A public corruption probe into a $1 billion deal to overhaul Miami Beachs Convention Center District may entangle a developer considered the front-runner to land the project.
Investigators want to know why CMC Group, run by one of South Floridas top high-rise developers, paid $25,000 to a firm headed by an ex-con suspected of working in cahoots with the citys purchasing director.
The purchasing director, whose job was to oversee the bidding, was forced to resign when city officials became concerned that he was possibly rigging the process by assembling his own development team.
Their concerns focused on the directors dealings with Walter Garcia, whose company, Peninsula Development, received the $25,000.
In a statement issued Friday, CMC Group acknowledged paying Garcias company for time and expenses that Peninsula said it incurred during a month of talks about forming a team to bid on the convention center project.
There were no further talks between Ugo Colombo, CMC Group founder, and Garcia after the latter mentioned his ties to members of Miami Beach city staff, according to the statement.
Garcia has been under criminal investigation since late March, when city officials discovered emails between Garcia and then-purchasing director Gus Lopez that suggested the two men were recruiting their own team to bid on the 52-acre redevelopment plan.
Among the correspondence: proposed contracts between Garcias company and third parties (CMC was not one of them), and a cost breakdown that included a projected $6.73 million consultants fee for Garcia.
Garcia and Lopez have denied wrongdoing, and neither has been charged. But an investment banker, Manny De Zarraga, told The Miami Herald that the men met with him to try and secure financing for the convention center redevelopment.
Lopezs bosses believed he leaked unreleased information about the project to Garcia, giving him an unfair advantage over competitors. They forced Lopez to resign on March 30 and handed over the emails to Miami Beach police, who weeks ago raided Lopezs home and Garcias office.
A CMC Group spokesman said the companys attorneys met with prosecutors to discuss Garcias Peninsula Development.
CMC Group is a central player in a highly touted team of bidders that includes Cirque du Soleil, Portman Holdings and the owner of Bal Harbour Shops. The group, called Portman-CMC, just received the highest score from the citys evaluation committee and was recommended as one of two viable redevelopment partners.
The city has proposed expanding the convention center, building an 800-room hotel, and possibly razing public structures including City Hall in favor of shops, condos, parks or restaurants. The idea is to transform an outdated facility into a world-class attraction in the heart of South Beach.
A vote by the Miami Beach City Commission on which teams make the final cut could come as soon as September.
CMC group maintains that its dealings involving the Miami Beach Convention Center are open and transparent.
But elected officials, while not condemning the development team, say investigators interest in the payments raises questions.
I dont think we should move forward if there is something wrong, said Mayor Matti Herrera Bower.
Colombo, the Ferrari-racing developer behind Epic Residences and Hotel in downtown Miami and the Grovenor House in Coconut Grove, spoke to The Miami Herald last week about his dealings with Garcia. At the time, he said he was unaware of any $25.000 payment.
Its a big office and theres a lot of transactions going on, Colombo said then. But as far as I know, no.
He is available at any time to meet with authorities, according to a CMC statement.
Colombo said his wife introduced him to Garcia. She runs the luxury European furnishing store Nest on Lincoln Road. Garcias Peninsula Development Group bills itself as a builder and remodeler of luxury homes and Garcia was a Nest client, Colombo said.
He said Garcia introduced him to an investor, who Colombo didnt name but said was legitimate and might be very helpful in this thing where the convention center moves forward. Colombo said Garcia then pitched that CMC Group pay him as a consultant specializing in public-private partnerships.
I didnt really need a consultant. And there was really nothing back then going on, Colombo said. I said well talk about it. And then the guy ended up in trouble.
Colombo said he subsequently learned from reading The Herald that Garcia and Lopez were accused of tampering with the citys Request for Qualifications process. He said he also learned from the paper that Garcia was indicted in 1987 as part of Operation Pisces, at the time the largest undercover federal money-laundering and drug probe in history. After several years on the lam in Spain, Garcia pleaded guilty in 1997 to conspiracy to possess and distribute marijuana. He was sentenced to four years in prison, court records show.
Details in a search warrant filed in court show detectives discovered an email with a scanned paycheck from Peninsula to Lopezs wife, apparently concocted to make it appear that she worked for the company and had a steady income so she could secure a loan for a Mercedes-Benz. In one email, Lopez instructed what Garcia was supposed to say if the bank financing the car called to verify that Lopezs wife actually worked with Peninsula, according to the warrant.
Miami Beach police and the Miami-Dade state attorneys office declined to comment, as did Garcia and his attorney. Lopezs attorney, Carlos Fleites, said he had no knowledge of meetings between Garcia and Colombo.
Commissioner Jonah Wolfson, who has been critical of the redevelopment plan, said the city should consider rebooting the bidding process.
If the top bidder had some involvement with someone who had a corrupt relationship with Gus [Lopez] then I think its reason to start the whole thing over, he said. Or scrap the entire nonsense.
Miami Herald staff writer David Ovalle contributed to this report.