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Marketing company inflated MIA bills

Paramedia USA Inc. was supposed to help MIA drum up business overseas. While the results of that mission have been questionable, an investigation shows the company did succeed on another front: Bilking the county airport and the traveling public for thousands of dollars in a scheme undetected by county officials.

As part of its contract for overseas work, Paramedia placed ads in European trade journals touting Miami's airport as a strategic location between Europe and Latin America. The airport reimbursed the company for what was supposed to be the exact cost of the ads.

Instead, Paramedia submitted at least half a dozen falsified receipts, records show. The Herald uncovered the discrepancy by comparing seven bills Paramedia gave to the airport against the actual invoices from the magazines that published the ads.

While the amount discovered - $5,682 - is small in the world of airport contracts, the findings raise questions about tens of thousands of dollars in other expenses billed by the same company, some with little or no paperwork to support them. And it shows how companies can earn millions from MIA without a rigorous review of what they do for the money.

In one case, Paramedia submitted a 1997 invoice showing the company bought a full-page ad in the Airline Ninety Two magazine for 483,890 Spanish pesetas, the equivalent of $3,456.36 at the time. But a copy of the original invoice voluntarily provided to the Herald by the magazine publisher, based in Madrid, showed a cost of 182,700 pesetas, or $1,305.00.

Four companies gave the newspaper invoices. Others refused or could not be reached.

Paramedia was hired as the airport's European marketing firm in 1994, even though it was not the top-ranked firm. Since then, the company has been paid nearly $3 million, with the money flowing from the airport year after year even as county auditors pinpointed repeated problems in the company's financial records.

This year, Aviation Director Angela Gittens abruptly terminated the contract, saying it brought no "discernible benefits" to the airport. Presented the Herald's findings last week, Gittens said: "We will pursue any funds that they may owe us."

The county's inspector general, with help from the state attorney's office, has since launched a criminal investigation into Paramedia's finances after finding numerous improprieties in an audit. The company is owned and managed by Billy Freixas, a lobbyist, former Miami zoning board member, businessman and political fundraiser. He and his father José ran the company together until the senior Freixas died last year.

The son refused repeated requests for comment and responded to written questions about the invoices with only scrawled fax replies.

"I have no records of this, " he wrote. "I did not run the company or submit invoices for payment. . . . I have only run this company since my father's death."

But Freixas was intimately involved in the company's day-to-day operations from the beginning, records and interviews show.

His ability to win government contracts - for himself or clients he represents - has paid him well. Until a recent divorce, he lived in a four-bedroom Coral Gables home, drove a Mercedes-Benz and Jaguar convertible, and frequented the world's finest hotels.

Freixas, his family and close business partners provided at least $47,515 in campaign contributions to county races, including at least $4,500 to County Commissioner Natacha Seijas, who has voted for his deals, and $3,700 to Miami-Dade Mayor Alex Penelas, who has traveled overseas with him twice on trade missions.

The Freixas family has deep ties in Miami's Cuban exile community. Before his death last year, José Freixas was a beloved businessman who left Havana two years into Fidel Castro's regime and earned his wealth as an import-exporter between Spain and the United States.

Billy, or Guillermo, Freixas was active in the local political scene. He was appointed to the Miami Zoning Board two decades ago, setting the groundwork for contacts that would later lead to campaign work and fundraising for former County Commissioner Jorge Valdes and success in getting government contracts.

Together, they urged the county to open a European marketing office - and hire them to do market research and "promote Miami's strategic location" in the aviation industry. For this, José Freixas had formed the company, Paramedia USA Inc., in 1991.

When it came to bid three years later, they were ranked second best among nine finalists for the work and had no previously documented market research or aviation industry experience. Yet they won the job on a motion by then-Commissioner Pedro Reboredo. Reboredo later traveled with the Freixases on county business in Spain and got $1,500 in campaign contributions from their companies.

Paramedia opened offices in Coral Gables and Spain. At the grand opening in Madrid of what was called the European Office of Miami International Airport, Miami-Dade and Spanish officials celebrated with a $44,763 bash, paid for by the airport.

Company members attended trade shows, traveled freely, wined and dined foreign executives and politicos and placed ads in European trade magazines. They were often joined in Spain by friends, family, Miami-Dade commissioners, business leaders and airport officials, in events billed as promotion for MIA.

The airport automatically wired Paramedia up to $23,271 a month for its basic marketing services. But it also reimbursed the company for any money spent on travel and advertisements - in all, nearly $1 million for those additional expenses alone.While reviewing Paramedia's airport work, The Herald contacted a half dozen magazines in Spain to examine the company's expense reports for advertising costs.

DISCREPANCIES

Of seven invoices provided, six do not match those sent to and approved by the airport. The one critical difference in every case: price.

Otherwise, the bills were identical - right down to the invoice numbers.

In one instance, the airport paid $3,000 - on the basis of the submitted invoice - for a full page ad in the Barcelona-based Spanish Air Cargo Transport Agents 1998. The real cost: $1,576.95, according to an invoice provided by Mencar publications, which ran the ad.

Many other invoices, some as high as $8,000, could not be obtained by The Herald.

Chris Mangos, the airport marketing director who approved the expenses, said he never verified the invoices because the prices were reasonable.

"I can't explain this, " he said of the discrepancy.

Apart from the billing issue, Paramedia had other problems. The company was caught twice violating the terms of its contract by airport auditors and later the county's inspector general. They found Freixas was overpaid thousands of dollars, received per diem and actual expenses simultaneously, and generally kept such scant records that it was impossible to determine whether the company was actually doing the work required.

FIRM ILL-PREPARED

Other airport officials concluded that the firm also was ill-prepared for the job.

"Currently, the Madrid office is not capable of carrying out market research, defining targeted groups for mailings and business consultations, or attending technical trade shows without significant guidance and participation by MIA staff, " wrote Naomi Nixon, director of trade development, in a 1995 memo to then-Aviation Director Gary Dellapa.

Some in County Hall privately questioned the need to have a European marketing office at all; no other major U.S. airport has one.

A 1997 county audit said the company was acting more as a "travel agent" than a trade representative.

"This degenerated into a way for commissioners to be wined and dined in Spain, " said one former airport official with direct oversight over Paramedia. "That's really how Freixas maintained his influence."

County politicians and top bureaucrats who traveled with the Freixases in the name of attracting airport business included Penelas, Commissioners Reboredo, Seijas, Javier Souto, Miriam Alonso, Assistant County Manager Bill Johnson, and other county staff.

Seijas and her staff have traveled to Europe seven times on county business with Paramedia since 1996.

One of her trips to Madrid included a 1997 detour to Sevilla. According to a news account, Seijas "and the delegation from Miami traveled to Sevilla, where they enjoyed enormously the distinct activities organized for them in this beautiful city: they were honored guests in the tent of Mr. Manuel Gallardo, president of Prensa Grafica, who dedicated this year to MIA."

That "tent" was later billed to the airport: $3,500, according to a hand-scrawled invoice sent to the airport. The cost for Paramedia representatives to attend all of this was more than $25,000. The airport paid the bill.

Seijas did not return three calls last week.

LITTLE SIGNIFICANCE

The firm considered the trip a great success because it brokered an agreement between MIA and Madrid's Barajas International Airport to jointly promote each other at trade shows. Yet former Airport Director Dellapa, who retired last year, said: "Its significance wasn't tangible."

Still, when the Paramedia contract was up in 1999, the County Commission unanimously extended it for two years. With the two years up, airport staffers last year recommended a 90-day extension while they sought other bidders. Freixas wanted two years.In the end, the commission voted for a one-year no-bid extension to the company.

This January, Gittens terminated the company's contract, saying passenger and cargo traffic from Europe was growing faster at other U.S. airports that had no overseas offices. Moreover, by operating as a "trade and tourism" office, the firm violated federal rules prohibiting use of airport funds for purposes not directly benefiting the airport, she wrote.

Still, Freixas is seeking more county paydays, fighting for at least $20,000 in expenses related to his work in Spain, including hotel costs he would have incurred had he not bought an apartment in Madrid.

One obstacle, however: He hasn't provided the receipts.

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