By Michael E. Miller
By Allie Conti
By David Villano
By Jose D. Duran
By Michael E. Miller
By Allie Conti
By Kyle Swenson
By Luther Campbell
Strolling into the press room at county hall last week, the lobbyist had a news flash. "It's going to be Thursday," he said confidently. "I just talked to Tallahassee."
The two Miami Herald reporters in the room stared back without saying a word. No one needed to translate this information. We all knew he was referring to the possible indictment of Miami City Commissioner Art Teele. "It was $200,000," the lobbyist added. This was the amount Teele supposedly pocketed as a bribe.
In the days leading up to last week's Herald story revealing the federal investigation of Teele, both city and county hall were overrun with rumors of Teele's imminent demise. On my way to the county commission meeting the day before the Herald article, four people stopped me between the parking lot and the commission chambers to share gossip. "I hear he took $300,000 from the stevedores," one supposed insider whispered. Another had this tip: Teele had fled the country and was hiding out somewhere in the Bahamas.
Thursday came and went without Teele being led away in handcuffs. The amount of money involved was actually $90,000. And the commissioner was still in Miami.
Inaccurate rumors notwithstanding, Art Teele is in serious trouble. In recent months federal agents pieced together a 1993 transaction in which Fiscal Operations, the company that operates the Port of Miami's gantry cranes, wired $85,000 to a bank in Puerto Rico. That money, as well as an additional $5000, was then sent to the office of Teele's Miami lawyer. Teele denies knowing that the cash -- which was described as a loan -- came from Fiscal Operations and its owner Calvin Grigsby, the San Francisco investment banker who is under indictment for allegedly bribing then-County Commissioner James Burke.
Anticipating that a Teele indictment would create a vacancy on the city commission, potential candidates last week were scrambling to line up support, most notably Pierre Rutledge, whom Teele defeated last fall. That election marked an extraordinary comeback for Teele. After he lost the county mayor's race to Alex Penelas in 1996, many predicted he would leave South Florida. But Teele not only won a city commission seat last November, he quickly established himself as that body's de facto leader, providing one of the few voices of clarity during Xavier Suarez's chaotic 111-day tenure. He was the only city politician with enough backbone to consistently support the unpopular but necessary fire-rescue fee. Indeed his future once again seemed boundless. Teele, a black Republican, was positioning himself to run for Congress in the next few years, depending on when U.S. Rep. Carrie Meek decided to retire.
Today, however, the question isn't whether he's headed for Washington but whether he's headed for prison. There is little doubt that Arthur E. Teele, Jr., will be indicted.
The nature of the charges, and the timing, is still being considered by the U.S. Attorney's Office. According to former federal prosecutors interviewed for this story, the charges could be a combination of any of the following: theft of government funds, wire fraud, or conspiracy to commit wire fraud.
Prosecutors will have to make a decision in the next two weeks if they want to charge Teele with one particular count of wire fraud. According to sources familiar with the facts in the case, the money was wired to Teele on May 12, 1993. The statute of limitations on wire fraud is five years, which means prosecutors would have to indict Teele by May 12 of this year.
One possible scenario: Prosecutors will indict Teele; former seaport director Carmen Lunetta, who engineered the loan; and Grigsby by May 12 and then follow up a month or two later with a more comprehensive indictment. The superseding indictment would include not only additional charges against Teele (such as conspiracy to commit wire fraud) but all the other counts prosecutors have been quietly developing against Lunetta and Grigsby during a two-year investigation of the port's finances.
By indicting Teele within the next two weeks, prosecutors would force Governor Chiles to remove the commissioner from office immediately -- a goal in any public corruption prosecution. It would also allow them an opportunity to make public some of their evidence in order to counter the criticism being expressed in the black community that the Teele investigation is racially motivated.
An indictment may be inevitable, but a conviction is not.
Certain facts will be impossible to dispute. Teele did receive $90,000 in May 1993, $85,000 of which came from Fiscal Operations and Grigsby. And although it was described as a six-month loan, it still has not been repaid.
The specific events in this case unfolded in early 1993 but have their roots in Teele's tortured personal financial history. In 1985 he bought a small Brooklyn company called Applied Electrical Technologies Corporation (AETC), which rebuilt electric subway motors. Teele purchased the company for nearly three million dollars -- paying $1.4 million in cash and assuming more than a million dollars in company debt. Teele borrowed money from several individuals, including William A. Patch, a former army brigadier general who served with Teele in Korea. Patch provided $150,000.
Teele also borrowed $380,000 from a German tycoon, Hans Kugler. As New Times first reported five years ago, Teele and Kugler met on a Concorde flight from Paris to New York. Teele had to personally guarantee both the Kugler and Patch loans if AETC failed.
And fail it did.
The company filed for bankruptcy protection in 1990, but that did not prevent Patch and Kugler from hiring attorneys to go after Teele to recover their money. In early 1993 Kugler sued the county commissioner. That same year Teele's first wife Celestra filed an affidavit with the Alabama courts claiming that Teele was not providing adequate financial support for their son. Celestra also claimed that Teele still owed her more than $200,000 from their 1984 divorce settlement.
This financial pressure led Teele to look for a quick infusion of cash. According to sources familiar with the current case, Teele spoke to several people in 1993 about his need for a loan, including Lunetta and an attorney by the name of John LaCapra, who represents the Florida Ports Council, among other maritime clients.
Lunetta is alleged to have arranged for Fiscal Operations to transfer $85,000 from one of its seaport accounts to a law firm in Puerto Rico, which in turn sent the money to Teele in Miami. Sources familiar with the case say that in order to hide the unsavory nature of this transaction, the money was disguised as a loan, with LaCapra serving as trustee for an unnamed lender. LaCapra's attorney has said he did this as a favor to Lunetta, whom he has known for years.
LaCapra, who has also known Teele for more than ten years, has been cooperating with federal agents in building the indictment against his old friends, filling in the blanks from the incomplete trail of bank records and wire transfers. But even with his help, the most difficult aspect of the case will be proving who knew what when.
It is entirely possible, sources familiar with the case say, that Teele did not know the money was coming from Fiscal Operations and Calvin Grigsby. It is also possible, they contend, that Grigsby had no idea the money Lunetta asked him to send to Puerto Rico was going to wind up in Teele's hands.
And for anyone who has watched Teele and Grigsby over the years, the possibility that each was unaware of the other's involvement actually makes sense. The men were often adversaries, and on several occasions Teele, as county commission chairman, attempted to scuttle projects Grigsby brought before the commission. In fact, one of the reasons Grigsby allegedly began bribing Burke was to gain an ally to counter Teele's evident animus.
It is hard to imagine that Grigsby would ever knowingly do a favor for Teele, or that Teele would place himself in the position of being beholden to Grigsby. Even LaCapra's attorney has said that although his client acted as the loan's front man, he didn't know it was coming from Grigsby.
The only person who indisputably had complete knowledge of all aspects of the transaction was Carmen Lunetta, who built a fiefdom at the Port of Miami based on his willingness to do favors for powerful people. Such favors included soliciting campaign contributions on behalf of elected officials, finding jobs at the port for their relatives, and funneling money to their pet projects and charities. In return Lunetta wanted just one thing -- to be left alone to run the port as he saw fit, without supervision or oversight.
Teele is expected to defend himself by arguing that if he didn't know the money was coming from Grigsby and Fiscal Operations, it was impossible for him to know he was doing anything improper or illegal. That defense might work on a basic count of wire fraud. But other charges are possible that would not hinge on proving Teele knew the exact source of the money.
For instance, former federal prosecutors say that a charge of conspiracy to commit wire fraud does not require all participants in the conspiracy to know all the details. A jury would merely have to believe that the various players were acting as part of a scheme to acquire money through false pretenses.
Another wire fraud count in an indictment could arise from Teele having filed false financial disclosure forms in Tallahassee. In his 1994 disclosure forms, Teele did not separately list the loan in which LaCapra was acting as a trustee. Teele may try to counter the accusation that he did not report the loan by contending he believed the source of the $90,000 he received was a long-time Haitian friend named Claude Douyon, who had often loaned him money in the past. Rather than listing the $90,000 loan as distinct from the other Douyon loans that were still outstanding, Teele could argue, he lumped them all together. In 1994 he listed total debts to Douyon of $170,000.
But a jury may find this argument difficult to believe. They may wonder why Teele would negotiate one $90,000 loan from Douyon using LaCapra as a trustee when he'd never handled any of Douyon's other loans that way. (In 1996 Teele told me that during the previous thirteen years Douyon had loaned him approximately $1.5 million. According to Teele, Douyon, a former member of the Jean-Claude Duvalier government, would provide financial assistance to him whenever it was needed -- in blocks of $100,000 or $200,000.)
After receiving the $90,000 in May 1993, Teele signed a document agreeing to repay the loan within six months. Five years later he still hasn't paid back the money. Taken by itself, this might be damning evidence, as it could lead the jury to suspect it wasn't a loan at all but rather a direct payoff. Teele, however, has a history of not paying back his loans on time. As Teele noted to me in 1996, he has always been late in paying his debts -- but he does pay them.
Teele is also enduring an investigation by the Internal Revenue Service, which has been scrutinizing his finances for the past two years and has been sorting through the bankruptcy of Applied Electrical Technologies Corporation. According to sources familiar with the probe, agents are also examining allegations that Teele may have failed to report income from business dealings in Italy and in Haiti.
Teele was well aware of the IRS investigation, which explains why his current attorney is David Garvin, who is best-known as a criminal tax attorney. Garvin has been representing Teele on IRS matters for the past eighteen months. Teele learned of the investigation into the $90,000 loan only two weeks ago, when his attorney received a letter from the U.S. Attorney's Office notifying him that the commissioner had become a target in the seaport investigation.
Within 48 hours the rumors were circulating, and political insiders had begun talking about Teele in the past tense.