Skeptical U.S. judge gives FBI two weeks to conduct better search of 9/11 records

 

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UPDATE 4/4/14 — Troubled by “inconsistencies” and the government’s sometimes “nonsensical” legal arguments, a federal judge on Friday ordered the FBI to conduct a detailed search of its records for information about apparent terrorist activity in Sarasota prior to 9/11.

Fort Lauderdale U.S. District Judge William J. Zloch, saying the Justice Department had failed to show that the FBI satisfied the requirements of the Freedom of Information Act, gave the FBI precise instructions as to how the search is to be conducted, right down to the text terms to be used and the databases to be queried.

The judge also imposed a tight deadline. The FBI must conduct the search and produce photocopies of all documents it finds to him by April. 18, two weeks from the date of his order.

A full story about this significant development in BrowardBulldog.org’s FOIA lawsuit seeking information about a local Saudi family’s ties to the 9/11 hijackers will be published this weekend.

By Dan Christensen and Anthony Summers, BrowardBulldog.org 

April 1 – A federal judge Monday ordered the FBI to conduct a more thorough search of its vast files to identify documents about its once secret investigation of terrorist activity in Sarasota prior to 9/11.

Fort Lauderdale U.S. District Judge William J. Zloch’s order also rejected a request by the Department of Justice to throw out the Freedom of Information case filed by BrowardBulldog.org in September 2012. Justice has argued that the release of certain information about the matter “would reveal current specific targets” of national security investigations.

The suit alleges the government has improperly withheld information about a local Saudi family’s apparent connections to terrorists including 9/11 hijack pilot Mohamed Atta and Adnan Shukrijumah, the former Broward resident and alleged al-Qaeda figure who’s got a $5 million federal bounty on his head.

“This is a huge step in the right direction,” said Miami attorney Thomas Julin, who represents the four-year-old news organization. “The decision tells the FBI that this federal judge wants to make sure that the truth comes out.”

In his four-page order, Judge Zloch said he would issue a separate order detailing steps the FBI must take to comply with his order requiring the additional records search.

BrowardBulldog.org asked the court in July to compel the additional document search. The suit was filed after the FBI denied the news organization’s record requests under the Freedom of Information Act.

FBI RECORDS CONTRADICT PUBLIC STATEMENTS

Six months after the lawsuit was filed, the Bureau unexpectedly released 35 heavily redacted pages, including four pages that were completely blanked out, and asserted it had no more responsive documents to produce. The declassified pages flatly contradicted earlier public statements by FBI agents in Sarasota and Miami that the decade-old investigation had found no evidence of terrorist activity.

In his order, Zloch noted the government has provided him with un-redacted copies of those pages “for the court’s inspection.”  Whether that information played a role in the judge’s decision is not known.

The Miami Herald and the Sarasota Herald-Tribune, in a friend of the court brief last week, argued to the court, “The Broward Bulldog has provided this court with ample evidence establishing that the FBI could not have possibly conducted adequate (record) searches.

In the motion requesting a better search, attorney Julin proposed a number of measures the FBI could take to identify records: Use its $440 million Sentinel computer system, employ better word searches and conduct a manual review of all 15,342 documents about its 9/11 investigation, code-named PENTTBOM, said to be stored in the FBI’s Tampa field office.

The FOIA lawsuit seeks FBI records about its investigation of “activities at the residence at 4224 Escondito Circle in the Prestancia development near Sarasota, Florida prior to 9/11/2001 The activities involved apparent visits to that address by some of the deceased 9/11 hijackers.”

TIES TO TERRORISTS, TIES TO ROYALS

The address was the home of Abdulaziz and Anoud al-Hijji until August 2001, when the couple quit their home and returned to Saudi Arabia –leaving behind cars, furniture, clothing, food and other items. Anoud al-Hijji’s father, Esam Ghazzawi, a longtime advisor to a senior Saudi prince, owned the home.

Within hours of the attacks on New York and Washington, the al-Hijji’s neighbors began calling the FBI and other law enforcement agencies to tell them about the couple’s abrupt departure.

BrowardBulldog.org first disclosed the FBI’s Sarasota investigation in September 2011. The story reported how agents who searched Prestancia’s gatehouse found logbooks and snapshots of license plates that provided evidence that vehicles used by the hijackers, including Atta, had visited the home. An analysis of phone calls to and from the home also found links to Atta and Shukrijumah, according to a law enforcement source.

An FBI informant later reported that prior to 9/11 al-Hijji had introduced him to Shukrijumah at a soccer game at a Sarasota mosque.

Records obtained from the Florida Department of Law Enforcement show the FBI continued to investigate until at least 2004, when the informant was interviewed. The Bureau, however, never disclosed the existence of its investigation to either Congress’s Joint Inquiry into the attacks or the subsequent 9/11 Commission, according to former Florida Sen. Bob Graham, who co-chaired the Joint Inquiry.

Graham has accused the FBI of impeding Congress’s inquiry into 9/11.

The 31 pages of FBI records released one year ago say that the Sarasota Saudis who “fled” their home before the attacks had “many connections” to “individuals associated with the terrorist attacks on 9/11/2001.”

The records list three individuals, including one identified as a relative of the al-Hijjis, but their names were blanked out. All three, however, were tied to the Venice, Fl. flight school where Atta and fellow hijack pilot Marwan al-Shehhi trained.

Attorney Julin said Monday’s federal court ruling could lead to a better public understanding of the attacks that killed nearly 3,000 Americans.

“Maybe now we’ll get a chance to find out what the FBI knew about the Sarasota Saudis and why it did not tell Congress,” said Julin.

Anthony Summers is co-author with Robbyn Swan of The Eleventh Day, an account of 9/11 that was a finalist for the 2012 Pulitzer Prize for History.

Gov. Scott’s blind trust deviates from U.S. model; Florida law omits federal safeguards

 

By Dan Christensen, BrowardBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

When Florida’s Commission on Ethics OK’d Gov. Rick Scott’s blind trust last September it acted after being told by the governor’s lawyers that it was “modeled on the blind trust of the federal Office of Government Ethics.”

But the governor’s blind trust – packed with more than $70 million in Scott’s stocks, bonds and other financial assets – deviates substantially from the federal model.

BrowardBulldog.org compared Florida’s qualified blind trust statute, signed into law by Gov. Scott last May 1, with parallel federal regulations and found that Florida’s law omits more than a dozen federal requirements intended “to assure true blindness.”

“At first blush, the Florida qualified blind trust legislation appears to be a significant step forward,” said Jan Jacobowitz, director of the Professional Responsibility and Ethics Program at the University of Miami School of Law. “However, upon closer examination it becomes apparent that it lacks many significant federal safeguards. Without them, Florida’s law cannot render public officials fully accountable for potential and actual conflicts of interest.”

Perhaps the starkest difference between the federal and state rules is in who is allowed to serve as a trustee of a blind trust.

A QUESTION OF INDEPENDENCE

Federal law requires trustees and their employees to be “independent of and unassociated with any interested party so that it cannot be controlled or influenced in the administration of the trust.” Ex-employees are explicitly prohibited from administering a blind trust set up by their former employer.

Gov. Scott chose Hollow Brook Wealth Management and its chief executive, Alan Lee Bazaar, to manage the blind trust he created in April 2011, a few months after taking office. Before announcing his run for governor, however, Scott employed Bazaar for more than a decade as managing director and portfolio manager at Scott’s eponymous investment firm, Richard L. Scott Investments.

“Under this federal definition, the trustee in the instance you have described would not appear to qualify as independent given the past business association,” said Washington, D.C. attorney Robert L. Walker, former chief counsel and staff director of both the Senate and House ethics committees.

“A public official should not be able to circumvent or undermine the underlying public policy considerations for the law by appointing an institution as trustee where the CEO of that institution would fail to meet the requirements for being appointed,” said Jacobowitz.

First Lady Ann Scott

First Lady Ann Scott

Hollow Brook is similarly afflicted by its current and prior relationships with Scott and his family.

“Generally, a financial institution will be considered independent if you or your family has no relationship with it other than savings, checking or other types of similar accounts,” the Office of Government Ethics informs Executive Branch employees entering public service.

HOLLOW BROOKS ADVISES THE FIRST LADY, TOO

According to U.S. Securities and Exchange Commission records, however, Hollow Brook also serves as investment adviser to other multi-million dollar Scott holding entities – a family partnership controlled by First Lady Ann Scott and a revocable trust set up for her benefit. Gov. Scott is a beneficial owner of those entities, the records show.

Attorney Walker called that relationship “problematic” under the federal statute.

Further, the governor’s general counsel, Peter Antonacci, told the Florida Times Union in September that Gov. Scott was a Hollow Brook client before he took office. Antonacci, with tax lawyer James T. Fuller of Williams & Connolly in Washington, D.C., requested the ethics commission’s opinion last year.

The governor’s office was asked to explain why Florida’s blind trust law – passed unanimously by a Legislature controlled by Scott’s fellow Republicans – does not include the missing federal level safeguards, whether Gov. Scott was aware of those omissions when he signed the bill, and whether he believes the law as written is adequate or should be changed.

“Senate Bill 2, a top priority for legislative leadership last session, made critical reforms to Florida’s Code of Ethics, including the first blind trust requirement in Florida’s history. Governor Scott gladly signed the bill into law,” said spokesman John Tupps.

Hollow Brook likewise does not appear to meet federal eligibility rules to serve as a trustee for Executive Branch employees because its ownership is too concentrated. Federal rules, which Florida did not adopt, say financial institutions may serve as an independent trustee if they are “not more than 10 percent owned or controlled by a single individual.”

Alan Bazaar, CEO of Hollow Brook Wealth Management

Alan Bazaar, CEO of Hollow Brook Wealth Management

Hollow Brook, based in New York City, is a nine-employee firm with four owners, including Chairman Edgar Wayne Nordberg who owns at least 25 percent of the firm, according to SEC records filed in January. Bazaar owns at least 10 percent, but not more than 25 percent of Hollow Brook, the records say.

“The public is not benefiting from the legislature’s blind trust law that allows officials to hide their stock holdings,” said Dan Krassner, executive director of the nonpartisan government watchdog group Integrity Florida. “The blind trust concept created in Florida definitely would not comply with federal law that requires the trustee to be more independent.”

BLIND TRUST LAW PROTECTS GOV. SCOTT

The ethics commission’s recent ruling that Gov. Scott’s trust complied with state law means that as long as the governor stays in compliance he is entitled to the law’s protections, namely immunity from prohibited conflicts of interest.

Yet the differences between the tougher federal regulations and Florida’s approach serve to undermine the purpose of Florida’s blind trust law. That is, to eliminate conflicts of interest, or the appearance of conflicts, by putting a public officer’s assets outside his knowledge or control.

Likewise, the governor’s trust itself has been ineffective in preventing the disclosure of Scott’s assets. Three weeks ago, BrowardBulldog.org reported that public records at the SEC reveal millions of dollars in recent stock sales by the blind trust and show that in the case of one company, Argan Inc., Scott’s trust continues to own nearly a million shares worth in excess of $27 million.

Argan does business in Florida through it’s principal subsidiary, power-plant builder Gemma Power Systems.

Federal and state blind trust laws share certain features such as prohibiting public officials from attempting to influence asset management decisions or seeking information about their trust’s holdings. Both also require the disclosure of a complete list of assets initially placed in the trust.

But federal laws and rules regulating blind trusts include additional safeguards not found in Florida’s statute. Under the federal rules:

  • Executed trust agreements and any amendments to them are public records. The Legislature rejected an effort to require those agreements to be made public when the law was enacted last year, and Gov. Scott’s trust agreement with Hollow Brook remains hidden. The governor’s office denied a request to release it.
  • The director of the Office of Government Ethics (OGE) reviews and certifies federal qualified blind trusts, and has the authority to revoke approval of a trustee for violations of trust restrictions. In Florida, an eight-member ethics commission, five of whom were appointed by Scott, approved Scott’s blind trust. The commission has no statutory authority to remove a trustee for misconduct.
  • Federal trustees are required to send periodic reports about the trust’s performance to the OGE director, make the trust’s books available for OGE inspection, and file an annual certificate of compliance with the law by May 15. Florida law imposes no such requirements on trustees, nor does it authorize the ethics commission to review a blind trust’s books of account.
  • Within 30 days of the dissolution of a qualified trust, the interested party must file a current list of assets and values with the OGE. There is no such rule in Florida, despite a 2010 Statewide Grand Jury recommendation that any blind trust law include a rule requiring “full disclosure” when trusts terminate. Federal law defines an interested party as the government employee who established the blind trust, their spouse and dependent children.
  • Public officials, their spouses or independent trustees or other fiduciaries who violate obligations under the law or the trust instrument face civil penalties of up to $10,000 for knowing violations and $5,000 for negligent violations. Florida’s blind trust law imposes no penalties for violations.

“It’s interesting to note that Florida elected to pass a law without the additional federal requirements,” said Jacobowitz. “It would be interesting to know why so many of the federal requirements were discarded in the enacting of the Florida legislation and what role, if any, various lobbying interests might have played in influencing the final legislation.

TO DISCLOSE OR NOT DISCLOSE

Aside from the blind trust laws, a gulf continues to separate the U.S. and Florida about the proper scope of financial disclosure to be made by public officers. Florida does not require disclosure of the assets or income of a spouse or minor child. The federal government does.

In the case of Gov. Scott, that has led to a strange dichotomy.

In multiple documents filed at the U.S. Securities and Exchange Commission, Scott is identified as the “beneficial owner” of shares of stock worth many millions of dollars that are held by the Scott family partnership and the revocable trust for the benefit of Ann Scott, his wife of more than 40 years.

Back home in Florida, however, Gov. Scott is not obliged by law to publicly disclose his financial interest in those multi-million dollar entities, identify the specific investments they hold or say how much they’re worth.

Likewise, the public remains unaware of other assets those entities hold that may create conflicts of interest for Scott in his duties as governor.

Citing broad public interest, newspapers ask judge to deny U.S. bid to block 9/11 lawsuit

 

By Dan Christensen and Anthony Summers
BrowardBulldog.org 911weremember

Two Florida newspapers have asked a Fort Lauderdale federal judge to deny the Justice Department’s effort to shut down a Freedom of Information lawsuit seeking records from an FBI investigation into apparent terrorist activity in Sarasota shortly before 9/11.

BrowardBulldog.org filed the suit in September 2012 alleging the government was improperly withholding records on the matter. The government, after unexpectedly releasing 31 highly censored pages last spring, argued the court should end the case due to national security considerations and asserted that a “reasonable search” had determined “there are no agency records being improperly withheld.”

Court papers filed Tuesday by attorneys for The Miami Herald and the Sarasota Herald-Tribune say they were intervening “to stress that the outcome of this case is a matter of intense interest to the media and the public generally.” The newspapers also argued that “government officials charged with investigating terrorist connections in our state must also be held fully accountable.”

“The Broward Bulldog has provided this court with ample evidence establishing that the FBI could not have possibly conducted adequate searches in response to its federal Freedom of Information Act request,” said the joint brief filed by Tampa attorneys Carol LoCicero, Rachel Fugate and Mark Caramanica. “The stakes are simply too great to accept as a matter of law the government’s vague, often second hand conclusions as to the adequacy of its document searches.”

The newspapers’ friend-of-the-court brief asks U.S. District Judge William J. Zloch not to be “too quick” to accept an agency’s claim that it conducted “an appropriate search,” citing examples where records that should have been produced were not.

One cited case involves the conservative watchdog group, Judicial Watch, which sued in 2012 seeking records about the Obama Administration’s alleged coordination with the producers of Zero Dark Thirty, the motion picture about the hunt for Osama bin Laden. Allegations had been made that the White House provided the filmmakers with access to highly sensitive national security records in order to burnish President Obama’s reputation prior to the 2012 election.

A judge ordered the CIA to produce records about the matter, “but it was only months later that additional ‘overlooked’ documents were produced that included illuminating correspondence among the White House, the Department of Defense and the CIA suggesting a coordinated effort to provide a heightened level of access to the filmmakers and a desire that the administration be portrayed positively.”

Broward Bulldog.org, represented in the suit by Miami attorney Thomas Julin,  first disclosed the existence of the FBI’s Sarasota investigation in September 2011.

The story reported how, a decade earlier, the FBI had found direct ties between 9/11 hijackers and a young Saudi couple, Abdulaziz and Anoud al-Hijji, who appeared to have hurriedly departed their upscale home in a gated community in the weeks before 9/11 – leaving behind cars, furniture, clothing, a refrigerator full of food and an open safe in the master bedroom.

Anoud al-Hijji is the daughter of the home’s owner, Esam Ghazzawi, a long-time adviser to a senior Saudi prince. Ghazzawi was also a focus of FBI interest after 9/11 when agents sought to lure him back to the U.S. from Saudi Arabia to close the transaction when the home was sold, according to a lawyer for the homeowner’s association.

Agents searched gatehouse logbooks and license plate snapshots and found evidence that vehicles used by the hijackers, including ringleader Mohamed Atta, had visited the home, according to a counterterrorism agent who spoke on condition of anonymity. A sophisticated analysis of incoming and outgoing phone calls to the home also established links to Atta and other terrorists, including Adman Shukrijumah, the agent said.

FBI Director Robert Mueller  with wanted poster for Adnan Shukrijumah

FBI Director Robert Mueller with wanted poster for Adnan Shukrijumah

Shukrijumah, a former Miramar resident, is currently on the FBI’s “most wanted” list and the State Department is offering a $5 million reward for information leading to his capture.

The FBI publicly acknowledged its investigation but said it had found nothing connecting the al-Hijjis to 9/11.

Former Florida Sen. Bob Graham, who chaired Congress’ Joint inquiry into the attacks, has said the FBI never informed Congress or the subsequent 9/11 Commission about its Sarasota investigation.

The story has taken several twists since news of the investigation first broke.

In February 2012, Florida Department of Law Enforcement documents obtained using the state’s public records law showed that in April 2004 Wissam Hammoud, a now imprisoned “international terrorist associate” then under arrest in Hillsborough County, told the FBI that al-Hijji considered Osama bin Laden a “hero” and may have known some of the hijackers who trained at a flight school in Venice, about 10 miles from the al-Hijji residence. Hammoud also told the FBI then that al-Hijji had  introduced him to Shukrijumah at a soccer game at a local mosque prior to 9/11. Hammoud confirmed making those statements in an interview.

Al-Hijji was reached in London in 2012 where he worked for Aramco Overseas, the European subsidiary of Saudi Aramco, the state oil company. He told The Telegraph that he knew Hammoud, but denied any involvement with terrorists. He called 9/11 “an awful crime.”

Abdulaziz al-Hijji, right, in Sarasota prior to 9/11 and leaving his London office in 2012  Photo in London by Warren Allot for The Telegraph

Abdulaziz al-Hijji, right, in Sarasota prior to 9/11 and leaving his London office in 2012 Photo in London by Warren Allot for The Telegraph

One year ago, six months after the lawsuit was filed, the FBI suddenly made public 31 redacted pages about its Sarasota investigation. The records flatly contradicted the Bureau’s earlier public statements that it had found no evidence connecting the al-Hijjis to the hijackers. Instead, the FBI records said the family had “many connections” to “individuals associated with the terrorist attacks on 9/11/2001.”

The declassified documents tied three individuals, with names blanked out, to the Venice flight school where Atta and fellow hijacker Marwan al-Shehhi trained. One of those individuals was described as a relative of the al-Hijjis, whose names were also redacted.

Last June, the Justice Department moved to end the lawsuit, citing national security. A senior FBI official told the judge disclosure of certain classified information about the Sarasota Saudis “would reveal current specific targets of the FBI’s national security investigations.”

The FBI did not explain how an investigation that it previously said had found no connection between those Saudis and the 9/11 attacks involved information so secret that its disclosure “could be expected to cause serious damage to national security.”

Anthony Summers is co-author with Robbyn Swan of The Eleventh Day, an account of 9/11 that was a finalist for the 2012 Pulitzer Prize for History.

Gov. Scott chose a familiar face to manage his $72 million blind trust

 

By Dan Christensen, BrowardBulldog.org 

Alan Lee Bazaar, left, and Gov. Rick Scott

Alan Lee Bazaar, left, and Gov. Rick Scott

Most Floridians have never heard of Alan Lee Bazaar. Yet as chief executive of the New York investment advisory firm that serves as trustee of Gov. Rick Scott’s blind trust, Bazaar is the keeper of an important public trust for Florida’s citizens.

Bazaar and the company he runs, Hollow Brook Wealth Management, oversee Scott’s $72 million portfolio of stocks, bonds and other investments on the governor’s behalf. Their duty is to decide when to buy or sell the governor’s assets without telling him – in effect “blinding” Scott to his holdings and, by law, immunizing him from prohibited conflicts of interest.

Trustees of qualified blind trusts in Florida are supposed to be disinterested fiduciaries. Relatives of the governor, his political allies, state employees or any “business associate or principal” need not apply.

The governor’s office describes Bazaar and Hollow Brook as “independent” of Gov. Scott. Bazaar and Scott, however, are intimate, longtime associates at Richard L. Scott Investments, according to a variety of public records.

Bazaar was a principal at the governor’s Naples-based investment firm for nearly 11 years, serving in positions of responsibility and trust until shortly before the governor announced his candidacy in April 2010. Bazaar joined Hollow Brook shortly after leaving Scott’s firm.

Bazaar worked for Scott from July 1999 to January 2010 as managing director and portfolio manager. He “co-managed the public equity portfolio and was responsible for all aspects of the investment decision-making process, including all elements of due diligence,” according to a biography on file at the U.S. Securities and Exchange Commission.

DEEPER TIES

Scott’s relationship with Bazaar is deeper than employer-employee, and he and his family’s financial ties to Hollow Brook go beyond the blind trust.

SEC records show that more than a decade ago the two men were members of a Delaware company that invested several million dollars in a small Deerfield Beach computer security company – an investment that later yielded tens of millions of dollars in returns.

SEC records also show that today Hollow Brook is “investment adviser” to two other large entities in which Gov. Scott owns a beneficial interest, – “a family partnership controlled by Richard L. Scott’s spouse (the Scott Family Partnership) and a revocable trust for the benefit of Mrs. Scott’s spouse (the Scott Revocable Trust).”

Bazaar declined to discuss Hollow Brook or his work, past or present, for Gov. Scott. “We don’t speak to reporters,” he said.

The governor’s office was asked why Gov. Scott chose Bazaar to oversee his blind trust given their long-standing business relationship. A spokesman cited the state ethics code’s definition of business associate: “Any person engaged in or carrying on a business enterprise with a public officer….as a partner, joint venturer, (or) corporate shareholder where the shares of such corporation are not listed on any national or regional stock exchange.”

“Mr. Bazaar does not fall within that definition,” spokesman John Tupps said in an email.

The past relationship between Gov. Scott and the man who oversees his blind trust is nevertheless troubling, according to Dan Krassner, executive director of the nonpartisan government watchdog group Integrity Florida.

“The relationship certainly stretches the concept of an independent third-party making disinterested investment decisions,” said Krassner. “When the legislature said don’t use business associates, you would think that would prohibit involvement of someone’s portfolio manager.”

BLIND TRUST CREATED TO HIDE THE GOVERNOR’S ASSETS

Gov. Scott’s blind trust was created in 2011 to place a veil over Scott’s many financial assets and any transactions involving them. Under a state law enacted last year, the arrangement immunizes Scott from any prohibited conflicts of interest because those assets are considered to be outside Scott’s knowledge or control.

Last week, however, BrowardBulldog.org reported that the trust has been ineffective in preventing disclosures of the governor’s assets. Information about stock purchases and sales by the blind trust are a matter of public record elsewhere.

For example, U.S. Securities and Exchange Commission records show that since December 2012 the blind trust has sold millions of dollars worth of shares of Argan Inc., a company that does business in Florida through its power plant construction subsidiary, Gemma Power Systems. Scott continues to be the beneficial owner of approximately $27 million in Argan shares.

The law does not require Scott to make public the agreement he signed with Hollow Brook that created the blind trust, and his office declined BrowardBulldog.org’s request to release a copy.

Instead, Bazaar certified to Florida’s Commission on Ethics last July that the blind trust met the law’s requirements. There is no way to verify Bazaar’s assertion.

Gov. Scott picked Hollow Brook and Bazaar, who turns 44 this weekend, to manage his blind trust when it was created in April 2011. It was a comfortable selection for both men. Bazaar’s duties were similar to his former job at Richard. L. Scott Investments where he helped research and choose Scott’s investments.

SCOTT’S EYES AND EARS

At the firm, Bazaar was Scott’s eyes and ears when serving as a director on the boards of corporations in which Scott had taken a large investment stake.

A decade ago, for example, Bazaar was named to the board of directors of a company called Media Sciences International. Federal records state that Bazaar’s board membership was part of a deal in which Scott invested $1.25 million in exchange for a million shares of Media Sciences stock directly from the company.

Alan Bazaar, third from right, with other members of the board of directors of NTS communications

Alan Bazaar, third from right, with other members of the board of directors of NTS communications

As trustee of the governor’s blind trust, Bazaar continues to serve on boards of companies in which Scott is heavily invested.

One example is NTS, a broadband services provider. Bazaar joined the board of directors in 2012 in the wake of a settlement between management and dissident shareholders looking to make changes in order to maximize shareholder value.

Last month, Lubbock, Texas-based NTS merged with another company and its stockholders received $2 for each share they owned. SEC reports show that Scott’s blind trust owned 1.25 million shares worth $2.5 million. Scott was also the beneficial owner of an additional 3.7 million NTS shares held by the Scott Family partnership and the First Lady’s trust. The total value of the Scott’s NTS shares: $10 million.

In 2013, Bazaar also became a director at Wireless Telecom Group of Parsippany, N.J.

Two years before, Gov. Scott’s blind trust reported its initial assets included $434,000 in Wireless Telecom stock. When Bazaar joined Wireless Telecom’s board on June 12, 2013, the company disclosed that Gov. Scott was the beneficial owner of 1,872,265 shares, or 7.9 percent of the company. The market value of those shares was $2.26 million.

How many of those Wireless Telecom shares were assets of the blind trust is not known. The governor typically owns shares indirectly via trusts or partnerships and Wireless Telecom did not identify the entity or entities holding Scott’s shares.

Hollow Brook, whose employees also include Scott’s longtime corporate accountant Cathy Gellatly, charges its clients fees based on a percentage of assets under management and performance, according to SEC records.

SCOTT FAMILY’S ENORMOUS ASSETS

In the case of the Scott family, those assets are enormous. The governor’s blind trust alone holds assets valued at more than $70 million. The Scott family partnership and the First Lady’s revocable trust are worth upwards of tens of millions of dollars more, SEC records show.

SEC records reveal something else: an apparent coordination of transactions among those three entities, each of which owned huge parallel interests in some of the same stocks.

On more than one occasion, the blind trust, Ann Scott’s trust and the family partnership bought or sold large numbers of shares on the same day, at the same price and in the same or similar proportions.

Gov. Scott filed reports with the SEC disclosing two such transactions.

The first report states that on Nov. 2, 2011 the blind trust, Ann Scott’s trust and the family partnership each bought shares of NTS for which they paid a total of $750,000. The second filing reported proportional sales by those entities of 350,000 shares of Argan on Dec. 20, 2012. The sales grossed $6.3 million.

SEC records also disclose Bazaar’s personal investments in stocks that Scott owned.

For example, Bazaar was a member of Fernwood Partners II, a Delaware investment company that Scott and his wife, Ann, used in 1999 to invest $3.7 million in Cyberguard, a Deerfield Beach computer security firm.

As part of that deal, Cyberguard added Scott’s brother, William Scott, and former Columbia/HCA Healthcare executive David Manning to its board. Gov. Scott was Columbia/HCA’s chief executive until 1999 when he resigned amid a federal Medicare fraud investigation.

Others who later joined Cyberguard’s board included Gov. Scott’s longtime friends, Broward Sheriff Ken Jenne, who later went to prison for corruption, and Fort Lauderdale lobbyist William D. Rubin. For their board service, both men were granted Cyberguard shares worth hundreds of thousands of dollars.

Gov. Scott quietly rakes in millions from stock sales; Florida’s blind trust law ineffective

By Dan Christensen, BrowardBulldog.org 

Gov. Rick Scott Photo: Joe Burbank, Orlando Sentinel

Gov. Rick Scott
Photo: Joe Burbank, Orlando Sentinel

Over the last 15 months, Gov. Rick Scott and his wife, Ann, through various entities, made more than $17 million selling hundreds of thousands of shares of Argan Inc., a publicly-traded company whose subsidiary, Gemma Power Systems, does business in Florida.

The Scotts’ Argan profits were magnificent, more than quadruple their investment.

Gov. Scott’s blind trust sold 140,976 of those Argan shares worth $2.54 million on Dec. 20, 2012. After the sale, the blind trust retained more than 520,000 Argan shares worth $9.43 million.

You aren’t supposed to know that. Gov. Scott isn’t supposed to know it either.

Not long after taking office in 2011, Scott put his personal portfolio of stocks including Argan, bonds and other financial assets into the blind trust that’s managed by others. The idea was to eliminate any appearance of a conflict of interest between the governor’s financial assets and his official duties by “blinding” him  – and the public – to the nature of his vast holdings.

Yet an investigation by BrowardBulldog.org has found that the governor’s blind trust, and Florida’s qualified blind trust law, have been ineffective. They have not prevented public disclosure of Gov. Scott’s personal riches.

MILLIONS IN BLIND TRUST ASSETS VISIBLE 

Millions of dollars of assets placed in the Richard L. Scott Blind Trust – securities, partnership interests and the like – are not veiled as the law intended. They are visible to Scott or anyone else who knows where to look. They are a matter of public record.

The reason: Florida’s blind trust law is trumped by the public reporting requirements of the U.S. Securities and Exchange Commission.

“The public is not benefiting from Florida’s so-called blind trust policies. It’s really not a blind trust. It’s more like a removable blindfold,” said Dan Krassner, executive director of the nonpartisan watchdog group Integrity Florida.

No one in the governor’s office, including General Counsel Peter Antonacci, would be interviewed for this story.

Gov. Scott and First Lady Ann Scott

Gov. Scott and First Lady Ann Scott

In response to emailed questions, Scott spokesman John Tupps said, “The governor’s blind trust is controlled by an independent trustee by law. He has no knowledge of any blind trust activity or transaction since his assets were placed in the blind trust on April 30, 2011.”

Still, publicly available SEC records show that just two weeks ago the governor and the First Lady cashed out another $10 million from the stock market when their five million shares in the publicly traded telecommunications firm NTS, held indirectly through several entities they control, were acquired in a merger. NTS changed is name from XFONE in 2012.

Gov. Scott’s blind trust accounted for a quarter of that total, or $2.5 million, the records show. Half of the Scotts’ stake, including the blind trust’s shares, were acquired at a bargain basement price directly from NTS on Nov. 2, 2011 – nearly one year to the day after Scott’s election.

The governor voluntarily created his blind trust about four months after his inauguration. Because public officials in Florida are not required to report spouses’ holdings, only financial assets owned directly in Scott’s name, or by the Richard L. Scott Revocable Trust, went into the trust.

Florida’s qualified blind trust law, signed by Gov. Scott last May 1, allows public officers to find legal safe harbor from prohibited conflicts of interest by using such trusts to hold their assets outside their knowledge or control.

Over the summer, Scott sought a ruling from the ethics commission that his blind trust met the new law’s standards and that he was entitled to its protection. In September, after Scott’s lawyers disclosed a list of initial assets placed into the trust, the ethics commission ruled that “under the circumstances presented,” Scott’s blind trust complies with state law.

So far, the extremely wealthy Scott is the only public official in Florida to create a qualified blind trust to shield his assets, according to the Commission on Ethics.

‘SECRECY APPROACH FAILED’

Today, however, the governor’s safe harbor seems in jeopardy because of the blind trust’s inability to keep his assets hidden from public view.

Dan Krassner, executive director of nonprofit Integrity Florida

Dan Krassner, executive director of nonprofit Integrity Florida

“The secrecy approach to accountability has failed and full disclosure is the solution. Lawmakers should repeal the blind trust law and instead have a policy of full disclosure of private financial interests of public officials,” said Integrity Florida’s Krassner.

The blind trust’s shortcomings would appear to create an immediate potential problem for Gov. Scott in his oversight role as chair of the State Board of Administration.

The SBA, with more than $176 billion in public money under management, invests widely on behalf of the Florida Retirement System and other funds, including the Lawton Chiles Endowment Fund, which manages the state’s tobacco settlement monies. The funds are run day-to-day by SBA staff and an executive director who serves at the pleasure of the SBA’s trustees – Gov. Scott, Chief Financial Officer Jeff Atwater and Attorney General Pam Bondi.

The pension fund and the Chiles fund own stock in hundreds of corporations. We now know, however, that includes stock in companies in which the governor’s blind trust is also heavily invested. One example is Argan. At the end of 2013, the SBA reported the state funds owned $260,000 in Argan shares.

Do Scott’s large investments in corporations whose shares are also owned by the pension plan and the Chiles fund create a conflict for him as SBA chair?

“The interests in question were acquired prior to (Scott’s) holding office. Interests such as these, residing in an office holder’s blind trust, do not create any conflict of interest,” spokesman Tupps said in an email.

The SEC generally considers beneficial ownership of more than five percent of a publicly traded company’s shares to be significant enough to report to the public. Persons who acquire such a large stake must promptly disclose, then file updates to reflect material sales or purchases. Insiders who own more than 10 percent of a company are subject to additional reporting rules.

SCOTT’S NET WORTH $83.8 MILLION

Gov. Scott reported a net worth of $83.8 million in June. His stock holdings sometimes amount to hundreds of thousands, even millions of shares – stakes large enough to trigger SEC public reporting requirements.

Reports filed at the SEC detail a number of large transactions involving stock beneficially owned by the governor, including shares of Argan and NTS.

The reports bear Scott’s electronic signature as the person who filed them.

Asked about that, the governor’s office said Scott didn’t personally file those reports, adding they were filed by an authorized trustee on his behalf.

SEC regulations, however, require insiders and large beneficial owners like Scott who use an authorized representative to disclose. Representatives are instructed by the SEC to use their typed signature and then indicate that they are signing on behalf of the person they represent. Authorizing documents, such as a power of attorney, must also be filed publicly with the SEC.

SEC reports about the Argan and NTS transactions are signed by one person, Scott. And a review of related SEC records filed by Scott and his blind trust trustee, Hollow Brook Wealth Management, found nothing that authorizes others to sign government forms or schedules on the governor’s behalf.

$10.8 MILLION IN ARGAN SALES IN JANUARY

As recently as seven weeks ago, an ownership report filed under the governor’s electronic signature reported the sale of another 350,000 Argan shares in seven transactions from January 10 to January 22. The reported price per share was between $30 and $30.45. The gross sales price: $10.8 million.

The report lists Hollow Brook Chief Executive Alan L. Bazaar only as a “person authorized to receive [SEC] notices and communications.”

Scott’s report does not identify the specific accounts, trusts or entities involved in those most recent sales of Argan shares. But a prior insider report about the December 2012 Argan sales show the Scott family has used a trio of entities to buy and sell the company’s shares – the blind trust, the F. Annette Scott Revocable Trust, named for Florida’s First Lady, and the Richard L. and F. Annette Scott Family Partnership.

Together, those three entities grossed $6.3 million selling Argan shares at that time, Scott reported.

The Scotts remain large stakeholders in Argan. In January, following the latest sales, the governor disclosed that he remains the beneficial owner of 965,255 Argan shares, or 6.8 percent of the company. At Wednesday’s closing price for Argan stock of $28.10 a share, that’s $27.1 million.

While the federal government deems Scott to be a beneficial owner of his wife of 41 years’ revocable trust and her share of the family partnership, Florida does not require him to report that ownership interest or place it in the blind trust. To protect him back home, Scott’s reports to the SEC about his beneficial ownership include a small print disclaimer that they should not be construed as an admission that he is actually a beneficial owner.

According to its literature, Argan’s primary business is designing and building power plants through its wholly owned subsidiary, Gemma Power Systems.

In the early 2000s, before Argan acquired it, Gemma constructed plants in Bartow, Arcadia and Wachula for Progress Energy and El Paso International. After 2005, Gemma let its registration to do business in Florida lapse for several years. Gemma reinstated its registration with the Division of Corporations in March 2011.

NTS, recently acquired by affiliates of a Connecticut private equity firm, does not do business in Florida. NTS boasts obtaining $100 million in federal stimulus funds to bring its internet access services to rural areas in Texas and Louisiana.

THE SCOTTS DOUBLE DOWN

Records show that on Nov. 2, 2011, the Scotts doubled their substantial NTS stake by taking advantage of an offering to existing shareholders to buy additional shares directly from the company at a discount to the market. The blind trust, the First Lady’s revocable trust and the family partnership paid $750,000 to acquire more than 2.5 million shares, Scott reported. The shares cost 30 cents each. Open market trades of NTS shares that day ranged from 40 to 41 cents a share.

Last month, the Scotts received $2 a share for each of the five million NTS shares they began accumulating in 2007. Profit: $2.5 million.

But the Scott’s NTS gains are eclipsed by profits from their investments in Argan.

In February 2011, about two months before the blind trust was created, Scott reported he was the beneficial owner of 1,673,000 Argan shares. Records show he’d acquired those shares, about 14 percent of the company, in a half dozen transactions by a limited liability company called Argan Investments since 2006.

In the fall of 2010, Argan Investments was dissolved and its holdings distributed to its members: the First Lady’s trust, the family trust and the Richard L. Scott Revocable Trust, which was later placed into the blind trust.

The Scotts paid $9.5 million for their Argan shares. In little more than a year they’ve sold less than half their stake for $17 million while retaining nearly a million shares worth many millions more.

SEC files contain public information about other stocks that were listed as assets in the governor’s blind trust in 2011.

MeetMe is a social networking company known as Quepasa Corp. when it was based in West Palm Beach. It was registered to do business in Florida from 2007 until last September.

MRS. SCOTT BUYS A MILLION SHARES AS 2013 LEGISLATURE CONVENES

The blind trust document valued the governor’s Quepasa investment at $1.4 million. That translated to about 167,000 shares at the time the trust was established.

While no subsequent reports were filed with the SEC regarding Scott’s MeetMe investment, the New York City investment firm Scott hired to manage his blind trust, Hollow Brook, reported holding 331,628 MeetMe shares at the end of 2012.

Hollow Brook has other clients and its report does not identify the owner or owners of those MeetMe shares. Still, MeetMe reported a few months later that in exchange for $2.75 million Richard L. Scott Investments had acquired one million MeetMe shares on the first day of the 2013 Legislative session.

Richard L. Scott Investments, now run by Ann Scott, changed its name this year to Columbia Collier Management. Among its other assets: the nine-passenger Cessna Citation business jet Gov. Scott uses to fly around Florida at his own expense, according to Federal Aviation Administration records.

Hollow Brook’s quarterly holdings report for the period ending Sept. 30, 2013 listed 1,331,628 MeetMe shares. By year end, however, Hollow Brook reported holding no MeetMe stock.

What happened to the MeetMe shares owned by the governor’s blind trust and Richard L. Scott Investments, now known as Columbia Collier? Were shares sold, transferred or otherwise disposed of?

SEC records don’t say. Scott’s office said the governor doesn’t know, and Hollow Brook Chief Executive Alan Bazaar declined to comment.

A loss of faith: Fort Lauderdale church sale angers parishioners, worries neighbors

By Ann Henson Feltgen, BrowardBulldog.org 

Fort Lauderdale's Episcopal Church of the Intercession

Fort Lauderdale’s Episcopal Church of the Intercession

For 60 years, the Episcopal Church of the Intercession has provided religious guidance and ministered to the needs of its congregation. Now, plans by the cash-strapped Episcopal diocese to sell the church and its peaceful, four-acre parcel in Fort Lauderdale’s South Middle River neighborhood, is roiling both church members and neighbors.

The Episcopal Diocese of Southeast Florida has a deal to sell the property and its one-acre community garden to a local developer for $1.3 million, if the city agrees to rezone it to accommodate 60 two-story townhouses.

Parishioners, who have yet to be notified by church higher-ups of the pending sale, and local residents say density is already too high in the neighborhood.

The first public meeting to discuss the proposed rezoning is set for 6:30 p.m., March 19, at Fort Lauderdale City Hall, 100 North Andrews Ave.

Complicating the discussion are the remains of 80 deceased church members who chose to spend eternity at the site by having their ashes interred in the sunset-facing memorial garden.

The Church of the Intercession, located at 507 Northwest 17 Street, once had hundreds of active members, according to parishioner Steve Kanter. Today, those who attend Sunday service have dwindled to about 30.

“They have grown old and died or now lost their faith in the church because of all the turmoil,” said Kanter, who was attracted to the church because of its religious traditions and missions.

The lack of membership caused the diocese about a decade ago to downgrade the church’s status to that of a mission, an entity that by church law can only remain in that status for six years.

The way events have unfolded has sewn distrust.

Kanter said he understands the diocese’s stance. Nevertheless, he is critical of its decision not to notify parishioners that the property was up for sale and of the need to do so.

“I found out in September that the church was on the MLS [Multiple Listing Service] website,” Kanter said. According to MLS records, the property was listed for sale July 15, 2013, but could have been for sale earlier.

“Why in this paradise with God are we having so much trouble,” he continued. “The diocese is up to no good and we don’t like it.”

The Venerable Thomas Bruttell, diocese’s archdeacon for deployment, confirmed in an interview that the property is for sale, the price and that a deal is on the table.

“When the rezoning goes through, the sale will be finalized and, by the end of the year, letters announcing the sale will be sent to the congregation,” he said.

‘TOO MANY CHURCHES, NOT ENOUGH PARISHIONERS’

“We’ve told [the congregation] for the last seven or eight years the same message: If something doesn’t change, we will have to sell the property,” he said. “There are too many churches and not enough parishioners and something has to give.”

Rumors the church was for sale had circulated for months, Kanter said. So late last year his wife emailed Bishop Leo Frade, who heads the diocese, and asked if the church was for sale.

On Dec. 17, 2013 Frade replied. “There are no plans to sell at this time,” he wrote.

Bruttell, who is adamant that the congregation knew the status of the church, speculated that Frade may have said that because he knew it would be a year before the sale could go through.

The diocese has helped support the church financially and brought in new ideas to increase membership, Bruttell said. One of them, he said, was to fight for the city to approve urban farming on the property so the farming efforts could expand. He said the diocese attempted to include the church into a new program combining All Saints and St. Ambrose into the New River Ministry, “but they didn’t step up to that.”

He added that the people who are now complaining “are not emotionally connected for spiritual reasons, it is because of the community garden…These 16 people do not own the church, they are visitors.”

But church member JoAnn Smith disputed that assertion.

“We have not had one dime in mission support,” to attract new members, said Smith, a certified master gardener who oversees the nature area and community garden. “If we do anything, we do it ourselves.”

She added that last year the church was $3,000 short of being financially self-sufficient.

Kantner said the diocese’s lack of candor has raised other red flags, such as how the church’s money has been spent and why his church was put up for sale when there are other small congregations like the Church of the Intercession.

THE DEVELOPER SPEAKS

The controversy has not gone unnoticed by developer Jay Clark, who with his partner Jay Fertig, have offered to buy the church property.

Clark said their project would feature 60 two-story townhouses houses in 10 buildings. The two-bedroom, two-and-a-half bath units will have a total of 1,600 square feet, including a single car garage. The price for each townhouse would range from $230,000 to $240,000, “depending on the market,” he said.

The current zoning is for 15 single-family homes, according to city records.

“But realistically only five or six could be built there,” Clark said.

“Our offer is contingent on getting the zoning changed,” he said. That change would allow for the 60 townhouses, a community swimming pool and green space, including preserving some of the trees.

“We’re looking at incorporating a community garden and turning over the control to the South Middle River Civic Association,” Clark said. The garden, he added, would be about 20-feet wide by 200-feet deep, about one-tenth the size of the current garden.

Clark said he knows that some people don’t want change, but others want to clean up the property and turn it into something that can make the community proud.

“We’re not trying to ram anything down their throats,” he said.

DENSITY TOO HIGH?

The South Middle River neighborhood is bounded by Sunrise Boulevard on the south, Powerline Road on the west, Northeast Fourth Avenue on the east and the South Fork of the Middle River on the north.

Neighbors are concerned an influx of new residents to the area will aggravate existing problems.

Lawrence Jackson-Rosen is president of the South Middle River Civic Association. He said the elimination of the church grounds will further limit green space that’s already in short supply.

“It’s the most populous neighborhood in Fort Lauderdale,” he said. “We have more than 2,500 households here.”

Jackson-Rosen said the association has not yet taken a formal position on the project, but is taking a survey of residents’ thoughts about the townhouse project that’s available online and via hard copies at association meetings.

With nearly 50 survey returned, “Thus far, the overwhelming majority of people who returned the survey oppose the change” in zoning, he said. Based on the feedback, the association will take a stand and provide that to the city, he added.

Gregg Pentecost, a local Realtor who is also a member of the civic association, offered his personal opinion. “People are already complaining about the traffic now and adding at least 120 more cars is not attractive,” he said.

The church site is amid a neighborhood packed with 1950s bungalows, some of which are foreclosed and stand empty, while others have been renovated. The dusty neighborhood, in the process of renewal through gentrification, has some of the last unpaved roads and in Fort Lauderdale, according to Pentecost, who lives a block-and-a-half away from the church and heads up the survey.

‘PEOPLE ARE CONCERNED’

“People are concerned about the loss of green space, the disposition of animals on the site, the environmental effects including water runoff and traffic,” he said.

“There are no sidewalks and most of the children play and walk to school in the streets,” he said.

The west end of the church property includes an octagonal-shaped church sanctuary plus several concrete block buildings that serve as offices, a church hall and a kitchen and a food bank. Last year, the church provided 22,000 meals for those in need, Kantner said.

Towering mango and mahogany trees and other mature trees on site provide cool shade over open spaces. To the west of the sanctuary is the Memorial Garden where the parishioners’ cremains are interred. The diocese’s Bruttell said he is aware of the situation and has talked to two or three churches about reburying the biodegradable containers.

A path on the eastern portion of the property leads to a sanctuary of greenery where visitors can enjoy a quiet moment with nature, said Smith, the church member who oversees the natural area and community garden.

Smith and other volunteers have been shaping and cultivating the nearly 1-acre garden area for the past 14 years.

“We started with hardscrabble and kept adding mulch and now we have free garden plots for church members and anyone in the neighborhood who wants one,” she said.

The idea of the organic community garden came 15 years ago from a former church priest, Kantner said. At the time, the project had the backing of the diocese.

“For years now, we have had no help from the diocese with the garden,” said Kantner. “We have had help from the neighborhood, school and other groups.”

Hollywood planning board members quit after conflict of interest warning from city attorney

By William Gjebre, BrowardBulldog.org 

Hollywood City Attorney Jeffrey Sheffel

Hollywood City Attorney Jeffrey Sheffel

Two Hollywood Planning and Development Review Board members have resigned after being warned by the city attorney of potential conflicts if they continued to serve while doing work for projects needing board approval.

Joseph B. Kaller an architect, and Gary Bloom, an engineer, stepped down after being informed by City Attorney Jeffrey Sheffel in a Jan. 23 email that they “have legal conflicts” because of their membership on the board.

Sheffel told Kaller and Bloom that it was not enough for the two to recuse themselves – as they have done in the past – from voting on matters in which their firms did work on behalf of projects.

“You must either resign you (sic) membership on the Board or cease to represent clients that come before the Board for approvals,” Sheffel said.

The two men quit a few days later.

Neither Kaller, who operates Joseph B. Kaller & Associates of Hollywood, nor Bloom, owner of Fort Lauderdale’s GBB Engineering, responded to phone calls seeking comment. Kaller’s term was to have expired at the end of June. Bloom’s term didn’t expire until June 30, 2016.

In an interview, Sheffel could not provide specific cases in which Kaller or Bloom had done work for clients who appeared before the board. He said, however, that there were several times when both refrained from voting on matters before board that makes final rulings on development projects and zoning issues.

“They have recused themselves,” Sheffel said, “both more than a couple of times, Kaller more so.”

Sheffel began researching conflict issues after being informed that Hollywood’s Community Redevelopment Agency (CRA) had selected Kaller’s firm, in partnership with another group, for work on a proposed 300-vehicle public parking garage at 327 Nebraska St.

In February, the city agreed to sell the half-acre site, which previously housed a fire station, to the CRA for $1.7 million. The project is likely to come before the planning board for review and approval if the project goes forward, Sheffel said.

The city attorney’s opinion was based on prior rulings by the state Commission on Ethics, which were provided to Kaller and Bloom. A key ruling involved a 2011 case out of Vero Beach that held a conflict was created when a planning and zoning board member’s business did work for a client after the client’s matter had come before the board, regardless whether the board member worked on the issue for the client.

In the same case, the commission ruled that a board member should not serve if he has substantial private interests regarding a matter coming before the board and should also refrain from serving if he has employment or contractual agreements that would create a continuing or frequently reoccurring “conflict” with his public duties.

After stepping down, Kaller appeared before the planning and development board on February 13 seeking the board’s approval of a modification on plans for a previously approved townhouse project.

Kaller’s January 27 resignation letter “due to conflicts with the city’s ethics policy,” said it had been an “honor” to serve on the board.

Bloom, on the other hand, initially resisted Sheffel and suggested he ask the city commission to remove Kaller and he from their appointed positions.

“I think you should do some more research on the extent of this far reaching conclusion that you recently reached, since Joe and I have been serving on city board for the past 15 years without this issue being presented,” Bloom said in a Jan. 27 reply email. “You can then explain to the commission why for the past 15 years…we were allowed to serve and recuse ourselves when an item was presented that created a potential conflict arose.”

Sheffel fired back: “Just saying ‘it has always been done that way’ is no argument at all.” He added that if Bloom did not voluntarily resign he would ask the commission to remove him.

“I cannot allow the city to engage in a continuous ethical violation once it has been brought to my attention.”

A short time later, Bloom resigned.

The nine-member planning Board and the city administration have come under criticism recently for supporting a zoning exception for the controversial Ben Gamla Charter School to build a 300-student middle and senior high school in a traffic congested neighborhood across from city hall.

Neighborhood and civic groups objected to the approval. City Commissioner Peter Hernandez, who represents the area where the school will be built, said the board and the city administration are pro development. “There are people on the board who endorse whatever staff recommends,” Hernandez has said.

“Pressure over the recent Ben Gamla approval, and the longstanding practice of these board members recusing themselves due to conflicts of interest finally came to a head,” said Nancy Fowler, secretary for the North Central Hollywood Civic Association.

Medicaid contracts, a close friend, big money and Gov. Scott’s re-election campaign

By Dan Christensen,BrowardBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

Before the Legislature convenes in Tallahassee next Tuesday, Coral Gables healthcare tycoon Miguel B. “Mike” Fernandez will host a Sunday afternoon BBQ with Gov. Rick Scott, his wife Ann, and key members of the governor’s campaign finance team.

Fernandez, dubbed “Florida’s newest billionaire” last year by Florida Trend, was named finance co-chair for Scott’s campaign in January. In the announcement, the governor called Fernandez a “close friend.”

But Fernandez, chairman of MBF Healthcare Partners, is more than Scott’s friend. He’s also a huge contributor to his re-election campaign and the owner or co-owner of fast-growing healthcare companies that under Scott’s administration have been awarded multiple, multi-year state contracts potentially worth hundreds of millions of dollars.

Most of those lucrative contracts involve Florida Medicaid, which is implementing managed care changes, including the Managed Medical Assistance program. The program is expected to begin in May.

fernandezinvite.jpgBetter Health Plan, which does business as Simply Better Health and is an affiliate of Fernandez’s $450 million Simply Healthcare Plans, won contracts from Florida’s Agency for Health Care Administration (AHCA) last year to provide general services in three of Florida’s 11 Medicaid managed care regions, including Broward County.

Clear Health Alliance, a Medicaid plan offered by Simply Healthcare Plans, was awarded AHCA contracts to provide “specialty” services to Medicaid patients who are HIV positive or have been diagnosed with AIDS.

The Florida Times-Union first reported Fernandez’s ties to Better Health and Clear Alliance in January after Scott appointed Fernandez to his campaign team.

AHCA disclaimed any partiality in contract awards in a statement released by agency spokeswoman Shelisha Coleman.

“Every company that won an award in SMMC (Statewide Medicaid Managed Care program) rightfully earned its award. No companies received an award as a result of favoritism. The agency followed Florida’s strict procurement laws…in letter and in spirit at all times.’

Fernandez, reached Tuesday via email, said, “Companies in which I have invested in have Medicaid contracts, totaling in the billions since 1990. This includes contracts with the State of Florida under the leadership of multiple governors, including a contract under Governor Crist. All contracts save the state much needed funds and improved care to our patients.”

In October 2012, BrowardBulldog.org reported that Fernandez was a silent partner in a $44.8 million contract awarded by Florida’s Department of Children and Families (DCF) to manage mental health services in Broward.

The multi-year department contract went to the Broward Behavioral Health Coalition, a nonprofit led by former DCF boss and state attorney general Bob Butterworth, and its for-profit partner, Concordia Behavioral Health of Miami.

Fernandez was a major Concordia shareholder. His name was disclosed to top department officials, but was omitted from DCF records about the procurement.

Fernandez’s invisibility regarding the Broward procurement meant that no one took note of his $125,000 contribution to Let’s Get to Work, a fundraising organization set up with the governor’s support, on Jan. 25, 2012 while the procurement was pending.

Previously, during Scott’s 2010 campaign, Fernandez and his MBF Family Investments gave Let’s Get to Work $500,000.

Asked about those large contributions in 2012, Katy Sorenson, head of the Good Government Initiative at the University of Miami, said, “It sounds like maybe Gov. Scott is running Florida like a business – doing business with his friends.”

Fernandez’s money continues to gush the governor’s way.

On November 2, 2013, as the governor’s re-election campaign was stirring, Fernandez personally gave $1 million to Let’s Get to Work. No one else has written a check that large in support of Scott’s re-election.

Little River Plantation home

Little River Plantation home

Sunday’s get-together at Fernandez’s opulent Little River Plantation, not far from Tallahassee, is a by invitation only event. The public is not invited.

Miami Herald political reporter Marc Caputo recently obtained a copy of the invitation and accompanying email:

“As an important member of Governor Rick Scott’s finance team, Mike Fernandez is opening his home to you. He is not a public person and believes we need to meet each other in person and in a social setting…Nothing formal (casual jeans and casual setting.) We will chat, have BBQ and see beautiful horses…We need to come together so we can deliver victory together,” the email said.

Little River Plantation features a 7,000 square foot home with six bedrooms, seven baths, a full gourmet kitchen and a great room, according to its web site. There’s a smaller lake house nearby.

“Your every whim will be coddled within the walls of our fabulous homes away from home,” prospective guests are told.

A psychiatric hospital for North Ridge site? Oakland Park commission set to decide

 

UPDATE: FEB. 21 —  With anxious residents watching at city hall and at home on computers and cable television, Oakland Park has put off for two weeks a decision on whether to approve a controversial psychiatric and drug rehabilitation hospital. The reason: Wednesday night’s hearing ran too late to finish the hearing.

About 40 persons spoke for and against the project.

Resident and former Mayor Steven Arnst was critical of a letter sent to the city by a West Palm Beach lawyer for the developer instructing commissioners on their “duty” to grant Palm Partners’ application and warned that they faced a possible discrimination lawsuit if they did not. Arnst called it a “threat.”

Fort Lauderdale lawyer Wilson Atkinson, who represents another rehab facility, Fort Lauderdale Hospital, informed commissioners that Palm Partners does not have a Florida Agency for Health Care Administration license needed to operate a 300-bed psychiatric/behavioral health hospital.

Atkinson said that should the city approve the project, and Palm Partners is unable to obtain such a license, the city would be stuck with a facility that would operate under less stringent Department of Children and Families regulations for residential treatment facilities. Those facilities allow patients to freely come and go outside specific treatment hours — a nightmare scenario for residents and one that Palm Partners has said it would not allow.

The five-member city commission will pick up the quasi-judicial hearing regarding the proposal to open the North Ridge Behavioral Health Center on March 5.

By Dan Christensen, BrowardBulldog.org 

notice

Revised plans for a controversial psychiatric/behavioral health hospital on the site of the old North Ridge Medical Center in Oakland Park are to be presented to the city commission Wednesday before a final up or down vote.

The changes, including additional fencing and assurances that it would not admit convicted sexual offenders to its residential treatment programs, were made to satisfy the concerns of nearby residents.

If approved, the proposal by Palm Partners LLC promises to reinvigorate a working hospital facility vacant since its purchase and closure by nonprofit Holy Cross Hospital in 2008. It would also create 300 new jobs and return the property to the tax rolls, promising “a significant increase in revenues to the city,” according to the proposal.

Today, Palm Partners operates a small, upscale drug and alcohol rehabilitation facility in Delray Beach. Its plan for a much larger, 300-bed facility to be known as the North Ridge Behavioral Health Center has provoked a strong negative reaction from wary residents in Oakland Park’s North Andrews Gardens neighborhood.

City Hall, located at 3650 NE 12th Avenue, is bracing for a crowd at Wednesday’s 6:30 p.m. public hearing.

“We are expecting a lot of people,” said Kristen Nowicki, an Oakland Park senior planner.

Two elementary schools and a high school are in the neighborhood. Several parents said in interviews that they fear their children will not be safe.

Opposition to the psychiatric facility has also come from the Broward School Board, which recently notified the city of its concern about “spillover effects” from the proposed psychiatric facility on nearby Northeast High School.

“The district’s position is that the proposed project is incompatible with the school,” said a letter from the School Board’s growth monitoring unit.

Last month, the city’s five-member planning and zoning board unanimously recommended the commission deny Palm Partner’s application to the city for its approval. If the city commission votes no, Palm Partners, owned by company chief executive Peter A. Harrigan, would have to go to court in an attempt to make the project happen.

Palm Partners signed a contract last year to purchase the 11-acre site on North Dixie Highway, between Northeast 56th and 58th streets, from Holy Cross Hospital for an undisclosed sum.

The company has said it hopes to operate an inpatient detoxification and rehab facility that will cater to a well-heeled class of psychiatric patient. The hospital would also treat other maladies such as eating disorders and sleep apnea.

“Our facilities and services fill a significant gap in our society, providing much-needed help to those suffering with addiction and behavioral health. These illnesses are life threatening and tear families apart. Our facilities provide a foundation for recovery,” Harrigan said in a statement on Monday.

“We often hear that people know someone who needed help, including family, but were unsure what to do. Education is key and we will work with the neighboring high school and other community organizations to provide educational and outreach programs. We are here to help, and I will work hard every day to ensure this hospital is a community partner that the City of Oakland Park can be proud of,” Harrigan said.

Palm Partners has told city officials it will not accept Medicaid patients, Baker Act patients, other indigent care patients or walk-ins. All patients will pay through private insurance, third-party reimbursement or cash.

In an interview, Harrigan said most patients would stay 30-90 days. The cost of a 30-day stay would be $24,500, he said.

Harrigan has sought to assure neighbors that the hospital intends to make sure that its patients pose no threat to local residents.

“I appreciate the neighbors’ concerns and share in the need to keep our communities safe. Safety is paramount to our mission,” Harrigan said in Monday’s statement. “We have operated in Florida for 20 years and have never had a security incident involving the surrounding neighborhood.

“Our plans to invest $20 million to restore this facility, which has been vacant since 2008, will serve as a catalyst for economic growth, drawing businesses back to the area and creating thousands of jobs for the City of Oakland Park. Our investment will restore the hospital into a leading, cutting-edge facility, which will provide substantial tax revenue to the City.”

 

Judge: Deerfield Beach pump maker MWI doesn’t have to pay millions sought by U.S.

By Dan Christensen, BrowardBulldog.org MWI Headquarters

After a bitter, 16-year fight with the Justice Department, Deerfield Beach pump maker MWI scored a big victory last week with a federal judge’s ruling that the company isn’t liable for any damages for its violations of the False Claims Act.

The reason: The government didn’t lose a penny on tens of millions of dollars in federal loans to Nigeria used to purchase irrigation pumps from MWI.

Attorneys for the Justice Department had at one point sought damages totaling $222.9 million – an amount that would have shut the company down and thrown approximately 130 employees out of work, according to an MWI attorney.

“The ruling is important not just for MWI and the fact that it will enable the company to stay in business and its employees to keep their jobs, but it shows the hubris of the government in pursuing these cases,” said District of Columbia attorney Robert T. Rhoad.

“The government pursued this case for 16 years, devoting an extraordinary amount of resources, when it knew the government hadn’t been harmed by any damages.”

NO DAMAGES, BUT CIVIL PENALTIES

Still, Judge Gladys Kessler of Washington, D.C. said MWI, short for Moving Water Industries, caused other harm and assessed $580,000 in civil penalties against the company. In November, a jury determined MWI had filed 58 false claims in paperwork submitted to secure a series of loans from the U.S. Export-Import Bank to finance its 1992 sale of irrigation pumps and other equipment to Nigeria.

“Despite the fraudulent actions taken by MWI to persuade the government to make these loans, they were in fact paid back in full with interest and fees,” Judge Kessler wrote in her 33-page order of February 10. “The government has been made completely whole.”

Former Governor Jeb Bush of Florida speaking at the 2013 Conservative Political Action Conference (CPAC) in National Harbor, Maryland. Photo: Wikimedia Commons. Gage Skidmore

Former Governor Jeb Bush of Florida speaking at the 2013 Conservative Political Action Conference (CPAC) in National Harbor, Maryland. Photo: Wikimedia Commons. Gage Skidmore

The government’s long-running civil action against MWI, one of Broward’s oldest companies founded in 1926 and still run by members of the Eller family, was the focus of media attention last year when former Gov. Jeb Bush was on the government’s witness list. Bush, a former business partner of MWI’s now retired chief executive/president David Eller, traveled to Africa twice while his father was in the White House to promote MWI.

Justice Department lawyers wanted to question Bush about his compensation. Bush, however, was not involved in the deal in question and Judge Kessler excluded him after deciding his testimony would be irrelevant.

Compensation paid by MWI to a Nigerian sales agent, Alhaji Mohammed Indimi, was a focal point of the trial.

The case began in 1998 when a former MWI employee named Robert Purcell filed a whistleblower claim alleging the company paid commissions in excess of 30 percent of the contract price to Indimi.

The total sale price was $82.2 million. The Export-Import Bank loaned Nigeria $74.3 million to finance the deal. Indimi was paid about $25 million.

Purcell, who stands to collect a cut of any damages, asserted that those commissions should have been disclosed on “credit supplier’s certificates” filed by MWI with the Export-Import Bank. The jury ultimately determined MWI did not disclose the commissions.

CRIMINAL PROBE WENT NOWHERE

The Justice Department initially conducted a criminal investigation, but found insufficient evidence to charge MWI or any of its officials with a crime. Instead, in 2002, it intervened on Purcell’s side in his False Claims Act case.

After years of little action, the case went to trial on November 6. The government argued its damages were the full amount of the loan, or $74.3 million. Three weeks later, however, the jury found MWI knowingly made 58 specific false claims and set the government’s damages at $7.5 million.

False Claims Act violators are liable for three times the amount of actual damages, or in this case $22.5 million. But the judge decided that MWI was entitled to an offset of $108 million – or $74.3 million in principal plus $33.7 million in interest and fees – paid to the Export-Import Bank for monies received from Nigeria as repayment of the loans.

“Thus, MWI owes nothing in damages,” Judge Kessler said.

Kessler went on to decide that MWI should pay the maximum civil penalty of $10,000 for each false claim. She justified that after finding evidence that then MWI President David Eller “had actual knowledge” that Indimi’s commissions “should have been disclosed.”

While Eller repeatedly told the court that MWI “would never have done anything wrong,” MWI employees testified that “Eller personally approved every commission MWI paid, including Indimi’s…Moreover, Eller testified that MWI never paid any other agent on any other combined project a total commission of more than $5 million,” the judge’s order says.

The judge also quoted the testimony of Juan Ponce, an MWI vice president of international sales, whom she called “a credible witness,” as evidence that MWI “deliberately withheld information about Indimi’s commissions from Ex-Im in order to acquire financing.”

“We knew that we were violating…the rules. We just hoped that we would never get caught,” Ponce said.

Kessler observed, “The harm to the government was more than monetary – it went to the integrity and purposes of the Ex-Im’s programmatic goals. Given that approximately a third of the total loan amount went to a single Nigerian individual, the goal of the Ex-Im to finance loans that primarily benefit U.S. exporters and workers was not achieved.”

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