By Chuck Strouse
By Scott Fishman
By Terrence McCoy
By Ryan Yousefi
By Ciara LaVelle, Kat Bein, Carolina Del Busto, and Liz Tracy
By Pepe Billete
By Ryan Yousefi
By Kyle Swenson
Given the magnitude of Dougherty's alleged fraud, Lehrman and Valls expected federal prosecutors to leap at the chance to pursue their old boss. In April 1992 they visited Assistant U.S. Attorney Andres Rivero, bearing the same satchel of evidence they had presented to John Blackwell of Lloyd's weeks before. Although federal agents are now eagerly building a case, the investigation began in earnest just two months ago and then only after persistent urging by a state prosecutor.
Rivero couldn't take the case originally, for two reasons. First, he was preparing another case for trial. Second, he and colleague Mary Butler had worked with Dougherty on the 1991 tax-evasion indictment of Munther Bilbeisi and his accountant, Kenneth Grushoff. For obvious reasons, Rivero and Butler A the prosecutors best equipped to understand the tangled Dougherty saga A had a conflict, one exacerbated by Dougherty's reported boasts that he, not the U.S. Attorney's Office, had made the case against Bilbeisi and Grushoff.
So the material tendered by Lehrman and Valls simply languished in the U.S. Attorney's economic-crimes division for months. Rivero and Butler decline to comment about Dougherty, but another inside source insists the delay was a classic example of "bureaucratic constipation. It was a great case, an unbelievable case, but people higher up couldn't see it."
Federal prosecutors weren't alone in neglecting Dougherty's alleged misconduct. The case of June Baker offers a dramatic illustration. Freshly graduated from law school, Baker joined Dougherty's office in September 1990. Because she had yet to receive her license to practice law in Florida, her own duties were often menial. One day, for instance, she found herself chauffeuring a visiting Lloyd's underwriter. Matter-of-factly, he asked Baker how work was proceeding on the case involving Bilbeisi's fraudulent home-burglary claim. Baker had no idea what he was talking about and told him so.
A few weeks later the significance of the episode came crashing down on her. She arrived early for work and noticed some bills to Lloyd's on her secretary's desk. They listed her and another attorney as working full-time on cases neither she nor the second attorney had touched. A fortnight later she resigned. On the advice of one of her law school professors, she also wrote a letter to the Florida Bar, stating her concerns about Dougherty's billing. Then she left town.
Randi Lazarus, the Bar attorney charged with investigating claims about Dougherty, says she does not recall receiving Baker's letter. "If I had, I would have opened an investigation," Lazarus insists.
In August 1993 the Bar asked Baker to provide an affidavit. She did, but no mention was made of her earlier complaint. Now working at a Denver law firm, Baker is unwilling even to speak about her experience in Miami. She says she fears retaliation from Dougherty, who is, after all, still a practicing attorney in Florida.
Three weeks ago Richard Lehrman and the other attorneys interviewed by the Bar were called before a federal grand jury. Questioning was limited to matters involving Dougherty's alleged overbilling. The whole exercise took only a few hours, suggesting that prosecutors are intent on drafting a straightforward, if sizable, fraud indictment against Dougherty. In the coming weeks, investigators also will likely be asking questions about Dougherty's handling of the case involving Bilbeisi's burglary claim, for which he billed several hundred thousand dollars. Dougherty's firm, meanwhile, was held in contempt of court by Judge Shelby Highsmith a week ago, after failing to appoint a competent custodian to turn over all the records federal authorities had subpoenaed.
Prosecutors David Mandel and Richard Gregorie refuse to comment about the case. But knowledgeable sources say establishing the fraud is only the initial phase in what could be a lengthy public-corruption probe. This would explain why the matter has been transferred from the economic-crimes division to Mandel and Gregorie, who work in the public-corruption unit. It might also indicate that federal prosecutors view a fraud indictment as a means of compelling Dougherty to reveal whom he paid and for what purposes. Investigators are reportedly interested in at least three areas:
* Bribes to foreign officials. Dougherty himself admits in his responses to the Bar that he paid thousands of dollars in "witness fees" to Central Americans. In interviews with New Times, however, former associates have alleged that Dougherty also plied Guatemalan military officials, politicians, and judges with expensive gifts and cash, in apparent violation of the Foreign Corrupt Practices Act.
According to three sources who spent time with Dougherty in Guatemala, these gratuities were delivered in exchange for hoped-for favors that would aid his pursuit of Bilbeisi. "Jim had people falsify documents in Guatemala in order to get the [smuggling] charges against Bilbeisi reinstated," investigator Vicente Valls told Bar officials in a sworn statement.
A second former associate, who claims to have personally delivered gifts for Dougherty, says they included cash payments, expensive fax machines, watches, and guns. Maria Elena Barrios, who worked as an investigator for Dougherty, says that because his Spanish is limited, he asked her to deliver cash bribes to a handful of politicians. When she refused, she says, Dougherty simply hired someone else.