Saturday, March 11, 2017
Miami airport’s kickback scam: Did a manager, offered ‘box full of cash,’ report it?
By David Ovalle
The Miami (FL) Herald
As most county employees struggled through the recession and pay cuts a few years ago, one guy seemed to be doing just fine — in fact, amazingly well. Ivan Valdes, a mid-level manager at Miami International Airport, showed up to work in a $69,000 Porsche 911, wore designer suits and shoes and jet-setted around the world.
The luxe lifestyle did not go unnoticed by colleagues. His boss, Carlos Jose, even wondered if his employee had a secret side gig as a traveling singer. As a teen, Valdes had starred in a Menudo-knockoff Latin boy band known as Chévere, which roughly translates to “awesome!”
But awesome music wasn’t the source of Valdes’ sudden new wealth. It came from high-tech, high-priced lights and fixtures, which the airport purchased in large numbers.
Valdes was pocketing illegal kickbacks in a scheme that cost the airport and taxpayers more than $5 million in excess payments for LED lights. Valdes this month began serving a 7-year sentence on state and federal convictions for engineering the scam — but newly released prosecution documents suggest the ripoff could have been uncovered earlier.
Sometime in 2013 — a year before police and prosecutors began a probe — Valdes approached Jose with a vague offer to get in on a business that would net his boss “a box full of cash sitting on his front porch the next morning,” according to the documents. It was an offer that Jose insists he refused.
But whether Jose, who remains one of the airport’s highest-ranking officials, reported the dubious proposal to anyone at the time remains unclear.
Reached by phone, Jose told the Miami Herald that he informed “the proper authorities” about Valdes’ offer. But he said he didn’t recall specifics, suggesting at one point in the interview that he might have spoken to the county’s inspector general. But neither prosecutors nor the Miami-Dade Inspector General’s Office recorded a tip-off from Jose, according to internal files.
An airport spokesman, Gregory Chin, late last month acknowledged that “no documentation” exists to support Jose’s claim. Citing an open investigation, Chin repeatedly refused over several weeks to offer any more details — despite state prosecutors declaring the Valdes probe complete.
On Friday, Chin finally acknowledged that the investigations were over, saying the aviation department now “will conduct a more extensive review of our procurement and management oversight processes, and take any necessary actions at the appropriate time.”
If that review could impact Jose wasn’t immediately clear. He remains the assistant director for facilities, maintenance and engineering, overseeing a budget of more than $100 million and 400 employees. Jose, who last year earned $161,808, has not been charged with any criminal wrongdoing, and cooperated with prosecutors well after the criminal investigation had already begun.
For more than a decade, Jose supervised Valdes, a native of Cuba who came to Florida in 1980 as part of the Mariel boatlift. As a teen, he joined a band called Chévere Internacional, which toured Latin America, following in the footsteps of Menudo, the popular Puerto Rican group that featured Ricky Martin in the 1980s.
But Valdes quit in 1985 to take care of his sister and newly single mother, and at 18 years old, he joined Miami-Dade’s aviation department. His first job: mowing the lawns. But over the years, he rose to managing more than 100 airport maintenance workers and overseeing $30 million worth of contracts at MIA.
Starting in 2010, Valdes was tasked with upgrading lighting at the airport, and directed 20 bulk purchases of high-tech LEDS, which are expensive but burn less energy and last far longer than old-style incandescent bulbs.
He got the job done but also helped rig the bidding process, ensuring that the cost of the lights was grossly inflated and that only one company got the contracts.
That company, Global Electrical & Lighting Supplies, was run by his buddy, Rolando Perez, who in turn kicked back money to Valdes. Global Electrical bought the bulbs from another company, Municipal Lighting Systems; its owner, Roy Bustillo, was in on the scam and gave inflated quotes to Global’s honest competitors, to keep them from winning the contracts.
Overall, the scheme fleeced the airport of $5.2 million — with about $1.2 million of that funneled back to Valdes.
Perez and Bustillo were both arrested and convicted. The group was also assisted by Jose Barroso, a former MIA executive who served as middle man for the transactions. He was also the bagman, delivering cash to Valdes in grocery bags, sometimes as much as $50,000, at an airport parking lot. Barroso, who cooperated extensively with investigators, was sentenced Friday to eight months in prison.
In all, MIA bought about 9,000 LED bulbs through Global Electric, lights that were used to illuminate the pick-up and drop-off areas outside the terminals and parking garages.
Valdes used the ill-gotten gains to fund a high-end lifestyle: there was the Porsche, as well as sky boxes at Miami’s AmericanAirlines Arena and Christian Louboutin shoes. For his wife, he bought dozens of Louis Vuitton shoes, which after his arrest were hauled away in their boxes in a police pickup truck.
The money flowed in against a backdrop of a stubborn recession. The economy was still recovering slowly and county employees had taken drastic pay cuts. Valdes made a good living, with an annual salary of $98,000, but his wife did not work, so the extravagances drew attention from colleagues
“Knowing that I went through that and everybody else was going through that in the county, to me it was suspicious enough to see somebody start dressing really nice and driving a nice car,” Jose later told detectives in a sworn statement.
Valdes also began taking frequent trips, often last minute. “One time it was to Trinidad,” Jose told police. “Another time it was to Los Angeles and so on.”
Jose claimed he asked Valdes if he “was doing anything” to supplement his income — which would have required him getting approval and filling out a form for outside employment. “I asked him because I’m responsible for the airport and I want to know if something’s going on,” Jose said.
Valdes’ response was vague. “I got a little something going on on the outside.”
Jose told police he thought Valdes might have been earning money singing. “He’s always told people in the county, in the aviation department … he used to travel singing and stuff like that so I left it at that,” Jose told State Attorney’s corruption investigator Michael Watson and prosecutor Ronald Dowdy.
But Jose did not press Valdes for details. Instead, he reminded his staff, at a meeting, to make sure they fill out outside employment forms.
It was sometime afterward that Valdes, over lunch, approached Jose with the vague offer of a box of cash if he joined some sort of scheme he did not describe. Jose recalled Valdes said something like “it’s all cash … you don’t get your hands dirty” and “these people will take care of you.”
“You know what, I’m not interested, I just got time for my family,” Jose claimed he replied, according to his sworn statement.
In an interview with the Herald, Jose said Valdes did not pressure him and offered no specifics.
“I didn’t know what he was talking about. I didn’t know if it had to do with MIA,” Jose said. “He never insisted. He left everything vague.”
Why Valdes felt comfortable enough to choose his own boss to approach remains unclear. Jose told police he had no real relationship with Valdes outside of work.
Valdes’ attorney, Sam Rabin, declined to comment.
If Jose did indeed report the offer of illicit cash in 2013, there is no record it made its way to law enforcement.
The State Attorney’s Public Corruption Task Force did not begin investigating until early 2014, when Valdes’ name popped up in some suspicious bank financial transactions. The Miami-Dade Inspector General’s Office did not get involved until September 2015, at the request of prosecutors.
A separate FBI probe into the contracts did not begin until 2015, according to federal documents, and sources have said the investigation did not start with Jose. Jose did not meet with Miami-Dade public-corruption detectives until June 2015, according to the prosecution’s case file, and he gave a sworn statement five months later. They approached him for an interview because he was Valdes’ boss.
When asked to provide paperwork that Jose reported the encounter to his superiors, airport spokesman Chin said “there is no documentation about this.”
Chin initially cited the State Attorney’s Office probe as the reason why “we cannot comment publicly.”
But a State Attorney’s spokesman confirmed that with Valdes headed to prison, its investigation was officially over. When asked again about records, Chin replied there is “a broader investigation related to Ivan involving other agencies that is ongoing.”
Asked to name the agencies, Chin wrote: “It’s best not to.” By Friday, after repeated inquiries by the Herald, the airport concluded that Valdes’ case was indeed over.