By Michael E. Miller
By Ryan Yousefi
By Kyle Munzenrieder
By Sabrina Rodriguez
By Michael E. Miller
By Carlos Suarez De Jesus
By Luther Campbell
By Kyle Munzenrieder
Here's a riddle.
Why is the criminal investigation of a little-known Broward-based insurance company by the statewide prosecutor in Tallahassee causing so much anxiety in the offices of Dade County Mayor Alex Penelas?
One reason: The target of the investigation, David Sanz, was a significant contributor to Penelas's 1996 mayoral campaign. Campaign finance reports reveal that Sanz, through various companies, funneled $6000 to Penelas's coffers -- a tidy sum considering that Sanz has never met Penelas, does no business in Dade County, and couldn't have cared less who won the election. A reasonable person might question why he made those contributions.
And therein lies the concern, because Sanz is now alleging that Penelas's chief of staff, Brian May, solicited contributions to the mayor's campaign while serving as deputy chief of staff to Florida Insurance Commissioner Bill Nelson.
Sanz owns Gulf Atlantic Management Group, a company that managed a private workers' compensation fund known by the acronym FESA (Florida Employers Safety Association). In the late Eighties and early Nineties, FESA provided workers' comp coverage for 3400 self-insured businesses with nearly 60,000 employees.
In 1996, however, the FESA fund ran into financial trouble; fund officials projected losses of more than seven million dollars. Throughout the spring and summer of that year, Sanz tried to negotiate a recovery strategy, known as an assessment plan, with the state Department of Insurance.
At the time, May was pulling double duty -- running Penelas's mayoral campaign and working for Nelson in Tallahassee. For appearance's sake, May took an unpaid leave of absence from the insurance commissioner's office during the last few months of the campaign, although he maintained his title as deputy chief of staff as well as his Tallahassee office.
Two months ago Sanz's Miami attorney, Richard Sharpstein, informed the statewide prosecutor investigating his client that in 1996 Brian May solicited campaign contributions from Sanz. In return, May allegedly promised that he would speed along Sanz's recovery plan and thereby keep his business alive. (The independent statewide prosecutor's office specializes in complex fraud cases that cross county lines.)
David Sutton, the assistant statewide prosecutor who is reviewing the allegations that Sanz misappropriated $3.5 million from FESA, acknowledges that Sharpstein has accused May of wrongdoing. "The allegations against Brian May are obviously something that are going to have to be dealt with," Sutton confirms. He passed along the accusations to his superiors and says it's up to them to decide how to proceed. "An investigation will be done by the appropriate agency at the appropriate time," Sutton adds. "Nobody is going to try to not have it investigated."
May denies asking Sanz to donate to the Penelas campaign. "This is a lot of political mudslinging," he contends. "I'm an easy target for this stuff." Nelson is up for re-election this year, May notes, and Sanz is supporting his opponent, former state representative Tim Ireland. "One way to get at Nelson is to come at me," he argues.
May believes Sanz is fabricating these allegations and threatening to embarrass as many people as possible in a desperate attempt to avoid prosecution if he is indicted. Don Pride, communications director for the Department of Insurance, agrees, asserting that Sanz's allegations are "an obvious ploy to get Bill Nelson to back off so Mr. Sanz can escape from his very serious legal problems."
During my initial interview with Sanz last month, he described his alleged conversation with May. "I got a phone call one afternoon," the 37-year-old businessman recalled, "and it was Brian on the phone and I said, 'Brian, what's going on?' And he said, 'Well, Dave, I heard you're having some difficulties getting your assessment plan approved.'
"And I said, 'You know, Brian, I really am. I just don't understand you people. It's like gridlock in your office. I can't get a yes, I can't get a no. I can't get an answer to any questions.'
"He said, 'Well, Dave, you know how things are. But I'll look into it for you.' And then he said, 'Well, look, the reason I'm calling is I'm raising some money for Alex Penelas.' He said, 'I'm trying to raise some money, and the insurance commissioner and I would consider it a personal favor if you could raise, let's say, $20,000, $25,000 for us.'
"And I said, 'You know, Brian, things are a little rough right now.' And he said, 'Well, I think if you could raise, let's say, $20,000 for Alex Penelas, I think we can get this plan moving for you.'"
Sanz did not remember the exact date of the call. Attorney Sharpstein, trying to piece together a chronology, believes May's call came after Sanz had already donated $6000 to Penelas's campaign. Sharpstein says Sanz made that donation at the urging of one of his Tallahassee lobbyists, Fred Baggett, an attorney with the Miami firm Greenberg Traurig.
Sharpstein claims the law firm squeezed its clients for Penelas in a transparent attempt to curry favor with the mayoral candidate. Sanz reluctantly complied and wrote $6000 worth of checks, which were turned in during a June 1996 fundraising event targeting insurance industry executives. The event was organized by former North Miami mayor Michael Colodny.
Sharpstein says that when Sanz was subsequently contacted by May directly and told that his company's future was now tied to his willingness to donate an additional sum to the Penelas campaign, Sanz refused. Shortly thereafter, Sharpstein alleges, the Department of Insurance broke off negotiations about the recovery plan, placed FESA under state control, and removed Sanz and his management company from the fund's daily operations.
"When David was solicited by Brian May for the Penelas campaign, it was at a crucial time, when the Department of Insurance was considering whether to accept his assessment plan," Sharpstein recounts. "And once David refused to pay, they pulled the rug out from under him, and [FESA] was forced into receivership. He becomes their enemy and they are now trying to indict him."
Evaluating David Sanz's credibility is difficult. Prior to his trouble with the FESA fund, he was portrayed in newspaper articles as a bold young visionary in the insurance industry. He is a member of the Broward Economic Development Council and on the board of directors of the Florida Education Foundation. In 1994 he gave $10,000 to a Miami City Ballet scholarship fund, and a year later "adopted" Pompano Beach Middle School, regularly donating items such as athletic equipment and uniforms.
Three years ago the Miami Herald published a flattering profile of Sanz, noting that he had begun his career in the insurance industry as a fraud investigator for an auto insurance company. "I got shot at, bitten by dogs, and chased," Sanz told the Herald. "I learned the tough side of the business. I found out later that I was hired because I was six-foot-three and a brown belt in judo. And at 230 pounds, they figured I could defend myself."
His current efforts to defend himself, however, inspire less confidence. Sanz can't remember important details about his alleged encounter with May, and at times he has contradicted himself. Initially Sanz told me he had donated $20,000 to the Penelas campaign. When informed that campaign records showed just $6000, he amended his statement, saying he had confused the number with contributions he'd made to Nelson's campaign for insurance commissioner in 1994.
Sanz's statement that Brian May tried to solicit an additional $20,000 from him is contradicted by one of his former attorneys, who says Sanz told him in 1996 that May was strong-arming his then-client for only $5000.
The one consistent aspect of Sanz's story is his assertion that Brian May used his position with the Department of Insurance to pressure him into donating to the Penelas campaign. And to Sanz's credit, there is corroboration.
The only thing Sanz and May agree on is that they first spoke to each other in 1994. May was running Nelson's statewide campaign for insurance commissioner and Sanz was interested in becoming more politically active. Fred Baggett, Sanz's Tallahassee lobbyist, told him that Nelson was probably going to win the race and that if he wanted to gain Nelson's ear, he had better donate to his campaign. Sanz claims he raised approximately $20,000 for Nelson, a figure Baggett confirmed during a recent deposition.
While Brian May was running Nelson's campaign, Sanz says he spoke to him regularly, and claims May instructed him how to get around state laws limiting campaign contributions to $500 per person. According to Sanz, May told him in 1994 that he could have his employees write checks to Nelson's campaign and then reimburse them. "Brian said you can always let them put it in their expense report or you can bonus it back to them," Sanz alleges. He now admits that "several thousand dollars" he donated to Nelson's 1994 campaign came from employees he later reimbursed.
Brian May adamantly denies this allegation. He says he never met Sanz during the Nelson campaign and talked to him only once on the phone. He insists he never solicited money from Sanz for Nelson's 1994 campaign, and certainly never instructed him how to circumvent state campaign finance laws. "Everything he is saying is absolutely not true," May says.
May acknowledges that after Nelson was elected, he did attend a private dinner with Sanz at Baggett's home in Tallahassee. In addition to May, Sanz, and Baggett, Insurance Commissioner Bill Nelson was present, along with another of Sanz's attorneys, Michael Lozoff.
At one point during the evening, Sanz, May, and Lozoff stepped outside to talk privately. According to both Lozoff and Sanz, May lamented that Nelson really didn't know much about the insurance industry and said that if Sanz had any issues or problems, he could contact May directly. From that point on, Sanz says, he talked to May about insurance industry issues. Which is why, Sanz believes, May felt comfortable enough in 1996 to call him directly about contributing to the Penelas campaign.
"I never spoke to Sanz about Penelas," May reiterates. Furthermore, he claims, he wasn't even involved in fundraising for Penelas. Sanz, he says, is lying. "I didn't hear David Sanz making these allegations two years ago," he adds, "when the FESA problem first broke."
And here is another reason that the mayor's office is concerned. Sanz apparently did report to several people May's alleged solicitation on behalf of Penelas. And in an odd and suspicious twist, the insurance commissioner's office has been trying to block at least one of those individuals from confirming Sanz's story.
This past March 30 Richard Sharpstein questioned Fred Baggett under oath. During the deposition -- which came as part of a civil lawsuit the state has filed against Sanz over his management of FESA -- Sharpstein asked Baggett if he had ever spoken to Sanz about Brian May's solicitation on behalf of the Penelas campaign. "I recall one instance that Mr. Sanz told me that he had had discussions about contributing to Alex Penelas's campaign, yes," Baggett replied.
"Was that with Brian May?" Sharpstein sought to confirm.
Attorneys for the Department of Insurance objected and ordered Baggett not to answer. Eventually, though, Sharpstein received the confirmation he needed. He asked Baggett if anyone "informed you that Brian May had solicited donations to the Penelas campaign?"
"Yes," Baggett responded.
"And who was that person?"
"David Sanz," Baggett said.
When Sharpstein pressed for details, attorneys for the insurance commissioner once again objected. Sharpstein says it is obvious that Nelson is trying to protect May. "I find it abhorrent and thoroughly offensive that Bill Nelson and the Department of Insurance do not want the public to know the truth about what happened," Sharpstein says. "Their refusal to let Baggett testify smacks of an agency that has something to hide."
Baggett did not return phone calls seeking his comment for this story. But Scott Keller, another Greenberg Traurig lobbyist hired by Sanz, says he doubts the truth of Sanz's allegations. "That is so far out of character for Brian," Keller says, who has known May for years. Despite Baggett's sworn deposition, Keller doesn't believe May would have contacted Sanz directly. "I'm pretty sure that didn't happen," he says.
Baggett wasn't the only person in whom Sanz confided regarding May's fundraising. Sanz also spoke to Miami attorney Michael Lozoff in 1996. "I got a call from David Sanz; he was very upset," Lozoff recalls. "He reported to me that he had received a call from Mr. May, and the way it was reported to me was that Mr. May hit him up for a significant contribution for Alex Penelas. It was $5000. I told him he shouldn't contribute and he said, 'You don't understand. Brian is putting me in a terrible spot. This guy is the assistant to the insurance commissioner and he could torpedo everything I've been doing.'
"He was very, very upset by this," Lozoff adds. "I said, 'David, you are absolutely right. It is totally inappropriate for him to call you and ask you for contributions under these circumstances. If I were you, I'd tell him to pound sand.' David continued to express his frustration and then that was it. We never talked about it again. I don't even know if he paid the money."
Since I began working on this story, a whisper campaign against Sanz has been launched by the mayor's office. Supporters of May and Penelas have been warned of this article's imminent publication and told that Sanz is a crook and a bit of a crackpot. Sanz's opponents claim that he is not respected in the insurance industry and that his allegations are not believable.
Of course, no one inside the Penelas camp was complaining about Sanz's character two years ago while they were cashing checks from him totaling $6000.
Sharpstein counters that Brian May has his own character flaws. After Penelas was elected, May resigned from the Department of Insurance to become the mayor's chief of staff. Sharpstein says that within the insurance industry, May's departure became known as the "Brian May double-fuck." The first bit of treachery, according to Sharpstein, came when May pressured lobbyists and executives in the insurance industry for contributions to Penelas's campaign and promised them they would always have a friend in the insurance commissioner's office. The second came when May left that office after Penelas's election.
So who is more believable, Sanz or May? The truth probably falls somewhere between Sanz's allegations and May's denials. Consider this scenario: May contacts Sanz and asks him to donate to the Penelas campaign. Whether he actually promises Sanz he would have FESA's assessment plan approved in return for the contribution or merely allows Sanz to jump to that conclusion will probably remain a mystery.
Either way, Sanz doesn't know what to do. He feels threatened and complains to Lozoff and Baggett. Eventually he decides he has no choice but to write checks for $6000. His lobbyists at Greenberg Traurig, as well as Michael Colodny, collect the checks and reap the credit for raising the funds.
Four months later, after Penelas is elected and May has left the insurance commissioner's office, the state rejects Sanz's recovery plan. What can Sanz do? He certainly can't complain to anyone that May promised to approve his proposal in return for the Penelas contribution; Sanz would be confessing to a criminal conspiracy. So instead he twists things into the story he's telling today: He gave the $6000 freely and then afterward May tries to extract an additional $20,000. He refuses, and the insurance commissioner's office punishes him by taking over FESA.
Who knows? Maybe it happened that way. One thing is clear: Something sleazy was going on. Perhaps an investigation will uncover it -- an investigation conducted at the appropriate time and by the appropriate agency. Whenever and whoever that is.