Former Miami-Dade County employees arrested in massive overbilling scheme
06/04/2013 9:43 AM
06/04/2013 8:22 PM
Jesus “Jay” Pons, Coral Gables husband, computer data whiz, mid-level county bureaucrat, appeared to be a model citizen.
But behind that low-profile image, authorities say he bilked taxpayers to the tune of $3 million over a decade, allowing county contracts to swell to ridiculous dollar amounts - all while accepting paper bags stuffed with cash from a New York tech company.
It was Pons who orchestrated a scheme to overbill for work never done by Data Industries Inc, then receive between 10 and 50 percent of the profits, prosecutors say. This was done while he continued to collect a county paycheck.
And the longtime county employee exuded audacity and boldness in private, investigators say.
He drove a Porsche Cayenne, arranged fraudulent deals via email using the name of his favorite gangster, “Meyer Lansky,” slept with the company president’s fianceé, bragged about off-shore banks accounts and a home in the Caribbean – while hinting at vague mob ties.
The contrasting images came crashing down Tuesday when Miami-Dade police swooped into his Coral Gables home in an early-morning raid, arresting Pons on charges of racketeering, fraud, grand-theft, extortion and other white-collar crimes.
“The money was taken from the taxpayers when we were going through very difficult economic times as a government,” said Miami-Dade State Attorney Katherine Fernández Rundle. “It was really to underwrite a lavish lifestyle.”
Afraid he might destroy evidence and valuables that might be used to repay taxpayers, Miami-Dade Police’s Special Response Team deployed flash-bang grenades in the jarring early-morning raid, hauling Pons away to jail in his pajamas.
Also arrested: wife Diana Pons, an accountant who prosecutors say was in on the scheme, and Bruno Diaz, Pons’ brother-in-law who also worked for the county.
The arrests cap a prolonged investigation into Pons and Data Industries, which has earned more than $16 million in taxpayer-funded contracts since 2001.
The arrests are a black eye for Miami-Dade’s Internal Services Department, which up until recently was known as the General Services Administration, or GSA. The sprawling department manages buildings and properties, handles billing, and coordinates real estate purchases.
In 2006, GSA hired Data Industries to handle its information technology services. The original contract was for $760,000 but with Pons pulling the strings, it ballooned up to a staggering $10.7 million paid to the company.
In all, investigators say at least $6 million was stolen, with half of that going to Pons.
“It happened because people got complacent. People trusted people. And there was a lack of oversight,” said Miami-Dade Mayor Carlos Gimenez, who was elected in mid-2011 and reorganized the department. “Procedures have been changed, and we don’t think that can happen again.”
Pons, 51, and Diaz, a senior systems analyst in the agency, were relieved of duty following a 2011 police raid on their desks at County Hall. They later resigned their county jobs.
Pons’ supervisor, Clayton Baptiste, also resigned amid the investigation. Lester Sola, who now heads Internal Services, said Baptiste gave Pons too much leeway and signed “blank purchase orders.”
Unrelated to the investigation, former GSA Director Wendy Norris also resigned, Sola said.
Pons, a former board member at the Adrienne Arsht Center for the Performing Arts, was a high-level GSA manager overseeing the Data Industries contract.
The probe began when a subcontractor, Anthony Mei, of Monodnock Consulting, was cut out of a deal and became suspicious of the figures. He relayed his concerns to private investigator Joe Carrillo, who later told to police.
Mei’s allegations to Miami-Dade police were outlined in a search warrant, first reported by The Miami Herald in April 2012.
He told police he charged Data Industries $125 an hour, and the company turned around and billed taxpayers between $230 to $275 an hour – markups he felt were “inappropriate.”
Mei also alleged the company paid a web designer $30 an hour, but billed taxpayers $175 an hour for her services. Another woman earned $35,000 annually through Data Industries, which billed the county $350,000 a year for her work, he told police.
Soon after The Miami Herald reported on the investigation, the head of Data Industries, Paul Raifaizen, agreed to cooperate against Pons in exchange for immunity. He allowed investigators access to his financial records and computers while detailing how the scheme unfolded.
Raifaizen said he met Pons through his own father, Phil Raifaizen, who told him to “take care of Jay.”
Investigators learned the company had long been paying Pons for “inside information” on county technology contracts dating back to the 1990s. Pons’ reach was unfettered.
“He touched every sector and he influenced every single technology contract at GSA,” according to a warrant by Detective Luis Rodriguez and prosecutors Breezye Telfair and Christine Zahralban.
According to the warrant, Pons steered a lucrative 2006 contract to Data Industries, then demanded 50 percent of the gross profit. To avoid suspicion, Raifaizen set up a Florida company, Paradyne Consulting Services, solely to “funnel money” to Pons.
They began billing for “ghost employees” who never worked on the contract, seven of whom cost taxpayers over $1 million. Pons received the bogus timesheets and looked the other way as Miami-Dade County paid the bills.
Using the moniker “Meyer Lansky,” Pons arranged the deals via e-mail to Raifaizen, who went by “Beth Goldberg.”
The men tried to hide the deals by emailing “in a pseudo amorous manner, but plainly communicated numbers, payments and initials for payees,” the warrant said.
On another occasion, Pons said he needed a “Christmas-time bonus” and created a scheme to bill for phantom overtime hours. Pons got the bonus: $100,000 in cash.
Usually, Raifaizen flew to Miami to deliver the case to Pons in paper bags at a Coral Gables Starbucks, or the Biltmore hotel, where Pons was a golf member.
At one point in 2010, as the economy was in shambles, Pons threatened to sever the contracts if more payments didn’t come in. Raifaizen responded with over $400,000 in checks.
By 2011, Raifaizen “couldn’t stand to look at Jay” anymore, according to the warrant. The reason: he found out that Pons was having an affair with his fiancé and now-wife, Erica Nagy.
“Although he discovered the affair, Mr. Raifaizen never confronted Pons and instead continued to pay,” according to the warrant.
After Anthony Mei came forward and detectives raided Pons’ desk, Raifaizen and Pons met in the Keys. Pons claimed he would “take care of Tony when things blow over” - a veiled threat toward the whistleblower, police say.
Miami Herald staff writer Patricia Mazzei contributed to this report.
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