The Un-Teflon Don

After years of popularity, a financial scandal threatens the reign of City Manager Donald Warshaw

Twice a year members of the Miami Police Relief and Pension Fund (MPRPF) convene at the ultraswanky Miami Palm Restaurant in Bay Harbor Islands. They dine on lobster that sells for $80 and up and filet mignon at $29 a pop, and swig fine wine that goes for as much as $400. Members congratulate one another for successfully managing police officers' money. The group sometimes numbers around twenty and bills can escalate to the $2500 range.

Everything is charged to the pension fund, which is supposed to keep law enforcement officers comfortable in their dotage.

Just prior to one such gathering in December 1998, the retirement fund's board made a $5800 withdrawal. The money was used to buy a Rolex Submariner watch for retiring chairman and former Police Chief Donald Warshaw. The ex-cop had served as a volunteer with the fund for seventeen years. These days Warshaw, who became city manager in September 1998, frequently wears the eighteen-karat gold chronometer with a shiny blue face to city commission meetings.

Some officers, fed up with the fund's overindulgence, have attacked the expensive timepiece and big spending at the restaurant. "When we retire from bumping and grinding in the trenches, are we going to get a Rolex watch?" asks a cop who declined to give his name.

Perhaps worse, Warshaw failed to list the gift on his 1998 financial disclosure form. Florida law requires all elected officials and many upper-echelon administrators to submit a document that details their sources of income and gifts worth more than $100. The state ethics commission considers a case if a complaint is filed. Punishment for nondisclosure ranges from a public reprimand to a monetary fine.

Warshaw says he pondered disclosing the watch, but assumed it was unnecessary. "The gift was given to me by cops. It was done in the open," he explains. "They gave me the gift because of my years of service on the board."

The attacks are only the latest in a string of accusations against the city manager. Warshaw is already under federal scrutiny for his questionable use of credit cards issued by the fund and another nonprofit organization linked to the City of Miami, Do the Right Thing. Indeed before committing suicide this past July, accountant Ronald Stern claimed the manager had charged Florida Panthers hockey tickets worth $16,775 on the pension fund's American Express platinum credit card. Warshaw claims he repaid the fund.

The uproar surrounding Warshaw's spending could finally undo the city manager. He's lost the support of all five city commissioners, who feel ignored by the administration. "It is very clear that the commission cannot direct the management," says Art Teele. "The management listens to [Mayor Joe Carollo] more than they listen to us."

In September the police rank and file complained at a Fraternal Order of Police union meeting, attended by approximately 100 officers, about Warshaw's spending.

Warshaw's protestations of innocence and ignorance have pleased few. Even Carollo, the manager's strongest supporter, recently retreated slightly. On September 24 the mayor publicly called on Warshaw to answer lingering questions and provide supporting documentation. After the manager gave the mayor some canceled personal checks and a letter of explanation, Carollo announced he was satisfied.

In a September 27 missive, Warshaw wrote: "I would have to acknowledge with all candor that some of the bookkeeping practices that have prompted recent inquiries could have been handled differently and better. There has been no attempt at all to have any organization pay a penny of any personal expense and the facts compellingly refute any such notion."

Many of Warshaw's problems trace to his acquaintance with Stern. The accountant and the manager met in 1990 after the MPRPF board hired Stern to run the pension fund, one of two used by city officers; it pays injury and death benefits, and supplements standard police-retirement stipends. It is backed by a one percent tax on all car insurance policies written in Miami.

Stern and Warshaw developed a friendship and attended many sporting events together. Stern also managed the finances for Do the Right Thing, a city-funded program started in 1990 to recognize youngsters for outstanding deeds. Warshaw was one of the founders and supervisors.

Stern began embezzling from the two funds in 1996, according to court records. He deposited the stolen cash into an investment account he created called the Florida Fund. Then he solicited clients by offering high returns that were detailed in bogus reports. He took a total of $1.3 million before the scheme unraveled in January 1999. After Warshaw and the cops pressured Stern to pay back the money, he returned $800,000. Then he defaulted. This past May 12 the MPRPF sued Stern in Miami-Dade Circuit Court and alerted the FBI. New Timesfirst reported the lawsuit in a Metro story, "Cleaning Out the Cops," on June 3, 1999.

The media attention, along with inquiries by Florida Fund customers, apparently led Stern to kill himself. And his suicide notes led to further scrutiny of Warshaw. "Everybody feels let down," says an anonymous uniformed cop. "Now we are not sure what happened."

It would appear that Carollo's statement of confidence in Warshaw has not stopped the erosion of the manager's political support. "There are still a lot of questions. What the mayor said means nothing," comments a commissioner who asked not to be identified. "If [Carollo] sees a poll that tells him to fire Warshaw, he would do it."

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