By Dan Christensen, BrowardBulldog.org 

Broward County Judge Ginger Lerner-Wren, left, and David Scharf, director of community programs for the Broward Sheriff's Office

Broward County Judge Ginger Lerner-Wren, left, and David Scharf, director of community programs for the Broward Sheriff’s Office

Fort Lauderdale resident Christopher Wayne Thurlow was adjudged guilty last April of misdemeanor battery and violating a restraining order. His sentence: 12 months of reporting probation – that is, to appear personally once a month before a probation officer.

But that’s not what happened.

Without informing the court, the Broward Sheriff’s Probation Office changed Thurlow’s court-ordered reporting requirement to once every two months.

Broward County Court Judge Ginger Lerner-Wren, who signed Thurlow’s probation order, chanced to find out October 2 when Thurlow appeared in her courtroom again for arraignment on new charges of resisting arrest without violence and a related criminal traffic charge.

“I asked (the prosecutor) to contact probation, as I knew defendant was currently on probation. The defendant indicated to the court that he was told he did not have to report,” Lerner-Wren told Chief Judge Peter Weinstein in a memo the next day.

At a hearing, Judge Lerner-Wren soon learned from a probation officer that BSO had similarly modified other probation orders without her knowledge.

“This is being done with no court order or other known administrative authority,” she wrote.

Lerner-Wren signed an order banning the practice in her courtroom, calling it “outside of the law” and “not in the interest of public safety.” Her memo adds that Charmin Gilbert, the probation officer, stated “this is occurring in order to alleviate workforce shortages or pressures.”

Since then, Lerner-Wren has informed the court’s top administrative judges by memo that she’s identified dozens of similar cases in her court culled from a list of 125 pending court-ordered probation cases compiled by the probation office.

NUMEROUS PROBATION ORDERS MODIFIED BY BSO

“The majority appear to have been modified, changed or altered without court notification, opportunity for court review and without court approval,” she wrote in an Oct. 29 memo obtained by BrowardBulldog.org. “The practice seems to have emerged as early as 2010, with the pattern apparently being systemized in 2014.”

Lerner-Wren, a veteran member of Broward’s bench, declined comment. But in her Oct. 29 memo she expressed concern about BSO’s actions.

“In my view, this situation raises a number of serious legal issues, particularly as to the integrity of court process, legal enforcement of sentencing orders by the court and potential public safety issues,” she said.

The memo indicates particular concern that BSO Probation’s actions violate the rights of victims of violent crimes.

“It is unknown how many modified cases involve a victim and/or are violence related,” she said. “In my view, this raises constitutional issues relating to the legal question of whether or not victims had a right to be notified and be heard pertaining to a change in post-conviction sentencing.”

County Court administrative Judge Sharon Zeller and Criminal Division chairwoman Judge Mary Rudd Robinson did not respond to requests for comment over several days. Chief Judge Weinstein is on vacation.

Ron Ishoy, a spokesman for State Attorney Michael Satz, said his office is aware of the matter and has been in contact about it with BSO officials.

“It’s not directly our fight (but) we certainly understand Judge Lerner-Wren’s concern and we’ll continue to monitor it,” Ishoy said.

Florida Statute 948.03 gives judges the sole authority to “determine the terms and conditions of probation.”

BSO: NO REAL PROBLEM

But David Scharf, who oversees probation as BSO’s director of community programs, indicated in an interview that his office has modified the terms of court-ordered probation in each of Broward County’s misdemeanor criminal courts because it is standard BSO policy. If so, hundreds or perhaps thousands of cases could be affected.

Scharf added that while he’s aware of judicial concerns about possible illegality, he sees no actual problem.

“Our practice is not contrary to any court order,” he said, citing standard language in misdemeanor probation orders that he says authorizes probation officers to modify conditions imposed by a judge.

That language on forms defendants sign says, “Each month you will make a full and truthful report in person to your probation officer, unless otherwise directed by your probation officer.”

Scharf explained that the practice, known as “dosage probation,” is rooted in what’s known as “evidence-based decision making” that involves the use of “objective risk assessment” criteria to assess whether a probationer is high, medium or low risk. BSO, without court input, then determines how many doses, or times, someone on probation must physically report to an officer.

“We as an agency are committed to public safety. The claim that we are compromising public safety we refute tremendously,” Scharf said. “Our successful completion rates are up.”

Scharf said he does not understand why Judge Lerner-Wren was not aware of BSO Probation’s policy because dosage has been part of BSO policy since about 2009.

“I don’t know what she doesn’t know,” said Scharf, who did not produce a copy of the policy despite several requests. “We have probation officers in court and have for many years. There’s never been a question or an issue about how we operated.”

He said BSO is currently developing a response to the court.

“We’re ready to work with the judiciary and formulate a plan, and if they want more discretion in how they are handling things we certainly are willing to do that – with the caveat that what we are doing is working,” said Scharf.

Meanwhile, Judge Lerner-Wren has informed judicial higher-ups of her plans to schedule “review hearings of all cases identified by BSO Probation to reaffirm court orders, hear input from the parties and evaluate the need for further court action.

“I wanted to share this new information in order that my colleagues may consider what steps, if any, to take in their respective criminal divisions,” she said.

For the public’s right to know or for profit? A town’s showdown with litigious residents

By Dan Moffett, Special to Broward Bulldog 

Martin O'Boyle, left, and Christopher O'Hare

Martin O’Boyle, left, and Christopher O’Hare

A non-profit foundation that bills itself as dedicated to the public’s right to know is a target of angry municipal officials who allege it is actually a money-making tool that uses frivolous public records lawsuits to squeeze payouts from governments in South Florida and across the state.

The small south Palm Beach town of Gulf Stream gave unanimous approval on Oct. 10 to a legal strategy to invoke the federal racketeering statute against two litigious residents, wealthy commercial real estate developer Martin O’Boyle and sculptor Christopher O’Hare, and the group O’Boyle founded, the Citizens Awareness Foundation.

O’Boyle has warned the city that a lawsuit against him could lead to Gulf Stream’s “demise” as a municipality.

Town officials say the class-action RICO suit will allege that O’Boyle used Citizens Awareness Foundation to intimidate, harass and force settlements of meritless public records suits in communities such as Fernandina Beach, Miami, Bradenton, Cutler Bay and Miami Lakes.

“We thought this was about a feud in Gulf Stream,” said Mayor Scott Morgan. “But we learned it was a lot more.”

Commissioners unanimously approved hiring a team of outside lawyers that includes Gerald Richman, a prominent West Palm Beach attorney, who will spearhead the federal RICO case.

Gulf Stream Mayor Scott Morgan

Gulf Stream Mayor Scott Morgan

Richman told the commission that O’Boyle and his Citizens Awareness Foundation had used a “scorched-earth strategy” against Gulf Stream and many other communities.

“We’re well familiar with their tactics,” he said.

Said Morgan: “All the talk about open public access and white knights on chargers helping the common man is nonsense. This has all been about money.”

‘VOLUME OF CASES’ DESCRIBED

O’Boyle, the wealthy owner of the Deerfield Beach-based commercial real estate firm Commerce Group, founded Citizens Awareness in 2013 and Joel Chandler served as its executive director until the relationship soured after a few months earlier this year. A longtime advocate for Florida’s public records laws, Chandler says he quickly became disillusioned with how CAF was run.

“I thought the foundation as originally presented to me would be a wonderful resource for open government across the state,” Chandler said. “What it ended up being is nothing more than a scheme to generate lawsuits for The O’Boyle Law Firm.”

Chandler said he had a quota of 25 public records lawsuits per week to fill and, though he recommended other attorneys, O’Boyle insisted that all the work be done at The O’Boyle Law Firm, a Deerfield Beach for-profit company run by his son, Jonathan O’Boyle, a lawyer based in Johnstown, Pa.

Joel Chandler

Joel Chandler

“The money was in the sheer volume of the cases,” Chandler said. “A lawyer could use a template and file a suit in 15 minutes. We filed hundreds of cases. The typical settlement started at $5,000. It all adds up to millions in legal fees.”

Court papers show that Fernandina Beach paid $5,000 to settle a lawsuit with Citizens Awareness this year. Miami Lakes paid $2,000. Cutler Bay paid $2,250.

In February, Citizens Awareness sued the city of Miami a day after Chandler was turned away at City Hall when he sought to photograph Mayor Tomas Regalado’s appointments calendar.

Marrett Hanna, a lawyer affiliated with The O’Boyle Law Firm and the wife of Mark Hanna, who is O’Hare’s attorney, signed the complaint. The suit is pending in Miami-Circuit Court.

Though O’Boyle and O’Hare filed most of their complaints individually, the town’s federal case will argue they often acted together, town officials said.

In an interview, Chandler said he wanted to work with Gulf Stream, meet with Town Manager William Thrasher, and work out the foundation’s differences over public records.

“O’Boyle was adamant that we wouldn’t do that,” Chandler said. “Marty said we’ll sue and that is all we do.”

Chandler resigned his $120,000 -a-year job at Citizens Awareness in June. Later, O’Boyle sued him alleging Chandler had misused the group’s funds.

Chandler, a longtime government transparency watchdog, denied misusing Citizens Awareness’s funds or any wrongdoing.

“The only things true in the suit against me were my name and that I live in Florida,” said Chandler, 51. The suit is pending.

O’Boyle did not return calls seeking comment for this story but has maintained his goal is to promote transparency in government.

SUIT GREETED WITH APPLAUSE

The Town of Gulf Stream has spent about $370,000 since January in the legal fight against O’Boyle and O’Hare, and billable hours are likely to skyrocket with a new stable of lawyers onboard.

Besides Richman, the town hired a trio of Broward-based lawyers at the Weiss Serota law firm, including former Hollywood City Attorney Jamie Cole. The lawyers specialize in laws governing sober houses — a business venture O’Boyle says he is planning in the town.

Gulf Stream Mayor Morgan says his town has no choice but to defend itself, and if it can win the RICO case, the town can collect attorneys’ fees and triple damages from O’Boyle and O’Hare.

“In my opinion, the town of Gulf Stream has suffered enough,” Morgan said. “The town has been expending funds, and time and resources and morale, and the difficulties of hiring and retaining employees as the result of the scandalously malicious and frivolous lawsuits and public records requests by Mr. O’Hare and Mr. O’Boyle. I think it’s time for the madness to stop.”

Between them, O’Boyle and O’Hare have filed dozens of lawsuits in the state and federal courts against Gulf Stream, as well as more than 1,500 public records requests with the town. The two have joined in at least one of those suits. O’Boyle and O’Hare have both accused the town of being unwilling to negotiate a settlement.

O’Boyle and O’Hare’s original beefs with Gulfstream started several years ago over architectural issues. O’Boyle wanted to redesign the entrance to his home and the town’s architectural board and zoning staff didn’t like the design and said no. O’Hare wanted to put a metal roof on his house, and the town nixed that, too. Things have escalated ever since.

“It’s disappointing and unfortunate when a town sues one of its citizens,” said Mitchell Berger, a Fort Lauderdale attorney who represents O’Boyle. “It’s unfortunate it has come to that over such a matter as public records.”

In September, O’Boyle told the commission he was prepared to “cost the town a million dollars” in legal fees if commissioners did not negotiate with him. He did not attend the October meeting saying he was out of town, but had an associate deliver a letter to the mayor.

O’BOYLE’S WARNING TO THE TOWN

“In connection with the proposed RICO action, Mr. O’Boyle wishes to provide the commission with a warning that any such launch will be met with an unfriendly response,” the letter said. “Mr. O’Boyle reminds the commission that the mayor has been inviting a fight for some time now. Mr. O’Boyle further reminds the commissioners, that should they decide to embark upon and support the mayor’s grand battle, the likely result will be the demise of Gulf Stream.”

O’Hare told the commission that filing a federal case ensures a long and expensive battle: “I bet you $5 million from now, it’s still going on.” He urged the commission to settle.

“RICO is for criminal activity, O’Hare said. “I didn’t know it was a crime to ask for public records.”

O’Hare said he didn’t know about Citizens Awareness until recent weeks and is unaware of the group’s activities. He said he only filed one lawsuit jointly with O’Boyle but did use The O’Boyle Law Firm.

“Mr. Morgan’s claim that this is all about money is simply not true,” O’Hare said. “There is no profit to be had by asserting your right to a public record in court.”

He told commissioners they will cost the taxpayers millions in legal fees on the RICO strategy: “And it’s not your money.”

A cluster of 20 residents at the October meeting broke into applause over the commission’s decision to file suit in federal court.

“I don’t usually agree with what Mr. O’Hare says, but he did say something with which I fully agree,” resident Anthony Graziano told the commission. “It is our money. And we would like you to spend it fighting these gentlemen.”

Morgan said the RICO action would allow the town to settle many disputes in one case.

“We can either take the approach of defending these individual cases as they come in and bleed to death by a thousand cuts,” he said, “or we can take steps necessary to stop those cases by advancing this case. From the evidence that I’ve seen, it’s a conspiracy of sorts to advance actions that essentially do nothing other than shake down municipal agencies.”

This article first appeared in slightly different form in The Coastal Star, a monthly newspaper that covers nine beachside towns and communities in south Palm Beach County.

Curbelo’s campaign blames glitch for missing $50,000 in PAC contributions

UPDATE: This story, published Saturday morning, was modified Saturday afternoon to account for significant errors contained in recent quarterly financial disclosure reports filed by the campaign of Republican Congressional candidate Carlos Curbelo. The campaign’s errors include misreporting tens of thousands of dollars of PAC contributions as having been made by individuals, failing to disclose nearly $50,000 from other political committees and underreporting the campaign’s total contributions, expenditures and cash on hand.

By Francisco Alvarado, BrowardBulldog.org 

U.S. Rep. Joe Garcia, D-Miami, left, and Republican challenger Carlos Curbelo Photo: Univision 23

U.S. Rep. Joe Garcia, D-Miami, left, and Republican challenger Carlos Curbelo Photo: Univision 23

Miami Republican Carlos Curbelo’s congressional campaign was forced to resubmit its most recent quarterly finance report after failing to disclose nearly $50,000 in contributions from 21 political action committees.

In its October 15 report, the campaign listed PAC contributions totaling just $40,500 from ten political organizations that included the American Medical Association and the House Conservatives Fund. It also reported additional tens of thousands of dollars of PAC contributions in the wrong place on the quarterly report – under individual donors – meaning that anyone going to look up the campaign’s PAC contributions would find an incomplete list.

But on Wednesday, with less than a week to go to Election Day, the campaign filed an amended report that correctly listed all of those PAC contributions, while also newly disclosing tens of thousands of additional contributions from other political committees, including private interests like the National Federation of Independent Business ($2,500) and conservative former Congressman Allen West ($5,000) and House Republican leaders like House Majority Whip Rep. Steve Scalise, R-La. ($2,000).

Two Curbelo campaign staffers, who did not want to be identified, said the incomplete report on October 15 was the result of a glitch with a new software program they were using.

“Our campaign takes satisfaction in the fact that we have always adhered to the law – from following election regulations to meeting FEC deadlines. When needed we have amended our reports, as allowed by the FEC, to correct any filing inaccuracies,” said Wadi Gaitan, a Curbelo spokesman.

Curbelo’s campaign has been plagued by federal reporting problems since it was organized in July 2013. Since then, the FEC has sent the campaign more than a half-dozen so-called “RAFI letters” or Requests for Additional Information, demanding explanations for missing or unclear information that candidates are required by law to make public.

A Washington, D.C. attorney not involved in the campaign who who specializes in FEC matters said the Curbelo campaign’s financial misreporting, and the two-week delay in getting it fixed, appears intended to flummox the opposing campaign of incumbent Democrat, Rep. Joe Garcia.

“If you are deliberately misreporting how much money you have on hand you are trying to gain a strategic advantage over your opponent,” said the attorney, who declined to be named. “$50,000 is a significant amount. The Curbelo campaign had 10 percent more money than they reported having. How much your opponent has affects how you will allocate your resources.”

The Republican Party establishment is betting big on Curbelo, a Miami-Dade School Board Member since 2010 who is locked in a competitive race with Garcia for Florida’s 26th District, which includes all of Monroe County and a large chunk of southwest Miami-Dade County.

Mitt Romney, former Florida governor Jeb Bush and U.S. Sen. Marco Rubio are three of Curbelo’s biggest endorsers. Roughly 16 percent of his campaign’s $1.9 million war chest came from national Republican political action committees.

Throughout the campaign, both candidates have attacked their personal connections to scandals and controversies.

Curbelo has told voters they can’t trust Garcia because his former campaign manager, Jeff Garcia (no relation), pleaded guilty last year to absentee ballot fraud and is currently under federal investigation for planting a ringer candidate in the 2010 Republican primary. Garcia has countered that Curbelo is not trustworthy because he will not disclose who his lobbying clients are.

Now, Garcia’s campaign is having trouble keeping track of groups funding Curbelo. Curbelo’s campaign workers said the omissions in the October 15 finance report were not intentional. They said the campaign began using a new software program at the end of September to electronically file its campaign finance reports with the Federal Elections Commission.

“While transferring data to the new program, the coding got damaged,” one worker said. “As we approached the deadline, we decided to file a report with the best information we had available.”

By acting swiftly to correct the problem, the FEC won’t sanction the Curbelo campaign, the workers insisted.

Sheila Krumholz, executive director for the Washington D.C.-based Center for Responsive Politics, disagreed.

“It should certainly raise the attention of the FEC,” Krumholz said. “They are more concerned about discrepancies and conflicts in the reports than they are with a campaign volunteering in a timely fashion that they made a mistake.”

With only days before Tuesday’s election, it’s critical for campaigns to have complete and accurate reports on time, Krumholz explained.

“The impression is if the candidate hasn’t done a good job managing their own campaign reports, how will they be able to manage the people’s business?” she said. “We expect people to have well-organized campaigns so they don’t have such problems.”

Broward PD Finkelstein says bond court judge Hurley must go; Chief judge says no

By Dan Christensen, BrowardBulldog.org 

Broward County Court Judge John "Jay" Hurley Photo: NBC6 Miami

Broward County Court Judge John “Jay” Hurley Photo: NBC6 Miami

John “Jay” Hurley, a Broward County judge who’s gained a measure of online celebrity for his brand of televised justice, will keep his post in bond court despite a call for his removal by Broward Public Defender Howard Finkelstein.

Finkelstein complained to Chief Judge Peter M. Weinstein last week in a letter that Hurley should be booted out of magistrate court for “expressing his contempt for the homeless and members of my office.”

Saying Hurley “has crossed the line,” Finkelstein asked Weinstein to transfer him in a letter recounting five incidents from October 7-15. DVD recordings that Finkelstein said depict “Judge Hurley’s rash and troubling behavior” accompanied the four-page letter.

“Each DVD shows Judge Hurley over-reacting, abusing his judicial authority and acting in a manner unbecoming a judicial officer,” Finkelstein wrote. “His behavior is clearly intended to bully and intimidate the attorneys and prevent them from effectively representing detainees.”

But in a Sunday telephone interview, Weinstein rejected Finkelstein’s request.

“Jay Hurley is doing a fine job. He’s a good judge. It’s a tough assignment and there are all kinds of issues, but there are no plans for him to move,” said Weinstein, who has served as chief judge since 2011.

Specifically, Finkelstein accused Hurley of chastising one public defender, threatening two others with contempt and twice having Chief Assistant Public Defender Nadine Girault Levy thrown out of court for seeking to assist homeless persons charged with violating municipal ordinances.

“On one occasion he actually pressed the panic button to stop her from making legal argument,” Finkelstein told Weinstein. “In an attempt to humiliate Girault Levy, Judge Hurley then ordered her to remain in the courtroom until deputies arrive[d] so she could be escorted from the courtroom by armed deputies.”

Hurley declined comment Friday through his secretary.

The web site CourtChatter.tv streams live video from Broward’s bond court and other locations. In June, Miami’s NBC 6 reported that Hurley has a daily following “on computer screens across the nation.” Site owner Cathy Russon told the station, “Judge Hurley popped into our chat room the other night, and oh my God, it’s like a celebrity that is better than George Clooney.”

Finkelstein, widely known locally as TV legal advice maven “Help Me Howard,” said the judge’s actions followed challenges by public defenders to Hurley’s “refusal to appoint counsel to homeless persons” charged with violating city ordinances.

Florida’s court operations are funded by the state, except for criminal violations of city ordinances. If a police officer arrests an indigent for a municipal infraction, the city must pay for a defense lawyer.

But city paid defense lawyers, like city prosecutors, typically don’t appear at bond hearings due to cost considerations. They only show up after the case proceeds to court.

Public defenders are state-funded and do not handle municipal cases. Yet they are always present at magistrate hearings and are permitted by law to counsel indigent defendants and ensure they get the rights to which they are entitled.

And that’s the rub. Indigents accused of minor city violations are, in what Finkelstein said in an interview is Hurley’s encouragement; often plead guilty in exchange for a sentence of a few days or time served.

“He is more focused on quickly moving through the docket than ensuring that defendants understand the process,” Finkelstein said in his letter.

Hurley’s refusal to appoint a lawyer to defend homeless persons arrested for municipal violations is allegedly personal.

In his letter, Finkelstein told Chief Judge Weinstein that at an Oct. 14 hearing Hurley went into a 10 minute “impromptu tirade” in which he “interjected his personal feelings into the proceedings and admitted that his wife and family had been approached by the homeless while in their car in traffic. He attempted to minimize his comments by characterizing them as ‘venting’ and repeatedly emphasized his compassion for homeless people while he continued to complain about being harassed by the homeless.”

Finkelstein also cited Hurley’s handling of defendant Gregory Williams at an Oct. 8 bond hearing. Via video proceedings, Williams told the judge that he was deaf and did not use sign language, but did read lips.

“Judge Hurley completely ignored (Chief Assistant PD) Girault Levy’s request to appoint counsel to Williams and to transport Williams to the courtroom so he could read the court’s lips and understand the hearing,” Finkelstein wrote.

Instead, Hurley accepted a no contest plea from Williams over video.

“Judge Hurley relied on a detention deputy to “translate.” It is apparent that Williams did not understand what was said and only wished to be released from custody, Finkelstein told the chief judge. “Judge Hurley denied Williams due process of law and failed to accommodate his disability in order to expedite and extricate a plea.”

Weinstein, while declaring his support for Hurley, acknowledged the court has “issues with how we deal with municipal ordinance violations” and said he’s taking steps to address them.

“We are in the process of working on a new administrative order to make things a lot clearer,” Weinstein said. He said the changes should be implemented by the end of the year.

Rick Scott and allegations of corporate spying and theft by a company he helped oversee

By Dan Christensen, BrowardBulldog.org 

Rick Scott celebrates his Republican primary victory over Bill McCollum at the Hilton Fort Lauderdale Marina on Aug. 24, 2010. One month earlier, Envestnet, a company where Scott was an investor and board member, settled civil charges of corporate espionage and theft.

Rick Scott celebrates his Republican primary victory over Bill McCollum at the Hilton Fort Lauderdale Marina on Aug. 24, 2010. One month earlier, Envestnet, a company where Scott was an investor and board member, settled civil charges of corporate espionage and theft.

Most Floridians know that before Rick Scott was governor he headed a hospital chain that paid an unprecedented $1.7 billion to resolve criminal and civil charges of Medicare and other healthcare fraud.

Much less known is the story of Scott’s involvement as an investor, director and paid consultant at another company that settled civil claims of corporate spying and theft a month before Scott’s 2010 victory in the Republican gubernatorial primary propelled him toward the governor’s mansion.

The company is Envestnet, a Chicago based firm that sells financial software to clients like giant Fidelity Investments.

Scott and his aides did not respond to written requests to discuss the governor’s involvement with Envestnet, or the 2009 federal breach of contract lawsuit brought against it by a Denver, Colorado company called Fetter Logic.

Records, however, show that Scott began investing in Envestnet at its inception as a privately held company 14 years ago. He served on Envestnet’s board of directors from 2001 until March 2010. In 2009, Scott was on the board’s compensation committee.

On his 2010 financial disclosure, Scott valued his Envestnet shares at $2.1 million. That didn’t include his beneficial interest in another $1.2 million in Envestnet shares acquired by First Lady Ann Scott’s revocable trust between 2001 and 2008. Florida law does not require state office holders to declare assets owned by a spouse.

The disclosure form, filed six months after Gov. Scott took office, also says that Envestnet paid Scott $10,100 that year for unspecified consulting work.

A 2008 DEAL GONE BAD

The litigation, including a countersuit filed by Envestnet against Fetter Logic, arose out of a December 2008 deal in which the two companies had agreed to work together to integrate their separate software applications and to develop and sell joint data management products to brokers and investment advisors.

Envestnet invested $5.7 million in the much smaller Fetter Logic as part of the agreement.

But the deal quickly soured, and in November 2009 the companies sued each other in federal courts in Denver and Chicago for breaching their agreement. Fetter Logic did not accuse Scott, or any individual Envestnet board member, of wrongdoing or name them as defendants.

Envestnet, with reported total revenues of $77.9 million in 2009, claimed the much smaller Fetter had failed to disclose serious financial problems that would have kept it from investing in Fetter. In opposing court papers, Fetter said that instead of working with it, Envestnet planted an executive in Fetter’s office who proceeded to steal Fetter’s copyrighted software and “trade secrets” and handed them over to Envestnet.

“Envestnet used its position of trust to raid Fetter Logic and to steal Fetter Logic’s proprietary business information and intellectual property,” says the company’s amended complaint. “Once Envestnet had what it need from Fetter Logic, it severed all ties.”

“The result…was catastrophic for Fetter,” Chief Executive David Fetter said in court papers.

Envestnet officials celebrate the company's IPO at the New York Stock Exchange, July 29, 2010.

Envestnet officials celebrate the company’s IPO at the New York Stock Exchange, July 29, 2010.

Despite the seriousness of the allegations, the case settled quickly. It came in July 2010 as Envestnet was poised to conduct an initial public stock offering, and by now former Envestnet board member Rick Scott was locked in a tight primary campaign against Florida Attorney General Bill McCollum.

Envestnet went public July 29, selling 7 million shares at an initial offering price of $9 a share. Scott defeated McCollum on Aug. 24th.

ENVESTNET WALKS AWAY FROM $5.7 MILLION FETTER LOGIC STAKE 

The settlement agreement was not made public. But Envestnet’s 2011 annual report filed with the U.S. Securities and Exchange Commission states that the settlement caused it to relinquish its $5.7 million ownership interest in Fetter.

In an interview Monday, David Fetter confirmed that his company kept Envestnet’s $5.7 million investment as part of the settlement deal. He also said he did not know what role, if any, Scott may have played in Envestnet’s actions.

“I think he was involved in approving the agreement, but I don’t have any specific knowledge of his participation,” said Fetter, adding that he only now was learning that former Envestnet board member Richard L. Scott was in fact Florida Gov. Rick Scott. “I didn’t meet him.”

Gov. Scott stopped publicly disclosing information about his stake in Envestnet after April 30, 2011, the day he placed all financial assets in his name or the name of his revocable trust in the newly created Richard L. Scott Blind Trust. He valued his approximately 123,700 Envestnet shares at $1,639,233 – a reported $500,000 decline in value from just four months earlier, Dec. 31, 2010.

Scott later became the beneficiary of a new state statute, which he signed into law in May 2013, that gave him and other public officials who place their assets in a “qualified” blind trust immunity from prohibited conflicts of interest.

The law was intended to eliminate conflicts in his official duties by “blinding” public officers like the governor, and the public, to the nature of their holdings. But as BrowardBulldog.org reported last March, the law has been ineffective in preventing public disclosure of Scott’s investments.

Scott raised the curtain on his stock holdings again briefly in June of this year when he dissolved his blind trust and filed “full and public disclosure” of his financial interests to ensure that he qualified to run for re-election. Florida’s Constitution requires such disclosure of candidates for public office.

The governor then opened a new blind trust to hold his assets.

At the same time, Scott released his joint income tax returns for 2010-2012. Last week, following a six-month extension to file, he made public his joint 2013 return.

SCOTTS BEGIN UNLOADING ENVESTNET STOCK

The tax returns show the Scotts began unloading their Envestnet stock in 2011. Mrs. Scott’s trust – the Frances Annette Scott Revocable Trust – reported collecting $1.2 million by disposing of nearly 97,000 shares in 21 transactions between May and December of that year. The trust acquired those shares between 2001 and 2008. The total gain was $480,000.

The couple’s 2012 tax return showed an even better rate of return for shares held in the governor’s name. In 35 transactions between January and May, Scott sold more than 127,000 shares for nearly $1.6 million – a reported gain of more than $900,000. Scott acquired those shares between May 2000 and February 2010.

The Scotts’ 2013 tax return does not report any transactions involving Envestnet shares. The governor’s financial disclosure form for 2013 likewise does not report any Envestnet assets or income.

In 1997, Scott resigned as chief executive of hospital giant Columbia/HCA, a company he founded, several months after FBI and IRS agents raided a company facility in Texas as part of a sweeping federal investigation into suspected Medicare and Medicaid fraud. The investigation focused on allegations of overbilling, fraud, kickbacks to physicians and other illegal practices. The company later changed its name to HCA.

The investigation lasted six years. Along the way, HCA subsidiaries pled guilty to substantial criminal conduct and paid more than $840 million in criminal fines, civil restitution and penalties, according to a 2003 Department of Justice press release.

Other litigation later brought the government’s total recovery from HCA to $1.7 billion, “by far the largest recovery ever reached by the government in a health care fraud investigation,” the release said.

Scott was not charged with any crime; nor was he questioned during the criminal investigation.

But in 2000, while that investigation was ongoing, Scott asserted his Fifth Amendment right not to testify against himself 75 times in a deposition taken in a civil case involving Columbia/HCA. He did so on his lawyer’s advice.

Scott’s current opponent, former Gov. Charlie Crist, has sought to use that to score political points with voters in advance of the Nov. 4th election.

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