Published: June 24, 2007Liberty City
At a biotech park ceremony are, from left, Henry Lewis, Florida A&M; Reuben Davis, Empowerment Trust; Eduardo Padron, Miami Dade College; Ex-congresswoman Carrie Meek; Commissioner Dorrin Rolle; developer Dennis Stackhouse; Api Rudich, MediVector. (Patrick Farrell/Miami Herald)
Developer reaped millions for biotech park never built
Under the watch of local government, a Boston developer reaped millions in poverty money for a promised biotech park but never delivered a single building - leaving only a desolate swath of land in one of Miami-Dade's most neglected neighborhoods.

On a muggy day in June 2005, some of Miami-Dade County's most powerful political figures joined a Boston businessman on a blighted tract of land in Liberty City for a groundbreaking ceremony.

Donning hard hats and armed with shovels, they stood in the middle of the shadeless lot, posing for pictures in front of a large lithograph portraying state-of-the-art buildings, tidy lawns and streets lined with palm trees.

There, in one of the poorest neighborhoods in the country, developer Dennis Stackhouse promised to build a massive biopharmaceutical park, where multinational drug companies and prestigious universities would develop cutting-edge medical advances and Miami's public hospital would provide free healthcare to 150,000 poor people a year.

Stackhouse

More than 1,500 high-paying jobs would follow, along with hundreds of millions in investments and tax revenue -- enough to make it the most dramatic economic development project ever seen in Miami-Dade.

This ''is exactly the kind of job-producing investment that we have needed in Liberty City for decades,'' said U.S. Rep. Kendrick Meek, a champion of Liberty City and one of the park's most vocal supporters.

Since then, county leaders have invested millions in Stackhouse's biotech project, using public money set aside to help the poor.

Here is what taxpayers received in return: empty lots, dormant earthmovers and piles of dirt and gravel with no sign of the buildings, the biotech companies or the high-tech jobs promised to Liberty City.

Instead, Stackhouse diverted more than $500,000 from the park through double billings and dubious expenses while paying a bevy of political insiders to rally support for the troubled project, a seven-month Miami Herald investigation found.

Among those insiders: former congresswoman Carrie Meek, who received at least $40,000 and a free luxury car from Stackhouse to consult on the project while her son -- U.S. Rep. Kendrick Meek -- moved to secure federal dollars for the developer; and County Commissioner Dorrin Rolle, who landed thousands in campaign cash and a $10,000 donation to a nonprofit he runs.

Along the way, county leaders failed to detect questionable spending, overlooked chronic delays and neglected to vet the developer's track record -- even while Liberty City sank deeper into economic despair, devoid of decent housing and badly needed jobs.

POVERTY AGENCY'S ROLE EMPOWERMENT TRUST HAD OVERSIGHT POWER

At the center of the county's breakdowns lies the Miami-Dade Empowerment Trust, a county-funded nonprofit that oversees the biotech park while holding a 5 percent interest in the deal.

The trust was supposed to monitor Stackhouse's spending and file progress reports and audited financial statements with the county. But it has yet to produce a single report or track how Stackhouse used the public's money.

The first phase of the Poinciana Biopharmaceutical Park was supposed to be completed last year and include three buildings and a parking garage encompassing more square footage than AmericanAirlines Arena in Miami.

Today, the only progress at Poinciana is the beginnings of the five-story garage going up in a neighborhood where many families can't afford cars. Potential cost to taxpayers: $23 million.

Thousands of pages of court records, county documents, internal e-mails, bank records and canceled checks obtained by The Miami Herald show the ambitious plan has placed millions of tax dollars and acres of public land at risk while setting back the revitalization of Liberty City for years.

Among the newspaper's findings:

• After the county spent millions preparing one of its last open stretches of public land for development, the trust gave Stackhouse's company control over half of it for 75 years -- then allowed him to use the land as collateral for a $4.2 million private loan while paying just $1,500 a month in rent.

• A year later, the trust provided Stackhouse's company with a $3 million interest-free county loan despite the developer's financial record, which is marred by foreclosures, liens, and a bankruptcy totaling more than $20 million.

• Once he had access to the county's money, Stackhouse diverted more than $500,000 from the project by submitting more than 40 bills to the trust that had already been paid with the private loan, including construction expenses, architectural fees and property taxes.

In one case, he turned in the same $26,000 invoice three times -- collecting a total of $78,000 from the trust.

• Stackhouse pitched the project to local leaders by claiming multinational companies and world-class universities would lease thousands of square feet and employ hundreds of people.

But most of the tenants touted by Stackhouse told The Miami Herald they have no plans to lease space at the park. Two of the companies said they had no knowledge of the project at all.

• In fact, the only biotech firm committed to moving into the park is a Massachusetts company called MediVector, which Stackhouse said will serve as the anchor tenant, creating 150 biotech jobs while leasing thousands of square feet to test and manufacture drugs.

But MediVector is little more than a small consulting firm run by one of Stackhouse's longtime business partners from a 300-square-foot office in Cambridge.

''I'm just so disappointed,'' said Carrie Meek, who acknowledges she received money, a car and rent-free office space for her foundation from Stackhouse. ``I saw this project as a great opportunity for the community.''

Kendrick Meek said he did not know his mother was provided money and perks from Stackhouse. The congressman said his mother never approached him about funding the project with federal dollars and that his support is based on the community's needs.

''We want to assist any project that is going to create jobs and opportunities,'' he said.

DEVELOPER'S THOUGHTS HE PLACES EMPHASIS ON JOBS, INVESTMENTS

Stackhouse defends the project, saying the park will bring much-needed jobs and investments to Liberty City.

He denied any wrongdoing and said the double billing could have been a clerical error.

''If it were $500,000 -- and I doubt that it is -- what is that? Five percent of what's been spent?'' he said.

Although he told the County Commission he had big-name tenants lined up for the park, Stackhouse told The Miami Herald the list is not firmed up: ``Who the ultimate mix of tenants are remains to be seen.''

The trust also defends the project. ''We still feel strongly, 100 percent behind this project,'' said Chief Executive Officer Aundra Wallace.

When fully built, Stackhouse said, the Poinciana Biopharmaceutical Park will be six times larger than the highly touted Scripps Research Institute going up in Palm Beach County.

Yet, unlike Scripps -- which received $310 million in start-up money from the state and boasts 11 Nobel laureates on its board -- MediVector, the park's anchor tenant, has never developed a drug on its own.

In fact, the company received a $300,000 grant from the Empowerment Trust in March just to write a business plan.

This isn't the first time a Stackhouse company has landed county money to bring the trendy biotech industry to a distressed area of Miami-Dade.

Three years ago, one of his businesses received $2.2 million from the county to buy medical equipment for an office building it was constructing in Opa-locka that he said would lure a biotech firm to the job-hungry city.

The name of the firm: MediVector.

But MediVector never moved to Opa-locka, and Stackhouse used the money instead to help with building costs and pay down a construction loan.

Now Stackhouse says MediVector will anchor the biotech park in Liberty City.

REACTION TO VIOLENCE BUSINESSES MOVED OUT; NEW ONES DIDN'T COME

Nearly three decades ago, racial tensions in Miami-Dade erupted in a frenzy of violence after the acquittal of four white police officers charged with beating an unarmed black man to death.

In the aftermath of the May 1980 riot, many businesses packed up and moved to the suburbs, taking thousands of inner-city jobs with them.

To reverse the trend, federal, state and local leaders promised to plant a seed along Northwest 79th Street that would one day blossom into an economic engine, enticing businesses back to Liberty City.

The county spent millions of tax dollars building roads, installing utilities and preparing the site for development. But to this day, the Poinciana Industrial Park remains a vast stretch of barren land, a wound that never healed.

After more than a decade of failed attempts to revitalize Poinciana, the County Commission named the Empowerment Trust the master developer in 2001, giving total control over how the area was redeveloped to the 18-member board of community activists that governs the agency.

It was the trust's largest economic development project, but the poverty agency never solicited bids to develop the site. Instead, the trust began negotiations with Stackhouse in 2003 after he came forward with his own proposal.

Although there is no record of how the trust evaluated Stackhouse's plan, the agency spent two years hashing out a deal with him.

During that time, the trust also began to loosen its purse strings.

In February 2005 -- three months before signing a formal deal -- the trust put up $100,000 for predevelopment expenses. Three months later, it leased Stackhouse 15 acres of county land in Poinciana for 75 years and became a 5 percent partner in a company controlled by Stackhouse.

''It was a vision we gave birth to, fought hard for and planned out over many long days and nights,'' said Wallace, the chief executive officer of the trust, in a February press release.

A month after signing the lease, Stackhouse spent $10,000 on the groundbreaking ceremony, which featured food, music and a large air-conditioned tent.

OPTIMISTIC APPROACH FIRST PHASE PROMISED FOR COMPLETION IN 2006

With the Meeks, Rolle and other prominent county leaders present, the event generated a flurry of press releases claiming the first phase of the project -- three buildings and a parking garage -- would be completed by the fall of 2006 and that more than 1,500 jobs would follow.

''This project creates real employment opportunities for our residents in high-paying fields,'' said Rolle, whose district includes the park.

Six months after the groundbreaking, Stackhouse's company secured a $4.2 million loan by mortgaging its lease on the county's land to a Boston real estate investment firm called Tremont Realty Capital.

Then, last August, the trust gave Stackhouse's company a $3 million interest-free loan to help build a 1,500-car parking garage.

As the trust's point person on the Poinciana deal, Chief Financial Officer Rodney Carey had the right to review how every dollar was spent on the park. So did Chief Executive Officer Wallace.

In fact, under its agreement with the county, the trust was supposed to file progress reports and financial statements regularly.

But the trust failed to submit a single report or monitor how Stackhouse used public funds.

Wallace defends the agency, saying, ``It's not like we don't know what's going on with the project.''

Yet, between August and December 2006, Stackhouse submitted dozens of invoices to the trust that had already been submitted to Tremont.

The bills totaled more than $500,000, according to invoices and requisitions obtained by The Miami Herald.

His company drew down nearly $200,000 in public money using invoices from the contractor hired to build the parking garage -- even though records show the bills had been paid months earlier with the private loan.

He did the same thing with $100,000 in architect fees, $15,000 in loan fees, nearly $60,000 in engineering bills and even $17,000 in property taxes.

When asked by The Miami Herald about the double billing, Stackhouse said he tried to track the invoices and payments but could not determine whether he submitted bills to the trust that had already been paid.

''I'm not saying it's not possible,'' Stackhouse said. ``As I sit here this very second, I don't know.''

Wallace and Carey, meanwhile, admit they never monitored how Stackhouse used the private loan -- even though it was secured with county land -- and never detected the duplicate bills.

Yet there were discrepencies even with invoices submitted only to the trust.

In one case, Stackhouse triple-billed the trust for a $26,000 construction management expense -- receiving $78,000 without paying the contractor.

Stackhouse says the bill has since been paid.

The trust also paid more than $80,000 in overhead expenses and administrative fees without receipts, invoices or other supporting documents.

An additional $75,000 in project funds was drawn down using phony invoices that Stackhouse's former assistant vice president for administration, Carolina Misle, said she created on her computer.

''Dennis [Stackhouse] would come and ask me to do my magic when he needed money,'' said Misle, who gathered the information and submitted the bills to the trust and the private investment firm.

The invoices included the logo of Coa-Dal Security, which was supposedly paid for guarding an empty lot.

But company representative Mark Coats said the firm has never been paid.

''Not one copper penny,'' he said.

In fact, Coats said the company never even submitted invoices to Stackhouse's company.

To persuade the county to sign on to the project, Stackhouse said MediVector would move its headquarters to Liberty City and become the crucial anchor.

As the driving force behind the project, MediVector would lease tens of thousands of square feet in the park, according to tenant lists submitted to the county.

Also listed as prospective tenants: the multinational drug giant Wyeth Pharmaceuticals, the Massachusetts Institute of Technology and an Australian-based firm called the Brain Resource Company -- key organizations giving the proposal instant credibility.

PROSPECTIVE TENANTS 'ANCHOR' FIRM IS SMALL; OTHERS NOT INTERESTED

But in documents submitted to the county, MediVector says it has just 15 employees -- which means the company would have to grow tenfold to fulfill Stackhouse's promises to the county.

MediVector's chief, Api Rudich, would not comment.

A spokeswoman for Wyeth Pharmaceuticals, meanwhile, spent weeks trying to find evidence of a deal involving Poinciana before giving up.

''To the best of our knowledge, nothing formal has been signed with these folks,'' said Wyeth's Angela Palmari, the vice president of communications.

MIT's Center for Biomedical Innovation showed interest in doing research at the park, but Stackhouse claimed that MIT would employ 75 people and lease thousands of square feet of office space.

''No, that is not accurate,'' said Frank Douglas, the center's former executive director, who resigned earlier this month.

Center officials now say they won't be involved at all.

Stackhouse also told the County Commission that theBrain Resource Company would move its world headquarters to Poinciana, lease 200,000 square feet and hire 500 people.

''It's not true, I'm afraid,'' said Mimma Mason, Brain Resource's vice president of marketing.

``Our head office will remain in Australia, and if we do open a U.S. office, it would most likely be in Los Angeles or the pharmaceutical corridor in New Jersey.''

Stackhouse could provide no documents confirming the company's interest in Liberty City.

''I never spoke to the Brain Resource Company,'' Stackhouse told The Miami Herald.

Meanwhile, he made virtually no progress on the bricks-and-mortar side of the equation, records show.

The first phase of the park is slated to cost $125 million, and Stackhouse has repeatedly told the county he has money lined up to pay for it.

He told The Miami Herald last November that he had secured $60 million in tax-exempt bonds -- but records show he applied for just $12.5 million in 2003 and never got the money.

His application has since expired.

At a hearing before the County Commission in January, Stackhouse said that he applied for a $20 million grant from the state to help fund construction of the park and that the award was guaranteed.

''We've already been assured we'd have it, we're past that,'' Stackhouse told commissioners.

It turns out the grant is far from a sure thing. In fact, Stackhouse asked Carrie Meek to go to Tallahassee on May 1 to meet with the governor, who made no promise to provide the money.

CONSTRUCTION MONEY COUNTY BACKS GARAGE; OTHER FUNDS IN DOUBT

Despite the lack of financing, the County Commission agreed in January to invest $23 million more in the project by signing on to buy the parking garage that Stackhouse promises to build in the next two years.

Cost per space: nearly $15,000.

The deal was approved by County Manager George Burgess and his top aides -- Assistant County Managers Cynthia Curry and Roger Carlton.

To ensure taxpayers are not stuck with an empty garage and no other buildings in place, Burgess and his staff say they put protections into the contract to make sure the rest of the biotech park gets done.

''This guy [Stackhouse] is not going to see the first penny of the county's money until the thing is built,'' Burgess said.

Among other things, those protections require Stackhouse's company to have leases for 75 percent of one building and letters of intent for 100 percent of another.

The county also will put $1.5 million into escrow until the buildings are completed, and Stackhouse had to sign a personal guarantee that allows the county to sue him directly if he doesn't get the job done.

But less than six months later, some of those protections are breaking down.

Stackhouse turned in the leases and letters of intent in February, but two of the three documents are signed by Api Rudich -- the president of MediVector.

According to the records, MediVector and a company called the Alliance for the Management of Substance Abuse will take up nearly 200,000 square feet in the park and pay Stackhouse more than $400,000 a month in rent -- or nearly $5 million a year.

Yet the trust's Wallace acknowledges that MediVector is ``almost like a virtual company.''

The Alliance for the Management of Substance Abuse, meanwhile, doesn't even exist. It's not incorporated anywhere. It has no employees, no board, no office.

The third lease is signed by Jackson Memorial Hospital, which plans to close two clinics in Liberty City -- where the cash-strapped public hospital pays just $80,000 a year in rent -- to open a facility in the biotech park.

The new rent: $350,000 a year, or four times what it currently pays.

The $1.5 million the county will keep in escrow is a fraction of the total cost of the garage.

And Stackhouse's personal guarantee?

The Suffolk County Courthouse in Boston is littered with judgments against the developer and his companies, and he's been accused at least twice by former business partners of hiding assets to avoid paying his debts.

In 1998, Stackhouse told a judge he was insolvent and unemployed to avoid paying a $225,000 judgment against him.

But court records and canceled checks show he had been using business accounts to pay for his son's boarding school and rent on a luxury condo in downtown Boston.

DEVELOPER QUESTIONED MOST COMMISSIONERS SUPPORT THE PROJECT

By the time Stackhouse appeared before the County Commission in January, commissioners Katy Sorenson, Joe Martinez and Carlos Gimenez fired pointed questions about financing, tenants and the wisdom of putting up money for a parking garage without any other buildings in place.

''We've been burned a couple of times before,'' Gimenez said.

In the end, the commission voted 11-2 to purchase the garage, with Martinez and Sorenson casting the dissenting votes.

''We will not let you down,'' said Commissioner Rolle.

``We know it's a good deal for the inner city. We know it's a good deal for the county.''