Published: Sept. 30, 2007 To our readers
Gyllenhaal
Team exposes a massive breach of trust

Reporters Jason Grotto and Scott Hiaasen spent almost every day for four months holed up on the third floor of a nondescript Biscayne Boulevard office building, paging through the back records of the Miami-Dade Empowerment Trust.

The story they stitched together from the documents is anything but ordinary. It tells how a large percentage of $68 million in public funds meant to ease poverty in South Florida was frittered away over the past eight years.

Even in a place unfortunately famous for misusing public funds, the dimensions of this failure are startling. Hundreds of thousands of dollars weren't just misspent, they went to pay for parties, food and travel. There's almost nothing to show for millions meant to create new jobs.

Instead of devoting the federal and county funds to troubled neighborhoods, portions of the money found their way to lobbyists, politicians and the politically connected.

Some of the funds even went to companies owned by board members who oversaw the trust.

"They squandered an opportunity," said Mike Sallah, The Miami Herald's investigations editor who directed this report, which includes an online report by videographer Chuck Fadely and superb graphics by Paul Cheung. "They squandered an opportunity for some real economic development."

The first part of this story was published in June after Jason Grotto discovered the Empowerment Trust spent $3 million on a biotech park in Liberty City where almost no work had been done. The man behind that project, Dennis Stackhouse, was charged last week with making illegal campaign contributions as part of a broad criminal probe by the state attorney's office.

The installments that start on today's front page and run through Wednesday step back and look at the entire Miami-Dade empowerment zone operation, which is part of a federal program created by the Clinton administration to ease poverty.

Since the start of the decade, the quasi-government trust has been directing this enormous flow of funds that should have had significant impact on nine poor neighborhoods that are the primary reason Miami ranks fourth in the nation in poverty statistics.

Tips started coming in more than a year ago that things weren't right with the Empowerment Trust.

So Jason, one of The Miami Herald's veteran investigative reporters, started looking into the agency and its 18-member board last September.

He began by setting up shop in the small file room that holds the trust's records. The files were a mess, but there was enough there to begin tracking where the money was - and wasn't - going. As the weeks turned to months, he was joined by Scott Hiaasen, a relentless reporter whose last story uncovered the state's astounding decision to spend $7 million to buy underwater land.

They spent so much time at the agency they were eventually given their own desk. "They even loaned us a copy machine," Jason said.

The two tracked down leads, visited the funded sites and interviewed scores of people from hundreds of the trust's projects. Gradually, a picture emerged that showed the Empowerment Trust had become a kind of loosely run savings and loan operation.

"Nobody was asking any questions," Scott said.

The trust had some successes with affordable housing and small business loans. But vast amounts of money went to causes that had nothing to do with poverty. Among the beneficiaries were multimillionaires, politicians, college presidents and celebrities.

"It became a piggy bank for the politically connected," Sallah said.

The stories make it clear that there's plenty of blame to go around for the program's failures. The federal plan came without many guidelines. Federal officials did almost no checking on where the money was going. The county, which contributed some of the money and acted as the financial office, wrote checks for years without asking questions.

Most of the trust's board members are refusing to say anything.

With a record like this one, that's not an acceptable response. This may have been the best chance at economic progress that some forgotten corners of South Florida may get. Those neighborhoods deserve an explanation of what happened to the money meant to help them and what will be done about it.