Dirty Money

In 1982 Padreda was indicted in Texas for bank fraud at precisely the same time he says he was participating in a $150,000 extortion scheme perpetrated by Hialeah Mayor Raul Martinez. In 1985, he testified, he met with then-Miami Commissioner Demetrio Perez and attorney Alberto Cardenas (a leading Republican Party fund raiser and organizer) to arrange for Perez's vote to name Sergio Pereira as Miami city manager. Asking price: $50,000. Also in 1985 Padreda said he funneled $40,000 to then-Metro Commissioner Jorge Valdes for help with a zoning matter. In 1987 he was accused by HUD officials in Washington of a conflict of interest in a complicated building project involving a Miami nonprofit organization.

But his criminal activity did not prevent him from receiving in February 1987 an invitation to be one of 127 "Distinguished Presidential Appointees" to the White House's Conference for a Drug Free America, a panel that included members of Congress and cabinet officers Edwin Meese (attorney general) and William Bennett (secretary of education). Two months later the FBI began an investigation of Padreda's business practices.

Eventually the feds got Padreda for submitting to HUD phony cost statements arising from a $23 million housing project in Kendall called Casa del Lago. He pleaded guilty to fraud charges in September 1988 and agreed to cooperate with authorities in their investigation of Dade County corruption. Last week he was ordered to pay $85,000 in restitution to the federal government, fined $75,000, and sentenced to two months house arrest and two years probation. In addition, Padreda was ordered to head a panel of local citizens who will develop a plan to heal Miami's ethnic divisions.

The rise and fall of Miguel Recarey, Jr., president of International Medical Centers, is one of the most remarkable con-man tales of the 1980s, and Jeb Bush was only one of many people he duped. In the late 1970s, Recarey took over IMC, a small health-care organization in Miami. With lavish political contributions to Democrats and Republicans alike, Recarey won federal contracts to provide health care for Medicare patients. He launched a glitzy advertising campaign featuring comedian George Burns and country singer Barbara Mandrell, and he signed up South Florida Medicare patients by the thousands, making IMC one of the largest health-care providers in the nation. By the time the organization collapsed in mid-1987, IMC and Miguel Recarey were receiving a $30 million check from the federal government each month.

In fact, IMC was the biggest Medicare fraud scheme in American history. Local doctors and patients complained regularly about IMC to federal regulators, saying that conditions at some IMC clinics were abominable - one office in Little Haiti didn't even have sheets to drape gynecological patients. Low-level staffers in the Medicare program in Washington had long resisted accepting IMC as a Medicare provider but had been overruled by their more politically minded superiors.

While the public was receiving substandard care, Recarey was skimming untold millions of taxpayer dollars off the top. Federal investigators now believe Recarey used IMC to increase his personal net worth from $1 million to $100 million in about six years, even though he was widely known among law enforcement officials as a con man. He had been convicted of tax evasion, was suspected of hospital embezzlement, and was heard boasting about his Mafia connections. The chief security officer at the Department of Health and Human Services (HHS) wouldn't even let the department secretary sit near Recarey at political functions. In later inquiries, the top investigator for the General Accounting Office told Congress, "Just how someone like Miguel Recarey could have headed up and been chief executive officer of the largest [health maintenance organization] in the United States...is astounding." But Recarey's lavish contributions to politicians of both parties won him powerful allies - among them Jeb Bush.

By 1984 the accumulated complaints against IMC finally prompted federal investigators to begin a critical examination of Recarey's health maintenance organization. Of particular concern was the fact that a high percentage of the plan's members were on Medicare. With these patients came a steady stream of Medicare benefit payments, made directly to IMC. To discourage profiteers from entering the health-care business simply to receive Medicare money, the federal government had limited the maximum number of any HMO's Medicare clients to 50 percent of the total number of patients served. Recarey had to secure an exemption from what is known as the "50-50" regulation or IMC would be suspended from the Medicare rolls, and an extremely lucrative business would collapse.

Recarey turned to Jeb Bush for help, but first he offered his own form of assistance: in September of 1984, the Dade County GOP received a $2000 contribution from IMC.

Two months later, in November, Jeb Bush placed at least two phone calls to senior officials at the federal Department of Health and Human Services on Recarey's behalf. He called the Secretary of HHS, Margaret Heckler, who had previously expressed to aides her concerns about Recarey. He also called C. McClain Haddow, Heckler's chief of staff, who later told Newsday that the vice president's son urged his office to discount "rumors that were floating around concerning Mr. Recarey." Jeb reportedly told Haddow that Recarey was "a good community citizen and a good supporter of the Republican Party." Heckler's office granted Recarey the waiver he needed.

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