Flying High

Before heading off to Washington for confirmation as Secretary of the Air Force, State Sen. Daryl Jones got involved in one last bond deal. The money was very good, but the backwash could be very bad.

Race may also have been a factor. Both Craig James and Daryl Jones are black, and several of the county commission's black members seemed to be offended that the Manager's Finance Committee would recommend skipping over a black-owned firm, explicitly questioning its abilities. "There was a sense that it was time to make up for a series of perceived slights that may have occurred in the past," says one county official who asked not to be named, "and Douglas James was in the right place at the right time. But certainly Daryl helped them."

As senior manager for the transaction, Douglas James Securities would coordinate the sale of the bonds from its cramped and drab offices on Washington Avenue on South Beach, across the street from the nightclub Glam Slam. The firm itself would sell the largest share of the bonds, while other companies would be responsible for a smaller percentage. After several weeks of preparation the bond offering opened on October 1; by the end of the day all $200 million had been sold.

County officials declared the transaction an unqualified success. James and Jones were understandably smug. "I think we proved our worth on that one," Jones says today. "We were completely vindicated."

The firm's commissions for the one-day sale totalled approximately $300,000.
Jones's cut: $90,000.
"I was getting paid for the same reason that everyone else was getting paid in that deal," Jones notes. "I probably worked harder on that deal than any other." He makes no apologies for his windfall or for the perception -- held by some in the bond business -- that he may have traded on his name and political office for his own benefit. Throughout his career in public service, he points out, he and his family have had to make financial sacrifices: "I don't know a single investment banker with a net worth of less than a million dollars -- other than me."

A $90,000 payday may not elevate Jones to the rarefied heights of wealth enjoyed by other investment bankers, but it boosted his 1997 bottom line significantly. It may also cost him dearly.

New Times has learned that the Securities and Exchange Commission (SEC) has initiated a wide-ranging "review" of the $200 million airport bond offering. In a detailed three-page letter dated February 4, 1998, John Mattimore, assistant regional director of the SEC, asked Craig James to provide copies of all documents in his possession relating to the deal. The sweeping request covers everything from internal memoranda and audits to bank statements and wire transfers. "This inquiry is confidential and should not be construed as an indication by the commission or its staff that any violation of law has occurred," Mattimore's letter stated. (Contacted last week at the Miami office of the SEC, Mattimore said he could not comment.)

James, who provided New Times with a copy of the SEC letter, stresses that he considers the review routine and notes that he has received similar requests in the past when managing bond deals.

Daryl Jones says the SEC review may have been prompted, at least in part, by complaints to the federal agency from officials at Bear Stearns who, he suspects, are still angry at not being selected. "They are just out to get us a little bit," he claims, attributing their alleged actions to "sour grapes."

But William Hayden, senior managing director for Bear Stearns in New York, says he knows nothing about any SEC review and denies that his firm was "out to get" Douglas James Securities. As far as he is concerned, he says, once the county commission made its selection the issue was closed.

The timing of an SEC review, and the questions it raises, could not be worse for Jones. In the coming weeks, the Senate Armed Services Committee is scheduled to take up his nomination as Secretary of the Air Force. Senators are expected to question him closely on a range of issues, from base closings to military readiness to his own record as a fighter pilot. Jones's answers will be weighed carefully before the full Senate is given an opportunity to confirm his appointment as the top civilian administrator responsible for overseeing a $62 billion budget and the welfare of more than 600,000 men and women around the world, including active-duty personnel, reservists, and civilian employees.

Regardless of the significance of an SEC review, Jones's own description of his efforts last year on behalf of Douglas James Securities raises serious questions about the propriety of the transaction. Financial experts familiar with the bond industry's rules say that if Jones was retained solely for the purpose of lobbying, and if that fact was not properly disclosed, the firm may have violated Florida statutes and federal regulations governing bond sales.

During an hourlong interview on February 16, Jones recounted that when he was hired to lobby on behalf of Douglas James Securities, he did not consider himself to be a regular employee of the company. "I'm a consultant," Jones asserted emphatically. "I'm not an employee, I'm a consultant." He repeated the statement several times, noting that his agreement with James guaranteed him a flat fee if he was successful in persuading county commissioners to award the $200 million deal to the firm.

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