By Trevor Bach
By Francisco Alvarado
By Trevor Bach
By Michael E. Miller
By Allie Conti
By David Villano
By Jose D. Duran
By Michael E. Miller
Howard Gary couldn't believe what was happening. Here it was the second day of July, the middle of a glorious summer, a summer in which he was supposed to have landed a series of lucrative bond deals. But instead of savoring the day, he found himself surrounded by federal agents at the FBI's North Dade headquarters. It wasn't so much their company that Gary thought unnerving but their highly inquisitive nature coupled with an omniscient understanding of recent, and supposedly secret, events.
They wanted to know if Gary was familiar with a computer company called Unisys. In fact, they asked, wasn't it true that Gary had approached Unisys a year earlier with a proposal that the firm hire him as a consultant and pay him $2 million, in return for which he and the City of Miami's budget and finance director Manohar Surana would steer to the firm more than $20 million in city contracts? Wasn't it also true that after the company rejected Gary's demand Surana told Unisys officials that if they wanted those contracts they had better find a way to come up with some sort of kickback? And wasn't it also part of the plan that Gary, Surana, and Miami City Commissioner Miller Dawkins would work together to transfer the money to the United States from foreign bank accounts?
Gary appeared stunned. For ten years the former Miami city manager had worked diligently to develop Howard Gary and Company, his municipal bond firm, which also acted as the city's financial adviser. He had invested his life savings to start the business, as well as the savings of family and friends. He had prospered. He considered himself a role model for blacks. Suddenly all of that was about to be destroyed.
As Gary struggled to comprehend the enormity of what was occurring, the agents explained that they believed he had committed a serious crime, but they would be willing to listen to his explanation. Quickly he denied that the Unisys scheme was his idea. According to sources familiar with the fateful meeting, Gary asserted that he was forced to participate in the Unisys scheme by Surana, who was in a powerful position, able to influence whether Gary remained Miami's financial adviser and whether he would continue to be involved in the city's bond deals.
He told investigators that he had set the figure at two million dollars because he knew Unisys would never agree to pay such a ridiculously large amount of money. And indeed, the company rejected Gary's demand. As he related to investigators, he was thrilled. At that point he believed he was finished with the Surana-led extortion attempt. But almost a year later, in April 1996, Surana and Dawkins contacted Gary again and told him they had managed to fashion their own deal with Unisys. Now they wanted Gary's help in secretly moving the money from India to the United States.
Gary consented, though he won't explain why. He was unaware, of course, that he was being set up. After Surana made his own demand for at least $100,000, Unisys officials decided they should contact the Miami Police Department, which then brought in the FBI. During a yearlong operation, federal agents gathered evidence first against Surana, then against Dawkins.
On March 4, 1996, the FBI confronted Surana, who agreed to cooperate and wear a hidden microphone. Ten days later the FBI watched as he handed Dawkins $25,000 in cash in the parking lot of a Denny's restaurant. With more Unisys money to follow, Dawkins and Surana sought out Gary in April. If Gary had rebuffed them, he would almost certainly be free and clear today. But instead he acquiesced. As far as the eavesdropping FBI agents were concerned, they had bagged themselves another bad guy.
As he sat at FBI headquarters in early July, however, Gary refused to think of himself as a bad guy. If the feds really wanted to go after corruption, he said, why didn't they do something about County Commissioner James Burke, chairman of the commission's powerful finance committee? Gary asserted that Burke was demanding a $100,000 kickback as a reward for Gary's firm being involved in a multimillion-dollar deal to refinance bonds at the county's recycling plant.
As soon as Gary spoke those words, a new probe was launched, and he agreed to cooperate. Since walking out of the FBI building four months ago, Gary has emerged as the central figure in the federal government's ongoing investigation of Burke, the commissioner's former chief of staff Billy Hardemon, and San Francisco-based bond trader Calvin Grigsby. Working undercover, Gary helped the FBI capture Burke and Grigsby on videotape allegedly discussing hundreds of thousands of dollars in kickbacks.
Last week, in his first interview since becoming a government informant, Gary talked about his relationship to Burke, his cooperation with authorities, and his future. "I made a mistake and I do apologize to the community," he said, referring to his involvement in the Unisys extortion plot. "And now, by cooperating with the government, I am trying to make up for my mistake and set things right."
By all outward appearances Operation Greenpalm -- the code name for the FBI investigation -- has been a tremendous success. Already Miller Dawkins has pleaded guilty to accepting a bribe in connection with the Unisys deal. He was removed from office by the governor and now awaits sentencing by a federal judge.
Manohar Surana, who has agreed to plead guilty to unspecified charges stemming from the Unisys case, has tried to mitigate his eventual punishment by gathering evidence against Dawkins and also by setting up a separate sting involving City Manager Cesar Odio and prominent lobbyist Jorge de Cardenas. In that case, the government alleges that both Odio and de Cardenas went along with Surana's scheme to extort money from Cigna, one of the city's insurance carriers.
As part of the government's investigation, Cigna agreed to hire de Cardenas as a consultant for $12,500 per month. De Cardenas allegedly would keep $5000 for himself, give $5000 to Odio, and pass $2500 to Surana. A federal grand jury last month returned a six-count indictment against Odio and de Cardenas; both men have pleaded not guilty. After the allegations were made public, Odio resigned as city manager.
No charges have been filed against Burke, Grigsby, or Hardemon. The U.S. Attorney's Office is still presenting its case to a grand jury, and indictments are likely to come early next year, says a source close to the investigation. (Hardemon has denied the allegations against him. Grigsby could not be reached for comment.)
It is also likely that Howard Gary will be charged for his part in the Unisys case. Federal prosecutors recently provided his attorney with a letter stating that Gary's business is not a target of the investigation, but that assurance does not extend to Gary himself. He has not been granted immunity in return for his cooperation, and his only agreement with authorities is that they will take his assistance into consideration as they decide how to proceed against him.
For a U.S. Attorney's Office that, in recent years, has accumulated a spotty record on public corruption cases, Greenpalm has been a significant image booster. But a close examination of the way the investigation was conducted reveals numerous internal problems. A combination of fatal press leaks, interagency rivalries, and tactical mistakes limited the scope of the operation and forced it to conclude before authorities could assess the true depth of corruption in Dade County. For years the federal government had sought access to the real and figurative back rooms of county hall. During Operation Greenpalm they had that opportunity for a short time, but then it slipped from their grasp.
"This case just completely collapsed," says one source familiar with the investigation. "It is impossible to know for sure what could have happened, but there is a feeling that we could have gone a lot further."
Another official involved in the operation says it was plagued by personality clashes: "There were a lot of egos and a lot of turf wars at work throughout this investigation."
Adds a third source close to the investigation: "I've never seen such a bunch of egomaniacs in my entire life."
Members of the investigative team often split into competing factions -- for example, those individuals who were working the City of Miami side of the case versus those who were working the Dade County side. Coordination and cooperation were often difficult, as each group thought it knew what was best for the investigation overall.
Another aspect of Operation Greenpalm that proved to be especially disturbing was the role of the Miami Police Department and, in particular, the conduct of its chief, Donald Warshaw. When Unisys was first approached by Gary and Surana, the company reported the extortion attempt to the city's police department. Warshaw concluded it would be inappropriate for his department to investigate corruption within the city administration, so he passed the information along to the FBI. But rather than allow the investigation to proceed independently, Warshaw and his department continued to be involved. Two Miami police detectives worked with the FBI's public-corruption unit on building the cases against Dawkins, Odio, and others. Warshaw and some of his top commanders also received regular briefings and sat in on strategy sessions with federal officials as often as three times a week.
Sources familiar with the case say that Warshaw -- far from being a passive observer -- became a vocal critic of the investigation, especially when it was clear that the chief's superior, Cesar Odio, was going to become a target. "He would be in these meetings and throw temper tantrums," recalls one investigator.
In an interview last week, Warshaw minimized his role, saying he attended only a handful of meetings. "As it related to Dawkins, I raised absolutely no objections," he recalled. "The only concern on my part was that Cesar Odio was my boss." Warshaw said he wasn't trying to protect Odio, but rather that he felt he had a duty to inform the manager that the head of the city's finance and budget department was a crook. "My passion was that the guy was working as a federal informant and also being allowed to come to work every day at the City of Miami," Warshaw said.
Why was Warshaw allowed to attend those meetings? According to several federal sources, the invitation was extended to the chief by then-U.S. attorney Kendall Coffey, who reportedly wanted to maintain good relations with the local police. Over time the chief became a fixture, and no one in authority was willing to bar him from future sessions. (Coffey was out of town last week and could not be reached for comment.)
Warshaw's concerns about Operation Greenpalm escalated last June to the point that he hired his own attorney and went before U.S. District Court Judge Stanley Marcus. Federal prosecutors and investigators were livid and argued that Warshaw was interfering in how they conducted their investigation. The transcript of that proceeding, which was closed to the public, remains sealed.
"I did go to court to try and protect the City of Miami and its finances, particularly as it related to the finance director," Warshaw acknowledged last week. "I'd like to be able to clarify this more, but in light of the fact that it was a sealed proceeding, I'm not allowed to discuss it."
Though Warshaw wouldn't answer additional questions about the subject, other sources say that the chief wanted to memorialize his objections to the investigation in front of a judge; he wanted to create a permanent record of his concerns that the city's finances were under Surana's control. The chief also reportedly wanted assurances from the U.S. Attorney's Office that while Surana was working undercover the government would supervise him to ensure he didn't swindle the city any further.
Warshaw's assertion that his highly unusual legal maneuver was motivated by a desire to protect the city is dismissed by several federal officials, who believe the chief's real interest was protecting his boss and therefore his own future. Dealing with Warshaw, these officials say, was an annoying distraction.
Motives aside, the fact that the chief's conduct has become an issue of controversy is evidence enough that he should have divorced himself entirely from the proceedings. Because he did not, his actions have raised questions about the independence of both the investigation and his own department.
Within 48 hours of Howard Gary's agreeing to become a government informant, FBI agents were planting hidden microphones and video cameras in his Biscayne Boulevard office. His first priority was to help secure the case against Dawkins. Gary arranged for the Miami city commissioner to come to his office on July 5 to pick up his second Unisys payment -- $75,000. Dawkins stuffed $5000 into his pocket and told Gary to invest the remaining $70,000. From that moment, Dawkins's fate was sealed.
Now it was time for Gary to turn his attention to James Burke. The timing couldn't have been better. Less than a month before he was questioned by the FBI, Gary had met with Burke, Grigsby, and Hardemon in Orlando. Burke has previously told New Times that the purpose of the meeting was to convince Gary and Grigsby they should work together for the betterment of the black community. The two men had long been bitter rivals in the bond business, Burke explained, and it wasn't healthy for them to continue their feud. As a sign of their newfound good will, Burke added, Grigsby had agreed to include Gary's firm in a bond-refinancing deal for the county's waste-recycling plant.
Gary, however, contradicts that version of events. He claims Burke demanded a $100,000 kickback for arranging the deal with Grigsby, a form of retribution for Gary's having backed Burke's opponent Victor Curry in their 1993 commission race. "I supported Reverend Curry and Jimmy Burke won," Gary says. "And because I supported Curry, Burke said that I would have to pay to play. He said, 'I'm in power now and I've got the power to keep you from doing bond business in Dade County.'"
But why didn't Gary report Burke's extortion attempt in June? Why did he wait until he was caught up in the city's Unisys scandal before telling the FBI?"I had never been extorted before," he offers, "and when I was approached by Burke, I was stunned. I was faced with the prospect of being excluded from doing business and not being able to meet payroll and provide for my family if I called his bluff." He contends he was still trying to figure out what to do when he was questioned by the FBI. "Burke was elected to serve the needs of the black community and its businesses," Gary says, "but instead he's used his position to line his pockets."
Burke's attorney Fred Schwartz calls Gary's account fanciful. "I think the evidence, if this matter ever gets to a trial, will show that Howard Gary was not the extortee but the extorter," Schwartz says. "He is not someone who is the victim of illegal activities by Commissioner Burke and Calvin Grigsby or anyone else.
"Ask anyone and they will tell you that Gary has always acted as if he expected to be in virtually every bond deal in Dade County," he adds, "that he alone was the black representative in bonds."
Counters Gary: "If Commissioner Burke did not do anything wrong, then he doesn't have anything to worry about."
Given Gary's personality and background, it is difficult to imagine that he would be easily intimidated or bullied into breaking the law -- whether by Surana in the Unisys case or Burke in the recycling-plant bond deal.
Gary's life has been defined by unwavering independence and self-confidence. He boasts of drinking from a segregated "whites only" water fountain as a child. In 1983, while city manager, he branded president Ronald Reagan a racist, even though he knew it would infuriate Miami's Cuban community. In 1984 he telephoned Ken Harms, the city's chief of police, at 3:00 a.m. to fire him for insubordination. In 1994 he came to believe he had been cheated in a bond deal by the venerable Wall Street firm Smith Barney, so he took the company to court and won a million dollars. Along the way Gary earned a first-degree black belt in tae kwon do.
It would also take a fairly resolute personality to work undercover for two months, as Gary did. Throughout July and August he regularly met with Burke to discuss details of the recycling-plant bond deal. They even traveled together to the Bahamas, reportedly to set up an offshore bank account for handling anticipated kickbacks. Gary's involvement culminated in an August trip with Burke to San Francisco, where they met with Grigsby.
In what will undoubtedly be the highlight of the federal government's case against Burke and Grigsby, the two men had dinner with Gary in his hotel suite. While dining on grilled salmon, the three allegedly talked about a $300,000 kickback from Grigsby to Burke, as well as a $100,000 payoff from Gary to Burke. Unfortunately for Grigsby and Burke, Gary's hotel room, like his Miami office, had been wired with microphones and video cameras by the FBI.
Burke argues that the conversations in San Francisco were manipulated by Gary. He told the Miami Herald last month that some of the discussions he might have had with Gary regarding money were in the context of their personal friendship and were not related to the bond business. "If someone was wearing a wire, things that you say as friends can seem to be something odious," Burke said. "He helped me out in a number of ways. It was things that only friends would do for each other, like, 'I am in a jam until the end of the month, can you help me out?' On tape it could be interpreted differently, but I knew what it meant."
Says Gary: "We were never friends."
Gary also denies he guided the conversations in San Francisco: "I can understand Jimmy saying everything he's been saying -- he's trying to make himself appear innocent to the public. [Entrapment] is his only defense because he was caught red-handed. But if I did all of the orchestrating, how is he going to explain him and Calvin coming up with the idea of asking the county for an additional $600,000 structuring fee at the last minute?" According to Gary, Burke and Grigsby concocted the idea of charging the county an additional $600,000 on top of the million-dollar fee Grigsby was due to receive in the recycling-plant bond deal. The two men were so excited by their plan they called County Manager Armando Vidal from Grigsby's office. Vidal and his staff were dumbfounded by the request, but after Burke vouched for its necessity, the manager said he would be willing to consider it, provided Grigsby could produce the proper documentation.
Gary says he knew the fee was not necessary. Its only purpose was to "put more money in Jimmy's and Calvin's pockets."
While Gary was in San Francisco, Operation Greenpalm was coming apart in Miami. Federal agents had been operating three distinct branches of the investigation. The first involved Surana, Dawkins, Gary, and the Unisys computer contract. By the end of August that case was fully developed. The second branch concentrated on Cesar Odio and Jorge de Cardenas and their links to the city's Cigna insurance contract. With Surana's help, federal authorities had gathered a fair amount of evidence against the two men but were looking for more. The third branch centered on Burke, Grigsby, Hardemon, and the recycling bond deal. In late August that case was still in its infancy.
In a probe such as Greenpalm, experts say, secrecy is critical to success. And secrecy is jeopardized each time investigators try to turn a suspect into an informant. If the suspect refuses to cooperate, there is nothing to stop him from telling the world an investigation is underway. But the use of informants is often the only means by which a case can be developed.
The government first set its sights on Surana, and in March confronted him with the mountain of evidence it had gathered against him. He agreed to cooperate. Next came Gary, who was quietly interviewed by the FBI in July. The next effort to recruit an informant backfired, however. On Monday, August 26, the FBI and the U.S. Attorney's Office approached Jorge de Cardenas in hopes he could help them gather enough evidence to guarantee a conviction against Odio.
According to sources close to the investigation, the likelihood of de Cardenas cooperating had been a matter of debate. "There was a lot of infighting about that," says one source. De Cardenas and Odio, after all, were lifelong friends. Authorities also discussed the so-called Cuban factor -- a combination of pride and machismo that holds it is better to go to jail than to betray a friend.
During de Cardenas's meeting with federal agents, they told him he had one option available if he wanted to avoid going to prison for a very long time: Help the government convict Odio. De Cardenas agreed, but according to court documents he left the Monday meeting and promptly warned Odio that the FBI was after them. The feds had gambled and lost.
Officials say that when Surana realized Odio was aware of the investigation, he panicked and abruptly quit his $110,000-a-year job. Surana's resignation on Friday, August 30 -- just a week before the city commission's budget hearings -- came as a complete surprise. His departure prompted a storm of rumors around city hall. The investigation was in a free fall.
A week later, on Friday, September 6, the Miami Herald published a front-page story under the headline "Bribery Probe Targets Odio and Dawkins." Quoting anonymous but very accurate sources, the newspaper outlined both the Unisys and the Cigna corruption investigations. The article, by reporters Manny Garcia and Tom Dubocq, stated that an unnamed county commissioner was under investigation as well.
In the days that followed, the Herald, thanks to its anonymous sources, published one revelation after another, leading to a September 20 story that exposed Howard Gary's role as a government informant and identified James Burke as the county commissioner under investigation. By that time, though, Gary's usefulness had already been destroyed.
"It is a fact that the activity in this case stopped with the leaks," says a source familiar with the investigation. "I just hope that whoever leaked those stories understands the damage they caused."
Unlike the City of Miami case, which began with Surana and Dawkins and expanded to ensnare Odio and de Cardenas, the Dade County case never had the opportunity to grow beyond Burke, Grigsby, and Hardemon. Prosecutors made a frantic attempt after the investigation was publicized to meet separately with Burke, Grigsby, and Hardemon, but by then they had all hired attorneys and refused to cooperate.
As another consequence of the investigation's premature end, prosecutors were unable to collect as much evidence against Odio as they had wanted. In fact, they have only a single instance in which Odio allegedly accepted money from de Cardenas, and the evidence of that exchange is merely a conversation between Odio and Surana, in which the two men appear to talk about the payoff. By comparison, the evidence against Dawkins was devastating: two clear instances of him accepting money, $25,000 from Surana, and $75,000 from Gary, captured on videotape at his office.
Acting U.S. Attorney William Keefer defends the actions taken by his office and the FBI. "I've been involved in a lot of public-corruption investigations," he says, "and most of them that are any good are going to have a few mistakes, missteps, healthy rivalries, and interagency tensions. In fact, I have never been in one that didn't. But this investigation had far fewer than most. And I think what made this case remarkable was the extraordinary level of cooperation between our office and the FBI.
"You always want more time in every covert operation," Keefer adds, noting that the use of cooperating witnesses is always risky. "You are on borrowed time and it is just a question of when your operation will be revealed. The only question we are arguing about now is whether it could have been more successful. And I like those kinds of arguments."
Not all federal authorities are as pleased as Keefer. "This entire case has ruined my relationship with the media in this district," complains Wilfredo Fernandez, spokesman for the U.S. Attorney's Office. "Everyone believed that I was responsible for leaking those stories to the Miami Herald. I would get other reporters screaming and cursing at me, accusing me of playing favorites with the Herald. I've never seen anything like it before." Fernandez categorically denies he released information to the Herald or anyone else.
Fred Schwartz, James Burke's attorney, was a state prosecutor for five years and a federal prosecutor for ten before entering private practice. In all that time, he says, he has never seen a case produce so many damaging leaks. "When I was a prosecutor we always tried to prevent leaks, but it is difficult because in a case like this too many people are aware of the facts," he says. "I also know the prosecutors in this case and I know them all to be honorable people and do not believe they were responsible. But it is clear to me that someone connected to the government wanted to convict Commissioner Burke in the newspaper. Ask anyone in the street who James Burke is and they will say he is the commissioner who was taking bribes. And he hasn't even been charged yet."
Though he won't come right out and say it, Schwartz seems to cast an accusing look toward the FBI. "This appears to be the type of organized leaking that we saw from the FBI in the Richard Jewell case in Atlanta," he says. "And I think this type of action is repugnant to our legal system."
Whatever their personal animosities, Howard Gary and James Burke now share a common sentiment: They both believe they've been beaten up in the press. "The surprising aspect of this to me was the hypocrisy of the Miami Herald," says Gary's attorney Peter Raben. "Howard Gary agreed to assist the government in a bond-corruption probe and was labeled 'Howard the Rat' by the Miami Herald. With publicity like that, this town could look forward to a long future of corruption. If the Herald was truly anti-crime, Howard would have been lionized. Instead they threw him to the lions."
Whether Gary should be canonized or vilified will perhaps be easier to judge when the cases he helped build come to trial. The fact remains, however, that he did not report to authorities the initial extortion plot conceived by Surana and Dawkins, nor their later request that he help them transfer ill-gotten money through offshore bank accounts. He also failed to immediately report Burke's alleged extortion attempt against him. At best he demonstrated uncharacteristic weakness when faced with pressure from men who had influence over his economic well-being. At worst he revealed his willingness to commit crimes for financial gain.
In the past few weeks, Gary's business has suffered as a result of his role in Operation Greenpalm. His firm was removed from two bond deals because of fears that his participation might scare off potential investors. He also reports that he ended up losing between $70,000 and $80,000 in the recycling-plant bond deal with Grigsby. He says if it hadn't been for the government's sting operation, he would have made money on that transaction. His attorney says the government will consider reimbursing him for his losses.
Assuming he isn't sent to prison, Gary says he has no intention of leaving Miami. This is his home and he is here to stay. "Basically, I wanted to get my side of the story out," he explains. "Some people believe that I've been cooperating for two years and that I've been asked to cooperate against everybody I know. My involvement has been limited to three people and three people only.