Miami Beach can’t seem to shake its reputation for attracting public corruption.
The billion-dollar sandbar went six years without a high-profile arrest of a City Hall employee before the clean streak ended Tuesday. Prosecutors charged Mariano Fernández, the city’s chief building official until he was fired in November, with accepting unlawful compensation in the form of free and deeply discounted rooms from a hotelier who received permits and approvals from Fernández’s department.
Fernández is accused of greasing the permitting process for RIU Hotels & Resorts, a Spanish company whose Collins Avenue hotel underwent a large-scale renovation. In return, Fernández was able to get free and reduced-rate hotel rooms on multiple occasions for himself, his wife and his employees, according to prosecutors.
The felony charges against Fernández, who surrendered Tuesday, deal a new and particularly stinging blow to those who have their hands on the levers of power in the Beach — administrators and elected officials who have touted the city’s recent relatively good record under their stewardship.
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The arrest also amplifies calls for an independent watchdog in City Hall to expose waste, fraud and abuse — the product of a campaign promise by Mayor Dan Gelber that is still in discussion among commissioners.
Questions abound about why no one at City Hall raised red flags when dozens of building employees took extraordinarily discounted “team-building” trips to properties owned by RIU. The cost of a 2016 Labor Day weekend trip: $36 a night for four nights — food, beverages and taxes included — at a resort in to Playa del Carmen, Mexico.
City Manager Jimmy Morales says he was not aware of Mariano’s allegedly cozy relationship with executives at RIU or even that RIU was giving discounted rates after getting permits from the city.
But he, like others, was aware of the team retreats — he was copied on a March 2016 email that names RIU and advertises a low rate for employees. If building department employees and upper management had questions about the discounted trips, their concerns were not raised publicly.
Five employees — female permit clerks and office associates whom Fernández referred to as his “angels” in an interview with investigators — got special treatment from the building official, according to the warrant. They received free hotel rooms at RIU resorts in Miami Beach and Mexico. The women told detectives they believed Fernández paid for the rooms. But emails among RIU executives and Fernández, coupled with sales information from the hotels, show they were complimentary.
The scandal has embarrassed and angered Morales, who became the Beach’s top administrator in April 2013. He hired Fernandez a month later in one of several personnel changes meant to transform a troubled culture at City Hall after a string of corruption arrests.
Morales considered himself a change agent in a city that needed to clean up its act.
“I set high standards of honesty and integrity for all city employees, especially my management team,” Morales said in a statement Tuesday. “When Mr. Fernandez was appointed as the Building Director in May 2013, I had extensive discussions regarding my expectations in regards to ethics.”
Such was the Beach’s tattered reputation for ethics that last year Morales touted the results of a survey of 218 employees that found 22 percent had been offered a bribe at some point in their city career — a decrease from 27 percent when the same question was asked in 2014. In Miami Beach, a coastal resort city brimming with wealth and private interests wanting to use that wealth to curry favor and wield influence, the fact that only 22 percent said yes warranted celebration.
But Fernández’s arrest dampens the goodwill. Morales’ chosen building official, one of the most powerful decision-makers in any municipal hall, is now facing felony charges.
Morales fired Fernández in November, when he learned his department director would likely be charged. Joined by his attorney as he walked into the state attorney’s office Tuesday morning, Fernández declined to comment.
Fernández had a good reputation among many at City Hall and in the community who considered him an efficient and responsive building official. He was credited with improving the customer service arm of the building department — where the average property owner who wants to renovate can easily drown in a sea of red tape without guidance.
In the case of RIU, Fernández may have given too much guidance. Investigators say emails between executives and records from the city’s permitting system illustrate an inappropriate relationship between the building official and the company. They paint a portrait of Fernández as a willing problem-solver who would personally extend permits, perform his own inspections, pressure fire inspectors and allow RIU to skirt fines.
In return, some of those executives told investigators, Fernández repeatedly asked for hotel rooms at RIU’s properties for himself, his wife and his office “angels.” One RIU employee said Fernández once asked for a weekend special when he and his wife were having a rough week.
After releasing the 117-page arrest warrant Tuesday, Miami-Dade State Attorney Katherine Fernández Rundle said her office will review Fernandez’s involvement in approvals for other buildings, which could include work from his previous position as the building official for the city of Miami, where he worked from 2008 to 2013.
On Tuesday, Morales said he will conduct his own internal review of similar projects to see whether Fernández behaved inappropriately with other property owners. He also wants to question employees who accepted the free hotel rooms.
“We’re certainly going to follow through, at a minimum, with those individuals,” he said.
Fernández and his wife, Maria Ortiz, a judge in the county civil court, did not pay for 10 stays at RIU properties in Miami, Mexico and the Dominican Republic, including the team-building trips where other employees paid the discounted rate, according to the arrest warrant.
The city manager said he learned of the corruption allegations from an anonymous tip last year, but it wasn’t the first time he learned of the building department retreats.
Morales and other top administrators were copied on a March 2016 email Fernández sent to the entire building department. The email, obtained by the Miami Herald this week, clearly advertised an all-inclusive four-day stay at RIU Palace Mexico in Playa del Carmen during Labor Day weekend that year. The price was $145 per person — for the whole stay. That’s about $36 a night, and it included food, beverages and taxes.
RIU’s website Thursday showed that the lowest 2018 nightly rates on Labor Day weekend at the same resort were $231 per person per night, plus taxes — or $925 for the same four-night stay.
“As I mentioned during the press conference, it is standard for a hotel to offer discounted rates for large groups. I honestly assumed it was a group rate, plus this was personal travel — not on the city’s dime,” Morales said Thursday. “We regularly receive offers extended to all city employees for discounts at area restaurants, special events (Disney On Ice, Monster Truck Jam, etc.) and in some cases Miami Beach hotels.”
Morales considers the charges against Fernández a setback for the city because “his actions have caused the public to question the integrity of the organization.
“I still believe that the ethics training and other actions we have taken have increased the integrity of this organization,” he said. “I would hope the actions of one bad apple do not spoil the barrel.”
Commissioner Kristen Rosen Gonzalez, a Congressional candidate, rushed to support Fernández when the Miami Herald first reported on the investigation into his relationship with RIU executives in August. At the time, she said “Mariano is a good man who helps the poor of Miami Beach,” who “helps more people than anyone else in the city.”
On Thursday, her reaction to Fernández’s surrender was sober.
“I am very disappointed because we strive for the highest ethical standards in Miami Beach.”
For Gelber, who was elected mayor in November, the scandal underscores a need for an independent watchdog in City Hall.
“You can put gift laws in, and you can put bribery laws in, and you can put in ordinances and things like that, but at the end of the day, it’s the polestar of your own morality that guides you,” he said in an interview Wednesday.
The proposal for a watchdog position is not new, given the Beach’s history of trouble within its ranks.
In 2012, seven fire inspectors and code compliance officers were caught taking bribes from an Ocean Drive nightclub in an FBI sting. In 2015, disgraced procurement director Gus Lopez pleaded guilty to racketeering, money laundering and bribery charges stemming from a bid-rigging scheme.
The building department itself has endured multiple scandals in the past 15 years. An electrical inspector pleaded guilty to taking bribes from a developer in 2007. Over the next four years, three other building employees were convicted on bribery charges.
Gelber, a former federal prosecutor who pursued public corruption cases, envisions an inspector general who reports to the county inspector general — not someone in city government — and roots out fraud, waste and abuse without fear of upsetting the administration.
Funding could come from a surcharge on government contracts. The position would also require a change to the city’s charter and likely an agreement with the county’s inspector general. Gelber’s proposal is scheduled to be discussed by the commission’s finance subcommittee soon.
An inspector general could, for example, conduct the administrative review Morales is undertaking, identify shortcomings and recommend changes.
“That would typically be what an inspector general would do,” he said.
BLOWING THE WHISTLE
The temptation to take bribes is unlikely to disappear as long as moneyed interests try to buy influence in Miami Beach, where real estate values are high and expedited permits and approvals can mean millions more in profits. The city has long pledged to equip the bureaucracy with the necessary protections and tools to stave off bribes and weed out corruption — consultants, an employee hotline and training.
Business people and their companies taking responsibility for their role in corruption could make a difference. In an unusual step, prosecutors also charged executives from RIU with unlawful compensation violations.
The city may get another tool. On Wednesday the city commission will take a final vote on a whistle-blower ordinance providing protection from retaliation for city employees who report malfeasance, waste or criminal activity in City Hall.
The ordinance is sponsored by Commissioner Michael Góngora, who was urged by former fire inspector David Weston to propose the measure. Weston raised concerns that were eventually proven correct in 2012, when an FBI sting ensnared fire inspectors who were taking bribes.
The ordinance, which gives employees who feel they’ve been retaliated against an opportunity to appeal their firing, passed an initial vote unanimously in January.
“If this ordinance had been in place, maybe other people would’ve felt more comfortable,” Góngora said.