Miami-Dade County

Money-laundering cops flew, dined, slept first class

After showing up for guard duty at Bal Harbour’s Sea View Hotel, Wilner Pierre surveyed the cluster of boisterous men lounging at the pool, drinks in hand.

The 58-year-old security guard asked them to remove the glass from the pool area of the elegant, 1940s-era resort. When they refused, he threatened to call the police.

Then came their response: We are the police.

Members of an elite, undercover task force claimed the hotel as a de facto base, converging at the pool, dining in the restaurant, ordering food and drinks to their private rooms.

For a group trained to keep a low profile while searching for financial crime, the officers broke all their own rules.

The Tri-County Task Force turned a money-laundering investigation into a multimillion-dollar enterprise, spending lavishly on travel and dining while picking up suitcases stuffed with drug cash from as far away as Los Angeles and San Juan.

Dinner at Morton’s

At least 21 times, officers flew first class and sometimes stayed at $350-a-night resorts while running the largest state undercover investigation in decades from 2010 to the end of 2012. There were dinners at Morton’s in North Miami Beach for $959 and the Bal Harbour 101 for $1,150.

Bal Harbour administrators are still trying to track down scores of expensive items bought by the police, including $100,000 in laptops, iPads and other electronics during the operation.

“It was an off-the-charts, clandestine pot of money,” said Jorge Gonzalez, who was hired as Bal Harbour village manager after the task force ended. “It seemed like they had carte blanche to do whatever they wanted to do.”

The spending of the money by the task force is among the most troubling practices of the unit’s brazen undercover sting, the Miami Herald found.

With little oversight, the special unit, consisting of Bal Harbour and Glades County, charged criminal groups at least $1.7 million in what became the fund for the operation — and a lifestyle that went far beyond the level of most police.

For three years, the agencies took advantage of a Florida law that allows local police to run stings, with the ability to launder cash, in order to infiltrate criminal groups.

Driven by an influx of drugs and money into the country by rising new cartels, the unit passed the information it gathered to federal agents while it struck deal after deal.

From a single trailer in the shadows of the Bal Harbour Shops, the task force created an operation that met the demands of the criminal groups. Officers could fly to any city, bag the money quickly, and move the cash through a quiet, discreet bank.

At first, to pay for the sting, they turned to forfeiture funds: dollars from seizures of cash and other property during investigations and approved by the court. But after months of bringing in money from criminal groups, the task force turned to a source of income that would raise questions about how far the unit went to compete for laundering deals.

Under powers granted by Congress, federal task forces can spend money earned from sting operations, including tapping into funds they charge the criminals for laundering their cash.

The Tri-County Task Force was not a federal unit, but state-sanctioned, which meant the money it would use was considered evidence. “They needed a court order,” said Pat Franklin, a Miami internal affairs expert who once carried out investigations for Bal Harbour. “You can’t just take the money and spend it. They would have broken the law.”

With no approval from any government agency, the task force began using thousands of dollars each week from the commissions it was charging the drug organizations.

When two of the task force members needed to pick up cash in North Carolina, they used the money to pay for two first-class flights at $1,420 each, two waterfront rooms at the Hilton in Wilmington at $292 a night, and dinner at Ruth’s Chris Steak House for $256.

After several officers arrived in San Juan to pick up $696,000 in 2010, they used the money to pay for suites at the El San Juan Resort & Casino. The hotel charges: $4,536. It’s not clear how many officers stayed in Puerto Rico and for how many nights because the receipts can’t be found by Bal Harbour officials.

Richard Weiss, the attorney for Bal Harbour, said he didn’t know the task force kept the money it was charging the criminals for laundering. “I didn’t even know it [the money] existed,” said Weiss, whose firm drew up the agreement between Bal Harbour and Glades County. “I didn’t know they were spending it.”

Tom Hunker, the former Bal Harbour chief who created the task force, said he was allowed to spend the money, and that Weiss and the village manager were aware the task force was using the funds. “We didn’t do any different than the way the feds do it,” Hunker said.

One Florida legal scholar said police did not have the authority. “That’s evidence money,” said George Dekle, a University of Florida professor and a former prosecutor for Columbia County. “You’ve got to go court to get authority to sell it, convert it or destroy it.” Alfred Treppeda, former village manager who resigned in 2013, did not return phone calls.

For three years, the funds poured into the task force, which set up a series of undercover accounts at SunTrust in Bal Harbour. Under the auspices of the branch manager, Ivan Morales, the officers ran cash bundles into the bank more than 200 times.

Banks are allowed to help police carry out stings under most circumstances, waiving the demands of anti-money-laundering laws. Morales, who cleared the way for police to use the SunTrust branch, resigned in November and did not return calls. SunTrust officials declined to comment.

For years, two officers, Sgt. Paul Deitado and Capt. Greg Roye, took charge of the finances, depositing cash, writing checks and at times, withdrawing money for purchases in what would grow into one the largest undercover operations in the country.

Most of the time, police kept busy wiring the funds into other banks to launder the cash and taking their cut: 3 percent. In one pickup — $1.2 million in New York on Valentine’s Day, 2011 — the unit kept nearly $40,000 for its share.

Some money went to pay for the costs of the operation: more than $116,000 for airfare and more than $59,000 for hotel stays, as the cops jetted outside Florida to pick up the containers of cash.

Other money was used for pricey purchases: $47,295 in Apple computers and other products, $40,000 to PNSI, a supplier, for computers, and tens of thousands for weapons, including three FN P90 submachine guns capable of cycling 900 rounds a minute. They bought a new black Jeep Grand Cherokee, inking a check for $42,012.

Cash withdrawals

They even purchased $300 in iTunes downloads and charged $23 at Yankee Stadium on a day the home team was playing the Detroit Tigers.

To watch the spending, the task force was supposed to be audited each year — a detailed review that can catch financial irregularities. But no audits took place, despite the task force’s own policies calling for them. “No trail, no audit, no internal controls,” Gonzalez said.

Most of the time, the cops used credit cards to pay for expenses. However, in 2010, a practice began that would raise concerns: officers taking out large amounts of cash from the bank with no records to show where the money went.

Again and again, officers withdrew cash in what became a routine, totaling $831,057 in three years. One of the last withdrawals occurred four days before the task force disbanded: $40,000 on Oct. 27, 2012.

Some of the money was used for “drops” — that is, cash delivered to local exporters to be laundered. But most of the money — $547,000 — was withdrawn without written reports. Over the past several months, auditors hired by Bal Harbour have found another $800,000 in withdrawals, with no supporting records, sources said.

Roye declined to be interviewed and Deitado didn’t respond to requests. Hunker said he was not in charge of the day-to-day operations and was unaware of all transactions, but he said any money pulled out of the bank was for legitimate reasons. Records, he said, would have been created to justify the expenses.

“I can’t tell you what happened to those records,” he said, but “they’re just not looking in the right place.”

Mark Overton, current Bal Harbour chief, said workers have searched in files to track down where the dollars were spent by the task force, which disbanded three years ago after a federal inquiry found Bal Harbour had misspent money seized during drug investigations. “We’ve looked everywhere,” he said. “We don’t have them.”

Time and again, officers bent the rules as money came into the coffers.

They were supposed to hold travel costs to government rates and to document everything, their rules state. But months after the task force got underway, the officers began boarding first-class flights for $1,000 average fares and business premium class for $700, records show.

Former task force officers argue they often needed to leave on a minute’s notice because laundering deals were imminent, forcing them to book the pricier flights — nearly 40 times. On most nights, they stayed in hotels at federal per diem rates, they said.

In numerous cases, it appeared the officers were flying to collect large amounts of cash, records show.

On several occasions, however, supervisors took upgraded flights to join a host of officers and DEA agents already on the ground. During a trip to Atlanta in 2011 to pick up cash, two supervisors traveled first class, each to join a subordinate, who also flew first class. They all checked into the five-star St. Regis for two nights at $850 each, which included room service.

In one trip in 2011, task force commander Tommy O’Keefe and another supervisor traveled to California to attend the funeral of a task force member’s son, flying first class for $1,066 each and renting an SRX Cadillac for four days at $846.

O’Keefe, who boarded at least seven first-class flights, said he booked the pricier flights because he suffers from circulatory problems that require greater space for him to move around and stretch. Frank Rubino, a former Florida Department of Law Enforcement agent whose job was to keep watch on expenses, boarded at least a half-dozen first-class flights. A former candidate for Charlotte County sheriff in 2012, Rubino did not return calls seeking comment.

On most days, task force members worked from a trailer, equipped with a flat-screen TV, electronic money counters and trophy photos of officers posing with piles of cash. At times, they held meetings at the Sea View Hotel in Bal Harbour. The European-style resort has long been known as the winter home to Washington power brokers, including former GOP presidential nominee Bob Dole, the late Senate Majority Leader Howard Baker and Watergate-era House Speaker Thomas “Tip” O’Neill.

At least 75 times, the task force reserved rooms at the fashionable hotel on Collins Avenue to gather for strategy sessions that were held mostly for members who didn’t live in the area. “They were always walking around, smoking cigars,” said Brian Mulheren, a director of the Bal Harbour Citizen’s Coalition and retired New York City police detective. “It’s not the kind of place that’s a police hangout, that’s for sure.”

$350 a night

When they weren’t at the Sea View, task force members would frequent the Bal Harbour Club and the One Bal Harbour, now a Ritz-Carlton, where they booked rooms at least five times for an average $350 nightly rate, leaving no written explanation for staying at the ocean resort on Collins Avenue.

Gonzalez said it wasn’t lost on local residents in the small, exclusive town that the task force members were an elite unit. “They thought they owned the town,” Gonzalez said. “They were like living the days of Miami Vice. They didn’t want to be the traffic cops just pulling people over in Bal Harbour for speeding. That wasn’t enough.”

Hunker said some of the money-laundering profits were spent most notably for the “furtherance of investigations” in the tradition of prior task forces. But officers didn’t follow that rule at all times.

They flew to Las Vegas for a training school, booking rooms at the Mandalay Bay Resort and Casino in 2010. The hotel charges: $9,410. Each officer was also given $355 for expenses. There are no receipts to show how much officers spent for airfare.

Time and again, the cops risked breaking their own rules by dining at exclusive eateries: They spent $452 at Cafe Regazzi in Surfside, and dined at Carpaccio at the Bal Harbour Shops for $413, according to bank statements.

There are no figures that show how many officers dined on each tab because there are no receipts describing the charges. But several independent auditors interviewed for this story said undercover cops are not supposed to be spending public dollars to dine at restaurants like Morton’s and the Chop House.

Without receipts, “it’s just not appropriate, any way you slice it,” said Charles Hall, a Georgia accountant who audits public agencies.

Hunker said he was surprised there are no receipts at police headquarters and said travel folders should have been created for every trip. “I have no idea what they did with them,” he said, adding that police officers “are not accountants. They’re not bookkeepers.”

Dennis Dycus, a former Tennessee auditor who spent years examining police finances, said officers steeped in undercover work sometimes have to play the role: luxury car rentals, tailored suits and expensive meals. But they have to demonstrate why they are spending large sums of money.

“There are no excuses for not having records of these expenses, and I don’t care if they are running an undercover investigation,” he said. “They are still public servants who used their positions to take in money.” As an auditor, Dycus said he would demand answers. “I would want to know what was accomplished, like whether they made arrests,” he said.

However, the task force did not make arrests, and in many cases, officers did not spend money to play roles as money launderers. In 39 cases for which investigative records are available, the deals were set up by informants negotiating over cell phones and by emails with the money brokers working for the drug groups.

Task force cops frequently paid the expenses for other government agents who assisted them. During a dinner outside of Boston in 2011, Rubino spent $476 taking agents to the Stockyard restaurant. The officers also paid for a recurring DEA undercover car rental in Atlanta at $1,150 a month, records show.

Dycus said the officers should not have been paying the expenses of federal agents. “It’s not the responsibility of local law enforcement to run operations for the benefit of the feds,” he said.

Reconciling records

In 2012, Justice Department agents examined spending patterns during a probe into forfeiture abuses and found that task force members broke their own policies, running up bills for hundreds of dollars more than they should have on airfare and hotels. But federal agents looked at only one month of credit card charges in 2011 and misidentified where the money came from, the Herald found.

Contrary to the federal report, the money didn’t come from forfeiture funds, but from the funds earned for laundering the drug cash. Gonzalez, the village manager, said a team of auditors has been examining the task force’s bank accounts for the first time, but with every discovery, more questions emerge.

He said the current audit has been difficult, partly because of crucial gaps in records. The challenge is to track the money through a web of bank wires, account transfers and even credit card charges without any prior audits. “It’s troubling,” he said. “It seems like every time we have one answer, we find that we have another question. We have $245,000 in the bank. I want to know where the rest went.”

The lack of documentation for so much money is the most disturbing breakdown of the task force’s activities, said Franklin, the internal affairs consultant. Without creating records, he said, the officers broke one of the most fundamental rules of policing: accountability.

Joanna Zuckerman Bernstein contributed to this report.

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