Broward Health gave company with financial ties to Gov. Scott 25-year, no-bid contract

By Dan Christensen and Buddy Nevins, FloridaBulldog.org 

Gov. Rick Scott announces plans to seek new cancer research funds during an April 2014 visit to the Fort Myers headquarters of 21st Century Oncology, a company in which he owns an indirect financial interest. Company chief executive Dr. Daniel Dosoretz is at far right. Photo: NBC-2, WBBH Fort Myers

Gov. Rick Scott announces plans to seek new cancer research funds during an April 2014 visit to the Fort Myers headquarters of 21st Century Oncology, a company in which he owns an indirect financial interest. Company chief executive Dr. Daniel Dosoretz is at far right. Photo: NBC-2, WBBH Fort Myers

An oncology company financially connected to Gov. Rick Scott got a no-bid contract four years ago from taxpayer-supported Broward Health for as long as 25 years – an unprecedented term.

Scott was an investor in a private equity firm that owns 21st Century Oncology, state records show. The Fort Myers-based cancer care company got the contract in 2012 to supply radiation oncology services to Broward’s biggest public health system.

The value and language of the contract with 21st Century Oncology are not known. The hospital system’s lawyers denied a public records request by FloridaBulldog.org for a copy of the contract.

The North Broward Hospital District, Broward Health’s legal name, is and was at the time run by an all-Republican board of commissioners appointed by the governor. Gov. Scott, who took office in January 2011, is a Republican. He was re-elected in 2014.

“This is news to me,” said Commission Chairman David Di Pietro, who seemed stunned last week when told of the governor’s indirect ownership interest in 21st Century Oncology, a contract he voted to approve. “In 2012 I was unaware of that, and I have no further comment at this time.”

Broward Health awarded the contract, with an initial term of 10 years and three separate five-year renewal options, to 21st Century Oncology after deciding to outsource its day-to-day business of providing radiation treatment services for cancer patients.

“In all my years I’ve never heard of a contract for that duration, especially at a tax-supported system like Broward Health,” said Florida International University healthcare professor Sal Barbera, a former hospital CEO who blew the whistle on Medicare fraud by Tenet Healthcare Corp. in 1997.

Information about the contract is contained in publicly traded 21st Century’s filings with the U.S. Securities and Exchange Commission (SEC) and the minutes of a Jan. 30, 2012 board meeting when the deal was approved in a 5-1 vote.

Financial disclosure filings by Gov. Scott indicate that at that time he owned a $210,000 indirect interest in 21st Century Oncology. The governor’s stake came via his investment in Vestar Capital Partners, the private equity firm that owns 21st Century.

Spokeswoman: Scott didn’t contact district about 21st Century

“The governor and his staff have had no conversation or contact about Vestar Capital or 21st Century Oncology with the North Broward Hospital District,” Scott’s communications director Jackie Schutz said in a statement on Sunday.

Schutz also said Gov. Scott wasn’t aware 21st Century Oncology had sought the Broward Health contract prior to its award in January 2012. Likewise, she said no executives at Vestar or 21st Century asked the governor to try to influence the selection of 21st Century by the district.

21st Century co-founder and chief executive Dr. Daniel Dosoretz

21st Century co-founder and chief executive Dr. Daniel Dosoretz

Two of the commissioners who voted for the deal continue to serve on the board today, Di Pietro and Joel Gustafson. Gustafson, who was chairman the day of the vote, could not be reached for comment.

In April 2014 Gov. Scott publicly touted 21st Century Orthopedics and its chief executive and co-founder Dr. Daniel Dosoretz during a visit to the company’s Fort Myers office while pushing a 60 percent hike in state funding for cancer research, including $20 million in new state grants for companies like 21st Century Oncology. Scott signed the measure into law two months later.

“There’s something in this for us, and it’s not exactly the same as what’s in it for the University of Florida and other centers,” 21st Century Oncology Chief Medical Officer Constantine Mantz told the Naples Daily News. “But to his credit, (Scott) has thought about some of the little guys in the state…We really have not had any ability to access state funds for any of our research activities, and so this is important for us.”

Last March, Scott named 21st Century gynecologic oncologist Dr. James Orr of Bonita Springs to the Florida Board of Medicine. At the same time, the governor appointed to the board Dr. Nabil El Sanadi, the Broward Health chief executive whose Jan. 16 suicide sent shock waves through the district, and prominent Republican fundraiser and Fort Lauderdale cardiologist Dr. Zachariah Zachariah, who recently jumped to Broward Health from Holy Cross Hospital.

Details of Gov. Scott’s indirect ownership interest in 21st Century Oncology are contained in his 2010 and 2013 financial disclosure forms and documents filed by his lawyers with the Florida Commission on Ethics.

Dr. Nabil El Sanadi, Broward Health's late chief executive

Dr. Nabil El Sanadi, Broward Health’s late chief executive

Gov. Scott keeps his assets, which his most recent disclosure form valued at $146.8 million, in a blind trust. He has had two such trusts while in office and as such maintains he has no knowledge of his investments, and thus no conflicts of interest.

While establishing Scott’s first blind trust in April 2011, his attorneys identified for the ethics commission several “passive investments” in companies that do business in Florida and are subject to state regulation. They explained that to avoid conflicts Scott was putting those assets in a blind trust modeled after the model federal blind trust and under the control of an “independent” financial professional. They asked for the commission’s blessing and it was soon granted.

In 2014, however, FloridaBulldog.org reported that Scott’s blind trust deviated substantially from the U.S. model and that the independent trustee was a New York investment advisory firm whose chief executive was former Scott business crony Alan Lee Bazaar.

One investment, in which Gov. Scott was said by the lawyers to play no managerial or decision-making role, was Vestar Capital Partners, 21st Century Oncology’s owner. Vestar has raised about $8 billion in capital in six equity funds since the late 1980s.

Scott’s investment in Vestar Capital Partners

“Governor Scott owns, through limited partnerships, interests in private investment partnerships in New York operated by Vestar Capital Partners,” says an April 20, 2011 letter signed by Scott’s attorneys Richard E. Coates, of Tallahassee, and James T. Fuller of Washington’s Williams & Connolly. “Governor Scott owns a 1% or less limited partnership interest in one investment fund, Vestar Capital Partners V, that has approximately $43 million in equity capital.

“Among its other investments, in 2008 this investment fund acquired a controlling interest in Radiation Therapy Services Inc. The stock of this corporation is owned by the investment fund. This corporation, based in Fort Myers, Florida, operates more than 90 radiation therapy centers in over 15 states, including Florida, under the name 21st Century Oncology,” the letter says.

Radiation Therapy Services changed its name to 21st Century Oncology in 2013.

On July 1, 2011, less than three months after his lawyers wrote to the ethics commission, Gov. Scott reported on his financial disclosure form that his assets included a $210,000 investment in Vestar Executives V, LP. The governor didn’t publicly disclose his financial assets again for nearly four years until he decided to terminate his blind trust in order to qualify to run for a second term. He disclosed, then immediately placed his assets into a new blind trust that by law affords him immunity from prohibited conflicts of interest.

That financial disclosure form, filed in June 2014, revealed that Scott continued to own about $210,000 worth of Vestar Executives V, one of a number of interconnected Vestar Capital Partners V funds.

Both Vestar Capital Partners V and Vestar Executives V are organized in the Cayman Islands, according to paperwork filed with the SEC.

Broward Health’s board approved its 2012 deal with 21st Century Oncology with only then-Commissioner Clarence McKee dissenting.

McKee “questioned why it did not go out for bid,” the minutes say. “Also, assuming that everything else goes well and Broward Health does not terminate 21st Century within the 10-year period, Commissioner McKee said that 21st Century would be getting a 25-year contract. He felt that the contract is too long and it should have gone out for bid.”

Then-CEO Frank Nask replied, “There was no requirement to do the RFP (request for proposals),” the minutes say.

In its annual report filed with the SEC last March, 21st Century Oncology described itself as “the largest integrated network of cancer treatment centers and affiliated physicians in the world.” It has grown by gobbling up a number of other treatment providers, including last summer’s buyout of South Florida Radiation Oncology and its network of treatment centers stretching from Miami-Dade to Vero Beach.

21st Century Oncology’s huge debt

To do that, however, 21st Century Oncology took on $1 billion in debt through the end of September, and continues to suffer from hundreds of millions of dollars in operating losses.

21st Century Oncology’s problems intensified in December with a U.S. Justice Department announcement that it had agreed to pay $19.75 million to settle whistleblower allegations that it had violated the False Claims Act by billing Medicare and Tricare, the U.S. military health care program, for laboratory tests that were not medically necessary.

Benjamin C. Mizer, the head of the Justice Department’s civil division, said the settlement demonstrated the government’s commitment to oppose “unscrupulous providers” of healthcare services.

21st Century Oncology’s problems have continued in 2016. In January the company announced, without explanation, that it was withdrawing an initial public stock offering that it had hoped would raise about $100 million to pay off debt.

Today, 21st Century Oncology is again in the spotlight due to Gov. Scott’s indirect investment and its extraordinarily long, no-bid contract with Broward Health. Yet the public hospital system has refused to make public a copy of that contract, citing an exemption in Florida’s public records law that protects some hospital records from competitors.

Miami attorney Thomas Julin represents the Florida Bulldog. He disagrees with the district’s decision.

“The Legislature gave public hospitals a limited amount of secrecy for small contracts that their governing boards are not required to approve,” Julin said. “Contracts that must go before the board, the big ones, must be made public a month before the vote takes place.

“The public owns these hospitals and is entitled to know how they spend the public’s money,” he said. “We’re deciding now whether to challenge in court the withholding of these records.”

Fort Lauderdale federal grand jury subpoenas Broward Health’s purchasing records

By Dan Christensen and Buddy Nevins, FloridaBulldog.org gjpic

A Fort Lauderdale federal grand jury has slapped a subpoena on Broward Health, demanding records related to an ongoing FBI investigation focused on its purchasing practices, two knowledgeable sources have told FloridaBulldog.org.

The subpoena, served earlier this month, is said to seek information about former hospital district procurement officer Brian Bravo and 16 companies that do business with Broward Health. They include MedAssets, a Georgia-based group purchasing organization for the Broward system and other hospitals (NASDAQ: MDAS) with a market capitalization of $1.87 billion.

The subpoena seeks those records going back 10 years. The name of veteran Assistant U.S. Attorney Neil Karadbil is on the subpoena.

“I’m told the (administrative) staff is on shutdown, spending hours finding all these documents,” one source said.

Broward Health’s attorneys declined to release a copy of the federal grand jury subpoena, saying it is exempt from disclosure under Florida’s public records law.

Fort Lauderdale Assistant U.S. Attorney Neil Karadbil

Fort Lauderdale Assistant U.S. Attorney Neil Karadbil

Commissioner Joel Gustafson, asked if he was aware of the grand jury’s subpoena, said, “I don’t know if I’m allowed to answer that question. We’ve been admonished not to talk about any alleged investigation. If I find that I can, I’ll call you back.”

At the same time, FloridaBulldog.org has learned that top Broward Health staff – chief executive Kevin Fusco, general counsel Lynn Barrett and security director and ethics officer Carlos Perez-Irizarry – have phoned board members to privately update them on the status of the criminal investigation. The move avoided a public discussion of those details.

Commissioners were told that district administrators, criticized in Miami-based investigator Wayne Black’s email for having blocked the FBI’s investigation, are cooperating and turning over requested records, although no time frame for compliance was given. They were also told that general counsel Barrett has waived a claim of privilege to certain documents, facilitating their production.

One of the items turned over: Bravo’s laptop.

The decision by Fusco and the others to brief commissioners individually, thus possibly outside the Sunshine Law, is problematic.

Sunshine law

Florida’s Government-in-the-Sunshine Manual, compiled by the attorney general’s office, cites a 1979 appeals court ruling that held a series of private meetings between a school board superintendent and individual members of the school board were subject to the Sunshine Law.

“While normally meetings between the school superintendent and an individual school board member would not be subject (to the Sunshine Law), these meetings were held in ‘rapid-fire succession’ in order to avoid a public airing of a controversial redistricting problem,” the manual says.

Joe Jacquot, a lawyer with the Foley Lardner law firm that represents Broward Health, said private updates for commissioners don’t violate the Sunshine Law. “As you say, staff appears to be updating individual board members in the normal course,” said Jacquot.

Broward Health officials have said Bravo was fired in December. On Sunday, hospital district board chairman David Di Pietro told This Week In South Florida that Bravo received an “unbelievable” severance package while he was under investigation by the FBI. The deal included a $17,000 payout for personal leave time, plus Bravo remains on Broward Health’s payroll until June.

Black, the private investigator hired last year to look into corruption allegations at Broward Health, told commissioners in a recent email that Bravo “was bragging about getting $75,000 BH (Broward Health) to pay his criminal defense attorney.”

Bravo did not respond to detailed requests for comment. Joel Hackney, chief executive officer of MedAssets, also did not respond to a detailed voicemail requesting comment.

Broward Health spends tens of millions of dollars on medical supplies every year. The district hired MedAssets in December 2007 in an effort to reduce the cost of supplies.

An undated company press release quotes Bravo: “MedAssets has been very effective in working with our leadership team, departments and physicians to review utilization and to implement strategies to reduce physician preference item supply costs while maintaining the quality of patient care.”

Supply costs can represent as much as 31 percent of a hospital’s cost per case, according to a 2006 academic study cited by the Milbank Quarterly, a healthcare journal.

“Gaining control of the hospital’s supply chain – the flow of products and associated services to meet the needs of the hospital and those who serve patients – presents special challenges,” the journal reported. “This is because the most expensive materials – up to 61 percent of the total supply expenditures – are for items about which physicians have a strong preference.”

Trouble at the Statehouse: secrecy, questionable ethics and conflicts of interest

By Nicholas Kusnetz, Center for Public Integrity 

The Florida House of Representatives

The Florida House of Representatives

In November 2014, Arkansas voters approved a ballot measure that, among other reforms, barred the state’s elected officials from accepting lobbyists’ gifts. But that hasn’t stopped influence peddlers from continuing to provide meals to lawmakers at the luxurious Capital Hotel or in top Little Rock eateries like the Brave New Restaurant; the prohibition does not apply to “food or drink available at a planned activity to which a specific governmental body is invited,” so lobbyists can buy meals so long as they invite an entire legislative committee.

Such loopholes are a common part of statehouse culture nationwide, according to the 2015 State Integrity Investigation, a data-driven assessment of state government by the Center for Public Integrity and Global Integrity. The comprehensive probe found that in state after state, open records laws are laced with exemptions and part-time legislators and agency officials engage in glaring conflicts of interests and cozy relationships with lobbyists. (more…)

A stonewall of secrecy hides many 9-11 records on 14th anniversary of terrorist attacks

By Dan Christensen, FloridaBulldog.org 

Osama bin Laden, left, with his successor as al Qaeda chief Ayman al-Zawahiri

Osama bin Laden, left, with his successor as al Qaeda chief Ayman al-Zawahiri

Seven weeks after the end of the massive cleanup at Ground Zero in lower Manhattan in 2002, a legal investigator for the families of 9/11 victims requested a copy of an arrest warrant issued by Interpol for fugitive al Qaeda leader Osama bin Laden.

Here’s the reply she got from the Justice Department’s Interpol-U.S. National Central Bureau:

“Release of information about a living person without that person’s consent generally constitutes an unwarranted invasion of personal privacy in violation of the Freedom of Information Act. You must submit an authorization (privacy waiver) signed by Usama bin Laden, consenting to the USNCB’s release to you of any record that it may have pertaining to him.”

The Justice Department’s assertion of privacy rights for bin Laden is a small rock in the stonewall of official secrecy that continues to hide 9/11 documents held by the FBI, CIA and other government entities on the 14th anniversary of the terrorist attacks.

Lately, the public focus has been on the 28 blanked-out pages in Congress’s 2002 Joint Inquiry into the attacks regarding “foreign support for the hijackers” – read Saudi Arabia. The pages, withheld by President George W. Bush and kept hidden by President Obama, have been the subject of recent stories in The New Yorker, The New York Times and others. On Capitol Hill, pending bills in the House and Senate seek to open those pages to the public.

Yet hundreds, likely thousands, of significant records about what the 9/11 Commission called “a day of unprecedented shock and suffering in the history of the United States” remain off limits in whole or significant part. The result: an incomplete public understanding of events behind the attacks, and a denial of evidence to 9/11 victims still seeking a measure of justice in the courts.

‘LET OUR PEOPLE KNOW’

“Thousands of pages, photographs and tangible evidence have been withheld, much of which from my personal knowledge has nothing to do with keeping America safer but rather protects incompetence or relations with perfidious foreign governments,” said former Sen. Bob Graham, the Florida Democrat who co-chaired Congress’s Joint Inquiry into the attacks and helped write the 28 pages.

Bob Graham

Bob Graham

“The United States has paid a high price in justice to injured Americans, national security and confidence in government by this secrecy. It is time to let our people know,” Graham said.

Many hidden 9/11 records are years, even decades old. But some like the classified files and memoranda of the FBI’s secretive 9/11 Review Commission were produced in 2014 and 2015.

The Review Commission, charged with investigating the FBI’s performance and evaluating new information about the attacks, went out of business in March after issuing a 127-page report. The FBI has yet to release any other commission material – transcripts, memos and the like – sought in a Freedom of Information request filed by FloridaBulldog.org in April.

Perhaps the largest untapped source of information about events leading up to 9/11 is the raw intelligence files about al Qaeda and terrorist threats gathered by the eavesdropping National Security Agency.

In his 2008 book “The Commission: The Uncensored History of the 9/11 Investigation,” former New York Times reporter Philip Shenon said Commission investigators neglected to examine that “gold mine” of NSA 9/11 data until days before the commission’s final report was due.

Found in that limited time, and noted in the commission’s report, was “strong evidence that Iran facilitated the transit of al-Qaeda members into and out of Afghanistan before 9/11, and that some of these were future 9/11 hijackers…We believe this topic requires future investigation by the U.S. government.”

“There’s a massive amount of information,” Shenon said in an interview last week. “That’s always been on the top of my list of documents I’d like to see.”

Suppressed records are plentiful and easy to locate in the reports of the Joint Inquiry and the footnotes of the follow-up 9/11 Commission. Aside from the notorious 28 pages, the Joint Inquiry’s report contains numerous other blanked-out parts, including six heavily censored pages regarding covert action ordered against bin Laden by President Clinton.

The National Archives manages the 9/11 Commission’s files and maintains an online list of about 1,200 fact-finding interviews, nearly 200 of which the public cannot access because they are classified. Hundreds more released documents have redactions ranging from minimal to heavy.

911datasets.org, a group that makes available raw information obtained by 9/11 researchers, says the National Archives has released about a third of the commission’s files. Many records within those files are nevertheless withheld citing national security.

‘NO EVIDENCE’ AGAINST SAUDI GOVERNMENT

The 9/11 Commission reported finding “no evidence that the Saudi government as an institution or senior Saudi officials individually” had funded al Qaeda. The official veil of secrecy over its records, however, continues to obscure how it reached that controversial conclusion.

Hidden from public view are commission interviews with White House staff, FBI agents, CIA employees and officials with other agencies including the Defense Intelligence Agency, State Department, Treasury Department and Federal Aviation Administration. Also secret: interviews with government officials from Great Britain, Canada, Afghanistan and Saudi Arabia.

From left to right: Dick Cheney, Prince Bandar, Condoleezza Rice, and George W. Bush, on the Truman Balcony of the White House on September 13, 2001. [Source: White House via HistoryCommons.org]

From left to right: Dick Cheney, Prince Bandar, Condoleezza Rice, and George W. Bush, on the Truman Balcony of the White House on September 13, 2001. [Source: White House via HistoryCommons.org]

One intriguing 2003 interview was with Prince Bandar bin Sultan, the Saudi ambassador to the U.S. who met with President George W. Bush and Vice President Dick Cheney at the White House two days after 15 of his countrymen helped carry out passenger jet attacks on New York and Washington.

Bandar’s wife, Princess Haifa, made payments to a man the Joint Inquiry identified as a “Saudi extremist and a bin Laden supporter.” The man, Osama Bassnan, also apparently had contact with 9/11 hijackers Nawaf al Hazmi and Khalid al Midhar, who were aboard American Airlines Flight 77 when it slammed into the Pentagon.

Time Magazine reported that from January 1999 to May 2002 the princess made monthly payments of $2,000 to Bassnan’s wife, who was said to suffer from a severe thyroid condition. The payments totaled as much as $73,000, The New Yorker reported last year.

Key documents by the CIA and the Treasury Department’s Office of Foreign Assets Control relating to terrorist financing are also under wraps.

For example, while representing 9/11 victims, New York’s Kreindler & Kreindler law firm filed a Freedom of Information request for a copy of a May 2000 memo about a meeting OFAC officials had with two of Osama bin Laden’s half-brothers, as well as a subsequent letter about the meeting from the Saudi Binladin Group, the large construction conglomerate founded by Osama bin Laden’s father. Both documents are cited in the 9/11 Commission’s report.

OFAC denied the 2009 request saying, among other things, that the release of those records would constitute “a clearly unwarranted invasion of personal privacy,” presumably of the bin Ladens.

OFAC also asserted personal privacy and national security considerations in 2006 when refusing to release nearly 700 pages of records about the International Islamic Relief Organization, a Saudi charity whose branches in Indonesia and the Philippines were specially designated by OFAC as terrorist entities for funding al Qaeda.

Another 600 OFAC pages were likewise withheld about the al-Haramain Islamic Foundation, a Saudi charity designated by the Treasury Department in 2008 for having provided “financial and material support” for al Qaeda.

IMMUNIZING FINANCIERS OF TERRORISM?

“The wholesale redaction of any relevant detail is a problem we’ve seen across the board when we’ve asked for documents that address specific details of Saudi-based support for al Qaeda in the pre-9/11 era,” said Sean P. Carter, a victim’s attorney with Philadelphia’s Cozen O’Connor law firm. “At the end of the day this is immunizing those people from the consequences of their actions.”

Al Rajhi Bank headquarters in Riyadh, Saudi Arabia

Al Rajhi Bank headquarters in Riyadh, Saudi Arabia

The CIA took a different tack in its July 2013 response to a FOIA request by another plaintiff’s lawyer seeking intelligence reports about Saudi Arabia’s al Rajhi Bank that were cited in a Wall Street Journal story, “U.S. Tracks Saudi Bank Favored by Extremists.”

The front-page article said CIA documents described al Rajhi Bank, which describes itself as one of the world’s largest Islamic banks, as a “conduit for extremist finance” that once obtained a visa for a money courier working for Osama bin Laden’s second-in-command, Ayman al Zawahiri. The CIA replied that it “can neither confirm nor deny the existence or nonexistence” of the requested records.

CIA documents cited prominently in the 9/11 Commission Report and requested by plaintiff’s lawyers have been released in recent years, often with heavy redactions and assertions that the information was exempt by presidential directive or U.S. law.

Examples include:

In June, the CIA released a 10-year-old report by the agency’s Inspector General regarding criticism leveled by the Joint Inquiry. The 490-page report is riddled with redactions, including nearly all of a 29-page section titled “Issues Relating to Saudi Arabia.” A sentence that remains states that the CIA found no “reliable reporting confirming Saudi government involvement with and financial support for terrorism prior to 9/11.”

The National Security Archive, a private research group based at Washington’s Georgetown University, has identified key 9/11 information that remains classified.

“Hundreds of cited reports and cables remain classified, including all interrogation materials such as the 47 reports from CIA interrogations of [alleged 9/11 mastermind] Khalid Sheikh Mohammed,” the group’s website says.

THE FBI’S MANY CLASSIFIED RECORDS

The FBI posts 72 documents about the 9/11 Commission on its website. Many contain extensive redactions and none involve allegations of Saudi financing for terrorists, the most controversial aspect of the 9/11 case.

The FBI’s sprawling 9/11 investigation, code-named PENTTBOMB, was the largest in its history. More than half of its agents worked the case, following more than half-a-million investigative leads, the FBI has said.

U.S. District Judge William J. Zloch

U.S. District Judge William J. Zloch

How many documents is that?

The FBI’s Tampa field office alone holds 80,000 classified pages in its 9/11 file, according to papers filed by the Justice Department in ongoing Freedom of Information litigation brought by FloridaBulldog.org.

The records include details of a once-secret FBI investigation of a Saudi family with apparent ties to the 9/11 hijackers who gained attention after they abruptly moved out of their Sarasota area home two weeks before the attacks, leaving behind their cars, clothes, furniture and other belongings. FloridaBulldog.org working with Anthony Summers, co-author of the 9/11 history “The Eleventh Day,” first reported the story in 2011.

Fort Lauderdale U.S. District Court Judge William J. Zloch is currently reviewing those 80,000 pages for possible public release.

The continuing secrecy about 9/11 has not sat well with the former leaders of the 9/11 Commission.

At an event last year marking the 10th anniversary of the release of its report, former Vice Chairman Lee Hamilton urged transparency, saying he was “surprised and disappointed” to learn that documents remain hidden.

“I assumed, incorrectly, that our records would be public. All of them, everything,” Hamilton said. “I want those documents declassified. I’m embarrassed to be associated with a work product that is secret.”

You don’t need X-ray vision to see through Gov. Rick Scott’s blind trust

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott, right, and blind trust executive Alan Bazaar

Gov. Rick Scott, right, and blind trust executive Alan Bazaar

Governor Rick Scott keeps his $127.8 million stock portfolio in a blind trust intended, by law, to prevent him from having knowledge or control of his investments and to eliminate conflicts between the governor’s public responsibilities and his private interests.

But Florida’s qualified blind trust statute, a little-noticed part of the large 2013 ethics reform bill signed into law by Scott himself, isn’t doing its job. While veiling the governor’s assets from the public, the blind trust fails to keep him blind to his investments.

There are at least two reasons why: disclosure requirements in federal securities law that can undercut blind trust secrecy, and weak conflict-of-interest rules in Florida that don’t require public officers like the governor to disclose assets they own or control when held in their spouse’s name.

For example, on June 25 Scott and the trustees of his blind trust told the U.S. Securities and Exchange Commission that Scott had sold 122,653 shares of Argan (NYSE:AGX) earlier that month for $4.87 million. Argan is a publicly traded holding company whose Gemma Power Systems subsidiary builds and operates power plants in Florida and elsewhere.

The report filed by Scott and his trustees at New York-based Hollow Brook Wealth Management also disclosed that the governor continued to own 4.2 percent of Argan – or 606,124 shares – worth nearly $23.7 million at Tuesday’s closing stock price of $39.06.

The public report says, “No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of common stock that are the subject of this filing.”

This wasn’t the first time Scott made millions on a private stock deal while in office.

In March 2014, FloridaBulldog.org reported that the governor and First Lady Ann Scott recently had collected $17 million selling hundreds of thousands of shares of Argan held by the blind trust and other entities. The story also reported about other large transactions involving several other companies whose stock Scott owned.

Scott’s Argan stock sales included at least 140,000 shares held by the blind trust – then worth $2.5 million – which also retained 523,000 shares. The two other selling entities: the F. Annette Scott Revocable Trust and the Richard L. and F. Annette Scott Family Partnership, in which Scott has acknowledged he was a beneficial owner.

Scott’s June filing does not break down the number of Argan shares sold then by each entity in five trades made June 15-19. But on more than one occasion the blind trust, the first lady’s trust and the family partnership have coordinated transactions – buying or selling large numbers of shares on the same day, at the same price or in similar proportions.

SCOTT ‘HAS NO KNOWLEDGE OR CONTROL’ OF BLIND TRUST

Scott’s office would not elaborate. Spokeswoman Jackie Schutz released a statement Tuesday saying the blind trust is “under the control of an independent financial professional” and that the governor “has no knowledge or control of anything that is bought, sold or changed in the trust.”

Nevertheless, trustee Hollow Brook Wealth Management’s chief executive is Alan Bazaar who worked for Scott from July 1999 to January 2010 as managing director and portfolio manager at Richard L. Scott Investments. Hollow Brook is also an “investment adviser” to the Scott family partnership and the revocable trust in Mrs. Scott’s name.

Further, Scott and Bazaar were partners in a company that in 1999 invested in Cyberguard, a Deerfield Beach computer security firm. The company’s board of directors included then-Broward Sheriff Ken Jenne, who later went to prison for corruption, and Fort Lauderdale lobbyist and Scott confidant William D. Rubin.

To date, Gov. Scott is the only public officer in Florida to use a state qualified blind trust to shield his assets and obtain the safe harbor it provides from prohibited conflicts of interest, according to the Florida Commission on Ethics.

Keeping his securities portfolio in the blind trust means Scott does not have to identify his individual securities on his annual financial disclosure form. Instead, his form describes his biggest single asset as simply “Governor Richard L. Scott 2014 Qualified Blind Trust.”

While the state form does not detail his blind trust holdings, mandatory reports he must make to the SEC about his large stock transactions do. But they aren’t the only way information about Scott’s stock holdings have gone public.

Companies must file reports identifying their biggest shareholders. For example, Argan’s May 16, 2015 report to the SEC in advance of its annual meeting listed Richard L. Scott as a principal stockholder who then owned 965,255 shares, or 6.6 percent of the company.

pipelineGov. Scott also has made public information about the contents of his blind trust.

In June 2014, while qualifying to run for re-election, Scott closed his original blind trust, made public a list of his blind trust assets, then immediately put those assets back into a new blind trust.

The maneuver presented a snapshot of Scott’s stock holdings as of Dec. 31, 2013. Among other things, it revealed Scott was heavily invested in energy companies, including those that control the two existing natural gas pipelines serving Florida.

Also disclosed was Scott’s $108,000 investment in Spectra Energy and its affiliate DCP Midstream Partners.

Spectra is currently seeking regulatory approval to build the $3 billion Sabal Trail Transmission, an approximately 500-mile pipeline to run from Alabama and Georgia into North Florida and south to Orange County. The underground pipeline would supply fuel to the state’s new gas-fired power plants.

The Florida Public Service Commission, whose five members were appointed by Scott, unanimously approved Sabal Trail in the fall of 2013, before Scott’s stake in Spectra was publicly known.

Last month, the Florida Department of Environmental Protection said it intended to award a key environmental permit and easement for the controversial Sabal Trail project that’s majority-owned by Spectra Energy.

FP&L and Duke Energy, also partners in the project, have contributed $1.4 million to Let’s Get to Work, the political committee branded with Scott’s campaign slogan, according to federal records. They also gave a combined $5.8 million to the Republican Governors Association in 2013-14, which in turn contributed $18.3 million to Let’s Get to Work last year.

Better late than never: Online access to court files arrives in South Florida

By Dan Christensen, FloridaBulldog.org clerkpage

Nearly two decades after the federal courts did it, state courts in South Florida and across the Sunshine State have begun to allow the public online access to documents contained in case files.

Unlike the federal courts, however, local court clerks in South Florida and other areas aren’t charging any fees to view, print or download millions of available pages of public records.

The Broward Court Clerk’s office was among the first to go fully online last month with free public access to electronic felony, misdemeanor, traffic, and civil court records not sealed, expunged or otherwise deemed confidential by law or court order.

“They’re available for free except for dependency, juvenile, adoptions – you know, family cases,” said Clerk Howard Forman. There is also no remote access to document images in cases governed by Florida probate rules.

For now, all users must register and log in to view the docket and document images during a 90-day pilot project. Once the state courts sign off on Broward’s system users won’t have to register and may view court records anonymously.

Miami-Dade Clerk Harvey Ruvin put civil cases only online last month. He did not respond to requests for comment.

In Miami-Dade, the county commission, not the clerk, runs the criminal record system and criminal cases are not online. “The county commission is supposed to finance their felony operation and they haven’t done it yet,” said Forman.

Palm Beach County Court Clerk Sharon Bock announced last week that a $2.6 million budget shortfall would indefinitely delay the implementation of online remote access to court records there.

What’s happening is the culmination of an effort that began in 2004 to develop technology and policies the Florida Supreme Court determined were necessary to shield sensitive personal information – like Social Security and charge card numbers – from anonymous, yet prying online eyes.

Court dockets have appeared online for more than a decade. More recently, attorneys have been required to file court documents electronically instead of on paper. New rules were adopted to require lawyers and pro se filers to identify and protect confidential information in their pleadings. A list of 20 exemptions subject to automatic redaction by the court clerk was also adopted.

A TIERED ACCESS SYSTEM

Years of study also led to the establishment of a tiered system of access to court records “to facilitate appropriate, differentiated levels” for judges, court and clerks’ office staff, “user groups with specialized credentials” like law enforcement and attorneys and the general public.

In March 2014, the Supreme Court opened the door to posting court pleadings online in an administrative order that adopted the new “access security matrix” and established the pilot program that allows clerks in Florida’s 20 judicial circuits to apply for approval of their local access systems.

Court documents in Broward undergo a thorough redaction process before they’re put online, officials said. It begins with an automatic redaction done by a special software filtering that locates, and blacks out, forbidden information like Social Security numbers. There’s also a manual review by clerks and submission to an audit that looks for statistical anomalies that might signal that exempt information wasn’t caught.

“It’s working very well,” said Ernie Nardo, the Broward clerk’s chief information officer.

The Broward clerk’s case management system, Odyssey, is provided by Texas-based Tyler Technologies. It cost more than $1 million to implement and another $435,000 in annual licensing fees, Nardo said. Another $230,000 a year goes to license redaction software from Apoka-based Computing System Innovations.

The court’s sensitive case files are not on the cloud, but remain stored locally on servers owned by the Broward clerk’s office, Nardo said.

While all new filings are coming in electronically, Broward clerks are today “back-scanning” older paper felony case files. “Those cases linger longer so we are going back to convert entire cases to electronic,” Nardo said. He said 2012 felony cases are in the process of being scanned, meaning that every case from 2013 going forward is now electronic.

There are no plans to go back and scan in other old, closed cases because the cost is prohibitive. However, the Broward clerk is thinking about providing on-demand back-scanning of cases for those willing to pay for it. Any files scanned that way would also be added to the online record.

Another project under consideration would allow individuals, for a fee, to track activity in cases by registering to receive alerts.

In Broward, the clerk’s office is also working on making its website mobile friendly.

“We are developing our website to be compliant with any phone out there. So it won’t matter what our phone is when you hit our site it would resize itself to that device,” Nardo said

Federal judge tosses out town’s RICO suit against residents seeking public records

By Dan Moffett, The Coastal Star 

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

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

Gulf Stream’s legal offensive against residents Martin O’Boyle and Chris O’Hare suffered a huge setback late last month when a federal judge in West Palm Beach threw out the town’s federal racketeering suit against the two men.

U.S. District Court Judge Kenneth Marra said that, while he was sympathetic with the town’s “very difficult situation” because of the hundreds of public records requests O’Boyle and O’Hare had filed, their actions did not meet the legal standards for suing under the RICO statute. (more…)

Town’s class action RICO lawsuit says Florida public records law misused to extort settlements

By Dan Moffett, The Coastal Star 

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

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

Town of Gulf Stream in South Palm Beach County has rolled out the heavy artillery in its legal war against residents Martin O’Boyle and Christopher O’Hare, filing a class action RICO lawsuit Feb. 12 in U.S. District Court.

The 48-page federal complaint alleges that the two men engaged in a conspiracy to exploit the state’s public record laws and extort settlements from the town and other municipalities and organizations around the state. (more…)

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.

Broward courts use fees to prevent sun from shining on judicial records; a $132,000 demand

By Alison Fitzgerald, Center for Public Integrity 

Rendering of the new Broward courthouse now under construction.

Rendering of the new Broward courthouse now under construction.

When the Center for Public Integrity last summer requested records from Florida’s 17th judicial circuit regarding the procedures and policies surrounding foreclosure cases, officials were more than happy to comply — for a price.

A price of $132,348, to be exact. (more…)

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