Miami-Dade County

Feds open probe of Bal Harbour police money laundering

After years of rampant abuses by undercover Bal Harbour police, the U.S. Justice Department is investigating the millions taken in by the officers who turned a money-laundering sting into a major cash enterprise, spending lavishly on travel and luxury hotels without making a single arrest.

The U.S. Attorney’s Office in Chicago and the Internal Revenue Service last week carted away hundreds of confidential files of the Tri-County Task Force, including records that show the officers regularly withdrew large amounts of cash from the bank with no receipts to show where it went, according to people familiar with the investigation.

The Chicago office requested all the records of the laundering deals struck by the Bal Harbour cops with criminal groups across the country — 84 deals in Chicago alone — in what appears to be a sweeping examination of the millions laundered by the police through banks and storefront businesses in Miami, records show.

The ongoing probe follows a Miami Herald series, License to Launder, that showed the task force officers from Bal Harbour and the Glades County Sheriff’s Office posed as money launderers while they jetted into a dozen cities to pick up drug cash in a sting operation to clean money for cartels and other groups with the stated goal of arresting suspects.

Ultimately, they kept at least $2.4 million for themselves for arranging the deals — returning the rest of the money to the same criminal groups — but never made any arrests of their own.

During one trip to Chicago, two Bal Harbour cops picked up $198,000 stuffed in a torn tortilla box, stayed long enough to dine at Morton’s of Chicago, and then flew back to Bal Harbour to wire half the drug money to a bank in China.

One source familiar with the probe said the case was part of a larger inquiry that expanded to Bal Harbour police, who frequently picked up drug cash with the help of a federal-state task force that included the Cook County Sheriff’s Office. Joseph Fitzpatrick, a spokesman for the U.S. attorney’s office in Chicago, declined to comment.

In the written request to Bal Harbour, prosecutors for Chicago U.S. Attorney Zachary T. Fardon also asked for the files of three informants believed to have helped the Bal Harbour cops to strike deals with drug groups in exchange for cash rewards.

“Follow the money. That’s what they’re doing,” said Dennis Fitzgerald, a lawyer and former Drug Enforcement Administration agent who examined the task force’s data for the Herald. “This was a task force whose objective was to make money. The objective was not to make arrests. They were not even writing police reports.”

Bal Harbour Assistant Mayor Patricia Cohen said she hoped the investigation would help the village move forward from a scandal that has dominated the community for months. “It’s unconscionable,” she said. “In many ways, we are all responsible. We allowed this to happen. We need to get to the bottom of it.”

The federal examination comes two weeks after the Florida Department of Law Enforcement opened its own inquiry into the task force, the largest undercover operation in decades in Florida in terms of dollars laundered, before it disbanded in 2012.

In an earlier investigation three years ago, federal agents found Bal Harbour misspent money from seized cars and cash to pay for police salaries, but investigators never examined the money raked in during the laundering sting — at least $71.5 million — until now.

Included in the evidence turned over to prosecutors last week: records that show the police tapped into the drug money — hundreds of thousands of dollars — to pay for the operation without seeking court approval, as required under Florida law.

Nearly 40 times, officers paid for first-class and business premium flights, frequently stayed at luxury hotels in San Juan and Las Vegas, and bought more than $125,000 in computers and weapons, including submachine guns. There were dinners at Bal Harbour 101 for $1,150 and Morton’s in North Miami Beach for $959.

In one case, they paid Bal Harbour’s finance director, Chris Wallace, $15,000 in drug money to cover his “overtime” costs for helping the police gather documents during an audit in 2012.

Tom Hunker, the police chief who created the task force and resigned in 2013, said he would not comment on any stories. In prior interviews, he said auditors sifting through the bank records would “not find anything wrong,” and that records were kept for all spending.

However, a recent audit of the task force’s finances by Anthony Brunson P.A., a Miami firm hired by Bal Harbour leaders, turned up troubling findings that were turned over to Chicago prosecutors.

Examiners found dozens of instances of officers withdrawing thousands at a time with no records to show where it was spent, according to sources who spoke to the Herald on the condition of anonymity. In addition, examiners found large cash deposits — millions of dollars — that appear to be laundering deals that do not show up in reports kept by police of the sting operation. Auditors believe the amount laundered was about $83 million.

Hunker said in a previous interview that all money withdrawn and any funds picked up for laundering were all properly documented. Mark Overton, who succeeded Hunker as chief, said police are still searching for any records that could help reconcile the differences.

The manager of the SunTrust bank branch that allowed the police to set up undercover accounts said any withdrawals of more than $10,000 were noted by his staff with the names of the police who took out the cash. Any other activities by the cops during their investigations were “completely out of my scope,” said Ivan Morales, who resigned his job as the audit was underway. “Our position was to process the transactions, like we would for any customer.” He said his departure was not prompted by the audit.

For three years, the cops conducted 332 deals with criminal groups to launder their money — one in every four taking place in Chicago. Officers were constantly working with U.S. Immigration and Customs Enforcement, DEA Group 37 and the Cook County Sheriff’s Office, among others.

In one case, they picked up $98,980 stuffed in a Dockers shoe box from a money courier. In another, more than $242,000 in a book bag outside an ice cream store. In all, the cops collected $15.6 million in dozens of trips to Chicago.

Emails exchanged between Bal Harbour and Chicago agents show the frequency with which the Florida cops were jetting into the city. After one deal in 2009, a DEA agent sent a message to former Bal Harbour Capt. Greg Roye. “Thank you again for last week!! What size shirts do you guys [the chief, too] wear?”

Several former federal agents who once supervised money-laundering stings said the dozens of money pickups in Chicago should have resulted in arrests by the task force — the very reason it was created.

“They keep talking about this sting. They stung no one,” said Michael McDonald, a former Internal Revenue Service criminal agent who took part in Operation Greenback, one of the most famous laundering task forces ever created. “Their intent was not to arrest or prosecute. It was a gravy train for these guys.”

Bal Harbour police in 2012 created a report that said the tips they passed on to agents in Chicago led to 43 arrests from 2010 through 2012. However, Rusty Payne, a DEA spokesman, told the Herald in June that his agency could not verify the arrest numbers traced to the Tri-County Task Force. Bal Harbour police did not track any of the arrests through court.

Toward the end of the task force’s operations, DEA officials began to question the unit’s practices, demanding in an email on Sept. 14, 2012, that the officers turn over letters signed by state prosecutors in Florida authorizing their ability to carry out sting operations before they could work with DEA agents. No such letter was produced, but the task force continued to fly into Chicago — five more times — to pick up hundreds of thousands with the help of ICE and the Cook County Sheriff’s Office, records show.

Fitzgerald, the former DEA agent who once worked in Miami, said the task force was driven by the deals, not government rules. “They did whatever they wanted to do,” said Fitzgerald, who wrote the book Informants, Confidential Informants and Undercover Operations. “No one was watching them. They were given a long leash and no one pulled the choke chain.”

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