Losing the Drug War: Drugs, Banks, and Florida Politics
Adams, James Ring
James Ring Adams LOSING THE DRUG WAR: DRUGS, BANKS, AND FLORIDA POLITICS Narcotics trading flourishes in the Sunshine State not only because of demand, but also because it is a major source of...
...Not to worry about that...
...Together they have a squeeze on the state's $30 billion financial services industry, and they milk it constantly for campaign money...
...The National Bank of South Florida, Sunshine State Bank, Trust Bank, Global Bank have met their fate, but no one knows just what is going on among Miami's other fast-growing banks and self-made financial millionaires...
...Whistle-blowers stepped forward...
...The vice-mayor, in fact, was wired for sound...
...But the charge was almost ludicrous...
...That was a bunch of sh--," he said,in a bugged conversation...
...I talked to Ray several times," Fernandez told the court...
...But today's criminals, he says, are tomorrow's social elite...
...The "Great Corrupter" Alberto San Pedro, of all people, gives a hint of continuity from Hernandez-Cartaya's mid-seventies operation through two Hialeah banks that failed early this year...
...State government sometimes looks and acts like a South American junta...
...Graham denied coming under any influence, but his handling of the case was a model of ambiguity...
...And even if they left office, nothing guarantees that their successors wouldn't yield to the same pressures...
...Sunshine, Global, and the like were small operations, easily watched...
...Fernandez recalls that Ray Corona and his Panamanian business agent flew up to his mid-Florida farm one day in mid-1978 literally hopping with excitement...
...That part he got [under] control...
...San Pedro was obsessed with overcoming his past...
...Shevin was leading in the polls for Democratic nominee for governor when he suddenly pulled out of the 1986 primary...
...San Pedro: F--- you...
...A host of local officials blustered out of the mess, claiming that San Pedro exaggerated his influence...
...There is almost an apostolic succession of drug banks...
...attorney and now federal judge in Miami, "The big boys hardly ever touch the drugs, but they always touch the money...
...He was able to control assignments within the police force of Hialeah, an 85-percent Hispanic enclave on Miami's northwest frontier...
...Yet amid the distasteful condescension and self-serving rhetoric of the recent White House Conference for a Drug-Free America, money laundering was almost a forbidden topic...
...Sparber, Shevin is one, as is Greenberg, Traurig, Askew, Hoffman, Lipoff, Rosen & Quentel of Miami, which until recently featured former governor and presidential candidate ReuEn Askew...
...This March, in the surprise of the year, former Governor Askew quit the Democratic U.S...
...Dugan was indicted for bribery, and San Pedro mused later about his bad luck...
...Miami financiers tell stories about people walking in off the street and offering to buy their bank...
...With everyone on his tail, Fernandez managed to flee to Brazil, where Ray Corona called him frequently from a pay phone at the 7-Eleven across from the Sunshine State Bank...
...The local man for the New York Times, rewriting the Herald article, concluded with a local judge's claim that "this case has been totally blown out of proportion...
...As with Tony Montana, his biggest problem was what to do with the money...
...I. THE CORRUPTORS "El Gran Corruptor de Hialeah" Alberto San Pedro, Dade County's leading political philosopher, is winning the battle for restoration of his public reputation...
...But San Pedro seemed to expect a favor back...
...Two Metro-Dade police detectives on the WFC case heard that the charter was about to go through...
...Politicians are never crooked...
...Its holding company also owns banks in Washington, D.C., and Los Angeles...
...Said Fernandez, "People were telling me rumors he was being disorderly and doing strange things and driving Rolls Royces, using mink coats and making big fights at the Mutiny...
...But when this writer asked to see it this May, Gunter's spokeswoman discovered that it had been included with a batch of rejected applications from 1982 to 1984 that had been discarded "as a routine measure to save space...
...The NBSF was accused of acting as a money-laundering arm for the WFC, whose activities fill six volumes and 20,000 pages of FBI files...
...Perhaps more typical is the Capital Bank, a true Miami success story...
...It's almost as if a financial network arose in tandem with the consolidation of the Colombian cocaine and marijuana cartels...
...The incumbent Comptroller and Insurance Commissioner of the 1970s both ended their careers in the grand jury room...
...The final loop is the widespread notion that these firms can get their clients preferred treatment...
...Naturally, no one on the seven-man junta is taking responsibility for the lax supervision of DNR...
...and the senator's brother, Donald Bentsen, served as directors with HernandezCartaya...
...The aides who ride the merry-go-round of campaign worker, fund-raiser, and senior bureaucrat often wind up with lucrative jobs at a handful of firms well known for their access in Tallahassee...
...The plush bar at the Mutiny Hotel in Coconut Grove used to be a big hangout for drug dealers until they were crowded out by tourists, and Ray provoked a dispute there with Fernandez's partner over one of its sparsely clad waitresses...
...In mid-1976, with the feds bearing down, Alvero-Cruz took an extended vacation in Spain, the drug dealers' haven for rest and recreation...
...If it weren't for the heat, one would call these banks the tip of the iceberg...
...Kiser received about $34,000 in campaign contributions and didn't make it through the Republican primary...
...As he stews in jail, it's hard not to sympathize with his bitter thoughts on the elected officials who took his contributions...
...The investigation was in high gear until it collided with San Pedro's pet project, his appeal to the State Cabinet to pardon his 1971 conviction...
...He also had to handle his own profits and somehow account for his sudden burst of prosperity...
...They sound like The Maltese Falcon redone by the cast of Brian DePalma's Scarface from a script that leaves out Sam Spade...
...The narcotics traffic flourishes not only because of demand, but because of tacit acceptance by elements of the political structure...
...Gunter was drawn into HernandezCartaya's affairs after the collapse of the Hialeah bank...
...But the Junta's weakness comes home to roost on the state's financial institutions...
...Shevin had received at least $2,000 of San Pedro's money in his 1978 campaign for governor...
...This task requires an elaborate infrastructure of bank accounts, dummy corporations, and "flexible" financiers...
...D ut San Pedro's most impressive LI legacy consists of 900 tapes of conversations recorded by the Metro-Dade police...
...At this point, Trust Bank turned, no less, to Robert Shevin to repeat the magic of his Sunshine State performance...
...He remained on the Investment Advisory Council to the State Board of Administration, an entity consisting of the Governor, Comptroller Lewis, and Insurance Commissioner Gunter that governed the state's nine billion dollar pension fund...
...At the Corona trial, veteran Miami banker Angus Harrison testified, "It seemed to methat if you used the certain law firm in Tallahassee, it may have been able to speed things up...
...Florida's temptations are so severe that both Lewis and Gunter at times have seemed destined to end the same way...
...Then, strangely, the regulators sold Global to five-year-old Ocean Bank, a Venezuelan-owned Miami bank still struggling to consolidate its own rapid growth...
...There's a Fat Man, a lobbyist and public relations hustler named Don Dugan, who weighed in at 350 pounds before his incarceration...
...Shevin did buy some time, a few months perhaps, but the bank was so far gone, and the State Comptroller was so burned by the Sunshine State experience, that Trust Bank closed in January...
...Lazarus, the patron of healing in Santeria, the Cuban folk religion...
...Comptroller Lewis refused to oust Levenstein from his bank post until the press began to criticize the delay...
...Fund-raising prompted Shevin to praise San Pedro's "strong principles and religious beliefs...
...This required an elaborate network of bank accounts and Panamanian shell corporations...
...From his start as one of the earliest backers of both Gunter and Jimmy Carter, Swann has come to control both a bank and a group of insurance companies, and he has put influential legislators on their payroll...
...When his Porsche was stolen from the Miami Airport, he had filed a claim listing its value as $53,000 instead of the $44,000 he paid for it...
...As stalwarts of Democratic party finances and as entrenched Cabinet members, their influence extends beyond their obscure posts...
...Scare commercials and pious indignation fill the airwaves...
...Insurance Commissioner Gunter's personal alter ego is Orlando attorney Richard Swann of Swann & Haddock...
...It took the government two trials to convict Ray and Rafael Corona, but Ray was ultimately sentenced to twenty years...
...Something that `Shevin' wanted...
...They'd f---ing steal everything if they could sell it...
...When Perry encouraged Cardoso to think he could identify the source of the information, his body bug picked up this charming exchange: Cardoso: That would be nice...
...We used our regular lawyers, and it took six years to get the charter...
...That's not a bad showing for the stocky, sparsely educated former strong-arm man who was once accused, in a confidential parole commission report, of being "one of the top 10 cocaine dealers in Dade County...
...Prosecutions have been most successful when they followed the cash...
...Anyone with sufficient cash could buy into the inner circle, and the biggest contributors most likely had the most urgent reasons to make nice to the regulators...
...But Holtz kept his political contacts...
...His partner in the alleged scheme was another accused smuggler, a close personal friend whom the DNR director had earlier tried to help beat a drug rap...
...In the next four years, he moved about one million pounds of marijuana, a potential profit of $8 to $30 million...
...That chief would do anything he said," marvels Nelson Perry, president of the Dade County Police Benevolent Association...
...He was using some kind of attorney or something, somebody who has some kind of power in politics...
...It is certain from other sources that its contents would embarrass not only Gunter but some of the most powerful figures in Miami politics...
...All right...
...THE PENETRATION oliticians weren't the only ones to 1 benefit from the Junta's elegant, self-perpetuating system...
...For a while Bentsen Sr...
...But several of Hernandez-Cartaya's associates continued to deal successfully with the Insurance Department...
...This March, in the surprise of the year, former Governor Askew quit the Democratic U.S...
...Magistrate acquitted him after telling prosecutors they should have indicted the bank itself...
...Sunshine State was finally closed in the fall of 1986, after a last-ditch purchase offer from its largestborrower, the Cavanaugh Corporation, which had raised eyebrows through its speculations in Miami Beach art deco hotels and casino real estate in Atlantic City...
...In the case of the Sunshine State Bank, Florida clearly failed...
...Perry: If you promise not to whack him...
...24 THE AMERICAN SPECTATOR SEPTEMBER 1988...
...Police heard a story that the fight involved a $200,000 deposit San Pedro had made earlier that day, but both bank officers deny it...
...The prime political casualty, however, was former State Attorney General Robert Shevin, a large, sweaty, and brilliant Miami attorney, who had unwisely written San Pedro a letter of recommendation for a clemency hearing in 1979...
...Only a portion of the government, offices such as budget, report directly to the governor...
...D ut the most remarkable thing LP about the purchase was the lack of trouble with the state regulators...
...To overcome the understandable local resistance, San Pedro dispatched his Fat Man gofer, Donald Dugan, with $4,000 for the town's vice-mayor...
...Banking practice in Hialeah had grown so bad that the Feds had to close down another bank, the Trust Bank, on their way to Global...
...San Pedro: That would be great...
...The file was finally destroyed on May 17 of this year, two days before Gunter announced his candidacy for the U.S...
...He had purchased the thrift, the Jefferson Savings and Loan of McAllen, from Lloyd Bentsen, Sr., an economic power in South Texas and the father of the United States senator and Michael Dukakis's running mate...
...He was convicted for murder conspiracy and sentenced to three years probation...
...The Federal Deposit Insurance Corporation (FDIC) audited Sunshine State along with all the other banks where it insureddepositors' accounts, and its regional office examiners became increasingly worried and frustrated about the bank's condition...
...But he is also part of a political system that has given power and protection to men like Alberto San Pedro and Jose Antonio Fernandez...
...Fernandez had brought his lawyer to cover for any faux pas, and his mouthpiece answered, "Mr...
...Fernandez moved into the vacuum as a broker, acting as a bridge between the Yankee-hating Colombians and the red-neck buyers...
...THE AMERICAN SPECTATOR SEPTEMBER 1988 23 General, and Insurance Commissioner Gunter...
...At almost every turn, the federal regulators ran into passive resistance from the State Comptroller, whose banking division had chartered the bank...
...When Ray Corona and Jose Antonio Fernandez were looking for a bank to buy in 1977, their first candidate was Hernandez-Cartaya's Hialeah-based National Bank of South Florida...
...Rather than give up his luggage, Fernandez went to the kitchen and emptied out a cardboard box of his infant son's peach juice...
...Askew left the board this March...
...Major departments like law enforcement and natural resources fall under control of a Cabinet composed of the seven elected state officers...
...If Gunter loses his Senate race, he keeps the option of returning to the Insurance Department...
...Heavy givers included the leaders of ESM Government Securities in Fort Lauderdale, a $300 million scam whose collapse set off the Ohio Bank Holiday in 1985...
...After San Pedro regained his health (and the hit-man disappeared), he turned to politics and became a devotee of St...
...Perry infiltrated San Pedro's clique, posing as a corrupt cop, and he describes a town where honest cops had a rough life...
...Florida is the only state in the nation that places every scrap of its financial regulation in the hands of elected (and intensely political) public officials...
...0"Don't let Book give him the money," San Pedro told Dugan...
...The Appropriations Committee chairman of the Florida House is a vice-chairman of Swann's American Pioneer Savings Bank, drawing a large salary...
...He's one of the most honestmen in the state...
...He's urging passage of a bill that would limit spending and fundraising in U.S...
...Jose Antonio Fernandez If San Pedro's crew could have populated The Maltese Falcon, Jose Antonio Fernandez could easily stand in for Scarface hero Tony Montana...
...But former Insurance Department employees say the charter was finally rejected in December 1977, just as the New York Times did an expose on WFC...
...By his force of personality and lavish political contributions, he turned himself into a local political power...
...At the pardon hearing, he deplored the "shadow" over San Pedro, "which hasn't after four or five years moved to the substance of some action...
...But the bust, on sixty-four counts of public bribery, drug sales, and murder conspiracy, at least temporarily embarrassed Governor Graham, who had praised San Pedro's "impressive" community record...
...In their 1986 campaign, the local press awoke from its slumber and detailed scandal after scandal...
...Some of these lawyer-allies have used their connections to build personal financial empires that in turn help hold together the political Junta...
...A Cuban national who fled to the U.S...
...He was very sure it would be approved...
...Don't let Book give him the money," San Pedro told Dugan...
...In 1983, it emerged that Levenstein had another substantial business, setting up dummy corporations for marijuana smugglers...
...If Florida is on the front-lines of the Drug War, a large part of it has been captured by the enemy...
...Another institution helps prop up the Junta, and that is the political law firm...
...Even worse are the impressive string of stories that routine approvals have encountered mysterious delays, amid discreet hints that business should be diverted to more favored lawyers...
...His solution, to buy his own bank, should have been riskier than it was...
...Gissendanner, executive director of the state Department of Natural Resources, was charged last year with trying to shake down a major marijuana smuggler arrested by the Florida Marine Patrol, a branch of DNR which acts like a state Coast Guard...
...I got a connection for the Congressman," San Pedro says...
...Since it opened in1984, Trust Bank had steadily lost money...
...San Pedro hired a 43-year-old lawyer named Ronald Book, a six-footer with a trim black beard and mustache, who had just been made a name partner in the Miami firm of Sparber, Shevin, Shapo & Heilbronner...
...T he War on Drugs has mush- 1 roomed into one of the nation's biggest issues...
...Fernandez actually seemed relieved when the DEA caught up with him...
...Insurance, and a grab-bag of related businesses like Health Maintenance Organizations are the province of State Treasurer/Insurance Commissioner Bill Gunter, also 54, a red-haired, round-faced self-proclaimed consumerist...
...Florida has a campaign limit of $3,000 from an individual, but like other national campaign reforms this law merely shifts influence to thc3e law firms or banks that can line up a large number of four-digit contributors...
...The sad irony is that both Lewis and Gunter entered office in the late seventies as reformers, along with the urban progressives who broke the hold of the rural "porkchoppers" in the legislature...
...By the time he was 21, he had a long rap sheet and a reputation for violence, which he now complains was grossly exaggerated...
...Truly big-time drug networks like that run by Jose Antonio Fernandez require a financial infrastructure...
...On his own case, Gissendanner made a plea bargain on a lesser charge, taking an 18-month sentence...
...Llovio-Menendez also identifies Hernandez-Cartaya's bodyguard as a Cuban agent known in Havana as Samuel...
...Since the mid-seventies, money laundering has become an entrenched feature of the state's economy...
...The state shut down Global two weeks after it closed Trust...
...After its first year, the bank was in such bad shape that examiners from the Federal Reserve Bank insisted on imposing a Memorandum of Understanding on its officers in July 1985...
...Most of the case was dismissed on technicalities, and Book was last seen chatting amiably with Jeb Bush at Tallahassee's annual Republican Legislators' Appreciation Dinner...
...So Bob Shevin better take this case on for free, for free, he better do it," San Pedro told Dugan...
...IT NEVER ENDS" W henever I discuss Miami intrigues with a favorite source, a former federal prosecutor, we wind up saying, "It never ends...
...San Pedro's influence grew by other means, especially after a Mafia hood emerged from a lunch date with a bullet wound in the elbow...
...Gunter is the Baptist son of a dairy farmer from North Florida, and Lewis is a Jewish lawyer from Miami, but their collaboration lies at the heart of the Junta...
...These firms play on personal friendships and former staffers, but they also raise money...
...The supervisor for banks, thrifts, and securing brokers is the State Comptroller, a Br ylcreemed and tormented Harvard graduate named Gerald Lewis, 54, under attack for years for spectacular lapses like the Sunshine State Bank...
...Cynics noted that Insurance Commissioner Gunter had been drawing a lot of bad press for his cozy relations with the political law firms and that the San Pedro tapes made Book an easy scapegoat...
...For the past decade, campaign finance reports for Gunter and Lewis have been studded with the names of notorious financial frauds...
...He called for agencies "with information that would warrant a denial to come forward publicly and specifically," and then he continued the case...
...Miami's Arky, Freed, Stearns, Watson & Greer did yeoman work for a series of notorious clients, until the suicide of its founder, Stephen W. Arky...
...has found a niche in the state's political eco-system...
...Lewis and Gunter won handily in November after multi-million dollar campaigns...
...Campaign contributions have givendrug rings an open door to penetrate state government...
...Our people did not want to do that...
...It was a f---ing rifle that I shot automatically, on semi-automatic...
...In a cause celebre which made "60 Minutes," investigators suspected Hernandez-Cartaya, a silver-haired veteran of banking in Havana, New York, and Atlanta, of handling drug money for Fidel Castro...
...Without naming names, he denounces the practice of regulators raising money from people they regulate...
...One of the contributors, whose check bounced, was another former Hialeah councilman, who was indicted this March on federal charges of fraudulently obtaining loans at both Trust and Global...
...In a 1981 confiscation hearing, a federal judge stated that when Abel Holtz discovered the operation, he demanded an increase in the bank's fee...
...San Pedro, 38, started out as a petty thug who, by his own account, specialized in robbing drug dealers...
...Along the way, Capital Bank was caught laundering millions of dollars for a Colombian drug ring...
...Founded in the early seventies by Cuban refugee Abel Holtz, Capital is now Miami's sixth largest bank with $800 million in assets...
...22 THE AMERICAN SPECTATOR SEPTEMBER 1988 veterans...
...Politicians are never crooked...
...As they sat around the table, Fernandez recalled later at the Coronas' trials, "some gentleman from the bank asked what was my business...
...Police thought he was about to order the murder of a man who owed him money, and Sergeant Perry discovered that he'd been exposed as an undercover cop...
...And there is a very special Wilmer, a well-connected lawyer named Ronald Book who becomes the fall guy for much more than San Pedro...
...Pending investigations concerning your company's operations will have to be settled completely in your favor," Gunter wrote Cartaya...
...the State Comptroller signed a Memorandum of Understanding removing Ray as president, but leaving his brothers on the board and allowing them to rehire him as a consultant...
...After a six-month trial on thirty-nine counts involving drugs, bribery, and attempted murder, a six-person jury convicted him of only seven charges...
...As much of Miami soon guessed, Ray had become a cocaine addict...
...Once these areas of concern have been resolved, please notify me...
...San Pedro himself is facing hard time, and a possible jury tampering probe, no matter that the press now soft-pedals his scandal...
...Alvero-Cruz was an old acquaintance of Hernandez-Cartaya as well as much of the anti-Castro terrorist network through the Brigada 2506, the organization of Bay of Pigs veterans...
...By 1982, Levenstein was chairman of a bank that generated $5,000 for Lewis's campaign...
...To the contrary, the real scandal in the San Pedro case may well be its tepid political impact...
...In 1987, some Capital Bank borrowers complained to federal agents that their loan officers had been forcing them to make campaign contributions to Gunter and Lewis...
...They were told to stay away from certain places at certain times," says Perry...
...Not that they're crooked, you know...
...Although Book's first job was the pardon, his other affairs soon became mired with San Pedro's...
...And the rhetoric of the Drug War becomes a hypocritical cant that even the dealers despise...
...Fernandez had to remit well over $100 million to his Colombian suppliers...
...This network has survived in spite of individual arrests and bank insolvencies because it James Ring Adams, a former member of the Wall Street Journal editorial board, is now writing a book on bank supervision under a grant from the Bradley Foundation...
...She testified that they first made love after spending the afternoon putting up campaign posters for a local judge...
...The traffickers have to move incredible sums of cash...
...In 1987, Federal Reserve examiners were so shocked by Trust Bank's condition that they started proceedings to remove its chairman, and the State Comptroller followed suit...
...Book was never charged, but his name jumps out of the tapes on one of San Pedro's bribery schemes...
...He is a superb attorney and a leader of the Florida bar...
...San Pedro, a friend of Cardoso from junior high school, did help him look into reports that the FBI was investigating Global...
...As the tapes came out in court, they became Miami's own live soap opera, more entertaining even than the first season of "Miami Vice...
...These politicians, bankers, and lawyers are perfectly happy to hang up red plastic ribbons with the slogan, "Say No to Drugs...
...Banks have regulators, who are supposed to scrutinize charter applications, monitor operations, and remove bad managers...
...On a good night of fund-raising, one of these lawyers can generate over $100,000 in campaign contributions, a lot of it from clients with pending business before the regulators...
...In his heyday, the Cuban-American banker maintained friendships with Robert Shevin, then State Attorney'A fresh witness has recently emerged, however, who recalls seeing HernandezCartaya in Havana in late 1976, dining with General Jose Abrantes, the senior intelligence officer in charge of United States contacts...
...Alvero-Cruz had introduced Fernandez to a volatile young man named Ray Corona, whose father was an established banker in Havana and then Miami...
...In spite of the San Pedro setback, Shevin and Book are still importantmembers of Florida's establishment, and we will meet them again...
...But there's another side to the story, and it casts a sharp light on Florida's vulnerable political structure...
...The State Comptroller's attorneys chose an unusual procedure which allowed Sunshine's lawyer to stay the closing...
...James Ring Adams LOSING THE DRUG WAR: DRUGS, BANKS, AND FLORIDA POLITICS Narcotics trading flourishes in the Sunshine State not only because of demand, but also because it is a major source of campaign and other political funding...
...Attorney Shevin confirms that he received more than a million-dollar fee for his Sunshine State work...
...Shevin states he had no personal dealings with San Pedro and that the use of his name referred generically to his law firm...
...in 1962, Jose Antonio survived through low-paying odd jobs, including a stint as contract employee for the Central Intelligence Agency, until 1976...
...San Pedro came to the US...
...But, as they like to insist, at least they aren't hypocrites like the respectable bankers, lawyers, and politicians who thrive on their cash...
...Cartaya tried to set up an insurance company, the American Atlantic Assurance Co., to take its place...
...Fernandez says he went to his bedroom closet and pulled Samsonite suitcases full of cash out on top of his bed...
...Anthony J. O'Donnell, a Princeton Ph.D...
...But watch them run for cover if the slogan reads, "Say No to Drug Money...
...In that year he fell in with Jose Alvero-Cruz, the largest marijuana smuggler in Miami...
...In order to be able to operate effectively, one had to be part of this campaign-contribution mechanism," he says...
...The bank far outlasted Jose Antonio's empire, which was infiltrated by the Drug Enforcement Administration as early as 1980...
...According to Stanley Marcus, former U.S...
...And there's little room to doubt that San Pedro had the same thing on his mind when he went to Shevin's law firm for help with his 1985 request for a pardon...
...THE SYSTEM o one wants to accuse a lawyer like Robert Shevin of criminal or even unethical behavior...
...One financial scandal segues into another, surrounded by tantalizing continuities and hints of hidden structures...
...You give him the money...
...Some other fears also triggered the San Pedro bust, in early 1986...
...It is not an isolated case...
...If San Pedro said, 'get your man moved, he's giving us trouble,' he'd wind up in the Property Room...
...In one celebrated incident, its chairman, Hialeah City Councilman Silvio Cardoso, had a fistfight with the bank president in the middle of the lobby, leaving blood on the floor...
...One of the deals, it turned out, involved the casino speculators who had sunk their hooks into Sunshine State...
...His role is still debated...
...Fortunes are being made and a new social elite is arising on the flood of drug money...
...As major customers, they were invited to a clients' lunch at the bank's dining room...
...They were so emotional about it that their voices would crack," recalls former FDIC Chairman Irvine Sprague...
...Some of its unique features have made it vulnerable, but nothing that has happened there can't happen to some degree in the rest of the country, and it probably has...
...In a way, Lewis and Gunter could be called victims of a popular culture that has grown excessively tolerant of sleazy dealings...
...In Orlando, Swann & Haddock has a special tie with the Insurance Department...
...Drawing a 23-year sentence, he turned state's evidence on his partners and entered the witness protection program...
...When they turn a blind eye to the source of their campaign funds, or their fees, they cross the line into the drug world as surely as the off-loaders, mules, and money-changing smurfs...
...I feel terrible about what happened to Shevin," says Sergeant Perry...
...A former Golden Gloves boxing champion, Ray looked more like a thug than a financier, and his behavior started to worry his silent partner...
...San Pedro had amazing control over the Hialeah Police Department, through his friendship with its chief and many of its officers...
...He kept a nine-foot-tall plaster statue of the saint in his house, and each year on the saint's day in mid-December took it to the ballroom of a posh Miami Beach hotel for a party that attracted dozens of local judges, police chiefs, and politicos...
...THE AMERICAN SPECTATOR SEPTEMBER 1988 21 After the lunch, Fernandez and Corona started talking about buying their own bank, and they soon began shopping in earnest...
...Fromlate 1985 on, San Pedro worried constantly about his influence in Tallahassee, the state capital...
...At one point Gunter's friend Richard Swann helped Hernandez-Cartaya search for endorsements...
...Ron Book, San Pedro's ill-fated lawyer, seemed to have a comeuppance of sorts two years ago when Insurance Department investigators arrested him at his law office and led him out handcuffed in front of television cameras...
...In 1982, Lewis received $1,000 from Jose Antonio Fernandez's lawyer (and later co-defendant) and another $1,500 from the Sunshine State Bank's largest borrower...
...There's a story that he once responded to a rough tackle in a neighborhood football game by shooting up the field with a machine gun...
...The system has become so blatant that some insiders are dropping out in revulsion...
...Four separate federal grand juries have taken testimony about their offices, in cases involving a bankrupt savings and loan, a fraudulent auto insurer, and charges of extortion within Lewis's staff...
...Perry showed the file to Cardoso and San Pedro over drinks at a Holiday Inn...
...I was f---ing broke when I was a kid, and I got the s--- beat out of me by the cops," he recalls...
...For years, Gunter's senior staff juggled this application file like a hot potato...
...We did him a favor, the Attorney General of Florida...
...Like the old-time Mafia, the drug trade does best where it can work out a fix with government—with local police chiefs, with bank supervisors, with any bureaucrat able to crimp its operations...
...Relatively good English and an engaging manner brought Jose Antonio the added duty of babysitting the Anglo distributors they supplied...
...As soon as one is closed down, another pops up to take its place, with little problem in obtaining a charter or change-in-control approval...
...The witness is Jose Luis Llovio-Menendez, who, as former Chief Adviser to the Minister of Finance, is the highest-level Cuban Government official to seek asylum in the U.S...
...Donald Bentsen says Hernandez-Cartaya was a respected businessman at the time of the sale...
...Senate primary, complaining vehemently about the efforts necessary to raise campaign money...
...Jose Alvero-Cruz, themarijuana smuggler and mentor of Jose Antonio Hernandez, had a half interest in the bid to buy HernandezCartaya's National Bank of South Florida...
...The FBI gave Perry a dummy file for his undercover operation...
...In 1971, his gang tried to rip off drug dealers who were actually undercover police...
...So the only surprise when the FDIC shut down Global this February was that it had taken so long...
...There ain't one f---ing fortune out here that hasn't been made, ah, illegitimately...
...Hernandez-Cartaya also left behind some friends with a need for "flexible" banking...
...Book, who had been managing political campaigns since his teens, was previously Governor Graham's legal counsel...
...Lewis also admitted knowing about the investigation for two years...
...finally attached a note to the file saying, "Don't steal any more copies because I have 15 more...
...Some police feel that this pressure pushed them to make premature arrests...
...who knows what he called me...
...That's what made me think there's only one way to get around in life, that's politics and money...
...The head cashier was actually tried for violating currency-reporting rules, but a U.S...
...One of his tapes catches a disjointed reference to "all of the grass money, Fidel Castro was involved, on Ninth Street" at the NBSF...
...The purchase of Sunshine State wasn't much different...
...Fernandez claims it took all of his diplomacy to keep Ray from getting killed...
...One School Board member who was honest or naive enough to admit accepting his unreported campaign contribution did plead guilty to breaking the campaign finance law...
...Once called a "political nymphomaniac" by a friend, Gunter runs perennially for higher office and leads Democratic primary polls this year in the race for United States senator...
...The drug dealers, as we shall see, move in an underside of politics that is far sleazier, and far more comfortable for them, than one might ever expect...
...He was also one of Graham's chief fund raisers...
...Senate primary, complaining vehemently about the efforts necessary to raise campaign money...
...San Pedro paid Sergeant Perry, the PBA president, $2,000 to obtain the FBI files on Cardoso...
...Askew won't comment on that...
...The cozy deals among the law firms, the fundraisers, and the crooked businessmen were laid on the public record...
...Four years later, a would-be hit-man shot him five times outside his house...
...I decided I couldn't participate in what amounted to a system of legalized bribery...
...This culture, as well as geography and the bilingual bridge, may well be the reason that Miami remains the financial center of the drug trade even as the smuggling routes move west to Louisiana, Texas, and California...
...Lewis's former general counsel, S. Craig Kiser, campaigned against him with a call to take bank supervision out of electoral politics...
...Just months after these donations, the minimum that could be identified from the campaign reports, the Comptroller rescinded a disciplinary action against the bank...
...The state government operates under one of those post-Reconstruction Southern constitutions designed to make the governor as pliable as possible...
...Drugs are taboo, but not jai alai or the lottery, he claims, in sound libertarian analysis, because the proceeds aren't taxed: "The only thing is since the Government don't make money, it's against the law...
...Senate campaigns and would force disclosure of the fundraisers who practice "bundling," raising and packaging a number of large donations from their clients or affiliates...
...The breakdown in financial regulation is part 'of a general political weakness...
...Not that they're crooked, you know...
...By the ninth grade he had begun a career in extortion, said his parole file, "making the other students do his homework...
...The only thing is they don't get caught and they stick together and they don't give themselves up that easy...
...Cases like Levenstein and the Sunshine State Bank suggest strongly that Florida has become the widely acknowledged capital of money laundering because of lax state financial regulation...
...Drug dealers flourish and get busted, or murdered, but the morality play never seems to extend to the financial and political infrastructure...
...As he began to lose loads more frequently, his Colombian suppliers grew restless and kidnapped him to enforce prompter payment...
...The exploits of the drug lords make fascinating movies, but their success depends on something harder to dramatize...
...They flew to Tallahassee to warn Gunter that an insurance company was an even better conduit than a bank for money laundering...
...Ray Corona installed his father as chairman and himself as president, but the family banking tradition didn't sit comfortably on his stocky shoulders...
...And then they moved that, the operations," he continues...
...A shady company called Southern Combustion Technologies, another of Book's clients, wanted to build a hazardous waste disposal plant in the suburb of Opa Locka...
...When the FDIC finally exerted full pressure to close the bank (which legally only the state could order), the Florida Comptroller strangely bungled the job...
...He and his employees gave heavily to their campaigns...
...Just a month before he helped negotiate this ineffective discipline, Comptroller Lewis had accepted $1,000 campaign contributions from the Trust Bank chairman and several of its directors...
...He hired people to lift his police records so frequently that the records chief for the Hialeah P.D...
...This diffused chain of command can lead to cases like the disgrace of Elton Gissendanner...
...The two dealers started putting deposits in a small institution called Totalbank, then the Coronas' employer...
...These connections became even more important as the bank went steadily downhill...
...Interspersed with the sounds of vacuum cleaners and crying children, they epitomize the political 20 THE AMERICAN SPECTATOR SEPTEMBER 1988 theory of a certain part of Miami...
...A close-knit circle even for small-town Tallahassee, these young hustlers with titles like Deputy Comptroller and Deputy Insurance Commissioner lunch together, room together, swap jobs, and take in each other's political laundry...
...The note had come to the Governor's wife, Adele, from a high school chum and former beauty queen who was dating one of San Pedro's associates, the son of an alleged mafioso...
...But she turned on him after he bugged her telephone and caught her talking to a friend with the federal Bureau of Alcohol, Tobacco and Firearms...
...The most corrupted mother f---ers and the most dirtiest lying sons of bitches I have ever known has been the politicians...
...He and two law partners were arrested on drug conspiracy charges dating to 1975...
...It is the first time I heard that word," Fernandez said...
...Holtz, the judge chided, "knew or reasonablyshould have known that the cash .. . was drug tainted...
...Fernandez is an entrepreneur...
...The funny thing," the bug caught him saying, "it has nothing to do with me...
...Those charges, and a more substantial fraud case, never reached trial,' but enough emerged to make Hernandez-Cartaya the biggest skeleton in quite a few closets...
...The fix is especially urgent for the financial side of narcotics...
...If you gave to Gunter, it was considered the same as a contribution to Lewis," said one of their former fund-raisers...
...It has survived the transition from Democratic Governor Graham, an occasional ally, to Republican Governor Bob Martinez, who often seems at the mercy of Tallahassee The narcotics traffic flourishes not only because of demand, but because of tacit acceptance by elements of the political structure...
...The federal examination of Trust Bank led directly to Global, which had been making bad loans to some of the same people...
...The case of Florida shows how sensitive a topic narcotics cash can be...
...The feds wanted to evict the Corona family from Sunshine State...
...Sunshine State itself was the successor to the granddaddy of all the Miami drug and banking scandals, the WFC Corporation of Guillermo Hernandez-Cartaya which collapsed in 1977...
...Comptroller Lewis seems entrenched...
...As informant OCBT-56, Roxanne joined a crowd of agents taping San Pedro's conversations...
...Called the "King of the River" for his control of the Cuban fishermen who docked along the Miami River, Alvero-Cruz added Fernandez as a lookout and truck driver...
...So my friend tells me, 'Hey Al, you know, if you (inaudible) do me a favor, why don't you try and stay away from these people, 'cause between you and me, they feel that that bank is being used for "something," the Global Bank of Hialeah.' " T he Global Bank, a one-story 1 building near the Miami River where San Pedro had several accounts, had been notorious for years...
...The Coronas managed to tie up the FDIC in a two-year lawsuit...
...The Kennedys, bootleggers, the other mother f---ers, gold thieves, ah, the Huns, whatever it might be...
...It recruited former Governor Askew and former U.S...
...The White House repeats the folly of Prohibition with its ill-conceived policy of "zero tolerance...
...The Sparber, Shevin law firm broke up earlier this year, possibly over the tensions involving Book and Shevin, but no one is talking...
...The swarthy Hispanic "narcotrafficantes" are just as villainous as their stereotype, no doubt about it...
...They were closing on the bank, and they wanted $1.2 million to finish the deal...
...Really we had a conversation, he got somebody there that was to make sure it happened...
...They counted out the million in bundles of hundreds...
...The tapes were partly the work of San Pedro's girlfriend Roxanne, a "political groupie" from a middle-class family who was once president of the Hialeah Young Republicans Club...
...Even though his nationally chartered bank had been shut down firmly by the federal Comptroller of the Currency (not to be confused with the State Comptroller), the Insurance Commissioner allowed Cartaya's group to submit its charter application three times...
...After Askew withdrew, his law partners, who had helped drum up about one million in donations, promptly accepted his resignation from Greenberg, Traurig...
...Their extremely able lawyer, none other than the former State Attorney General Robert Shevin, performed the superhuman feat of keeping Sunshine State open even after Ray and Rafael Corona were indicted as part of a "vertically integrated" drug smuggling conspiracy...
...He could get a personal appeal taped to Governor Bob Graham's shaving mirror and move a grant through the U.S...
...But very few in this furor are willing to look closely at the real ecology of the drug trade...
...If they ever felt embarrassed at taking money from companies they regulated, they could arrange for insurance companies to contribute to the State Comptroller and for banks to give to the Insurance Commissioner...
...State examiners were more lenient than the FDIC in classifying the bank's bad loans...
...When Democratic Governor Bob, Graham (now junior United States senator) went into his bathroom to shave one December morning, he found a note on the mirror urging the pardon...
...Senator Richard Stone as directors...
...Some insight into this murky affair comes from another Greenberg, Traurig partner who left the firm a few months earlier...
...H ernandez-Cartaya left the scene, eventually serving several years in federal prison for misapplying funds from a Texas thrift...
...There's a femme fatale named Roxanne Pandora Greene, police informant and San Pedro's girlfriend, who was a smash in her televised deposition, in abstractly streaked summer dress, blue-tinted sunglasses, and broad-brimmed straw hat...
...Politics brought Roxanne and Alberto together...
...from Cuba in 1955 at the age of five, not one of the "Mariels" he liked to point out...
...If the pols won't lead the fight against drugs, who will...
...A good portion of the Dade County judiciary accepted invitations to his annual bash in honor of a saint from the Cuban version of voodoo...
...Department of Housing and Urban Development...
...The massive flow of drug money which has corrupted Florida from top to bottom encountered a political culture quite happy to be corrupted...
...Ronald Reagan's White House had him on its "A" list of Hispanic leaders...
...San Pedro confronted her with his tape of the conversation, she said, yelling at her and hitting the top of his desk with a rolled up Sesame Street poster...
...He told me everything was going fine in Tallahassee...
...An apologetic Miami Herald, dismissing his tape-recorded claims of state-wide political influence, awarded him a "luke-warm victory...
...Following standard practice, after his release they sent him a bill for the cost of the kidnapping, including the price of the guns...
...It's a very bad system," he told me...
...The deal collapsed...
...Ray's reputation troubled federal regulators, if not the state...
...I said, 'Jesus...
...For revenge, she started talking to every lawman who would listen...
...Consider the case of Leonard L. Levenstein, one of Gerald Lewis's large contributors since his 1972 race for the Public Service Commission...
...You give him the money...
...specializing in land use and zoning cases, says he just got fed up with the system...
...III...
...Senate...
...After one false start, of later interest, Ray Corona came up with the Sunshine State Bank...
...San Pedro smoothed over the incident through his connections with a Gambino family capo regime named Joseph D. Paterno, and afterward, the mob stayed out of Hialeah...
...This alliance owes its coherence to a network of senior aides and fund-raisers like Ronald Book of San Pedro notoriety...
Vol. 21 • September 1988 • No. 9
