Revenge of the Penny Tax

FIU and MDCC foundations draw new scrutiny from state investigators

Miami-Dade State Attorney Katherine Fernandez Rundle has asked the governor to appoint a special prosecutor to review allegations that the presidents of Florida International University and Miami-Dade Community College violated the state's campaign finance laws during last year's failed effort to raise the sales tax by a penny in order to create a dedicated source of funding for transportation issues.

The investigation into the so-called Transit Not Tolls campaign has been simmering for months and centers on donations made to the campaign by the nonprofit foundations for FIU and MDCC. The FIU Foundation contributed $299,000, while the MDCC Foundation contributed $150,000. Investigators are examining whether individuals and corporations were encouraged to donate money to the foundations, knowing that their contributions were going to be passed along to the Transit Not Tolls campaign. Such encouragement would almost certainly be illegal, violating the state law against using a third party to donate to a political campaign.

The state's campaign finance laws carry both civil and criminal penalties. Neither FIU president Modesto “Mitch” Maidique nor MDCC president Eduardo Padron returned phone calls seeking their comment.

State Rep. Annie Betancourt continues to question last year's penny-sales-tax campaign orchestrated by Mayor Alex Penelas
State Rep. Annie Betancourt continues to question last year's penny-sales-tax campaign orchestrated by Mayor Alex Penelas

“I believe that a conflict exists as to this office carrying out its prosecutorial duties,” Rundle wrote in the July 28 letter to Gov. Jeb Bush. “Therefore to avoid the appearance of impropriety, I am requesting that an executive assignment be made regarding this matter.” In an interview last week, Rundle explained that she believed she had to recuse her office from the case because she works closely with Maidique on FIU's efforts to establish its own law school.

Rundle told me she first became aware of the allegations several months ago and that the Florida Department of Law Enforcement was leading the investigation with help from one of the prosecutors in her office. At the time she considered the examination of the allegations to be merely an “inquiry,” and so she did not feel obliged to recuse herself. In recent weeks, however, Rundle said it became clear that enough questions and concerns had been raised regarding the donations to the campaign to warrant a formal investigation. Governor Bush is expected to assign the case to another State Attorney's Office sometime this week.

The revelation that donations to Transit Not Tolls are being investigated comes at a particularly inopportune moment for Miami-Dade Mayor Alex Penelas, who is entering the final weeks of his re-election campaign. Penelas was the architect of the Transit Not Tolls campaign, orchestrating what already was considered a sleazy and misleading operation. Penelas pushed to have the election held on a Thursday in the dead of summer in an effort to keep voter turnout low. Even the name of the campaign -- Transit Not Tolls -- was deceptive, since the majority of tollbooths in the county would remain in place even if the sales-tax increase passed.

Despite these tactics (some would argue it was because of them) the proposed sales-tax increase was soundly defeated. And in the end, the only people who benefited from the campaign were cronies of the mayor, who received hundreds of thousands of dollars from campaign coffers.

BVK Meka, a firm owned by Penelas's friend and confidante Herman Echevarria, received more than $280,000.

P&M Advertising, owned by Pedro Milian, was paid more than $270,000.

Knight-Perry International Group, a “public relations” firm owned by Dewey Knight III and Bill Perry III, raked in more than $150,000. (If the name Bill Perry sounds familiar, it's because four years ago he ran for county mayor. At the time many people believed Perry was planted in the race by Penelas to draw black votes away from Art Teele, Penelas's main rival in 1996. Both Teele and Perry are black. Perry denied he was acting as a Penelas stooge, but since Penelas was elected, Perry has attained insider status at county hall and has been placed in several contract deals.)

Gutierrez & Associates, owned by Armando Gutierrez, received $64,000. Strategic Edge, a political consulting firm owned by Brian May, Penelas's former chief of staff, was paid more than $40,000. Communikatz Inc., a firm owned by Penelas ally and current campaign strategist Ric Katz, received more than $32,000.

Penelas even brought in his long-time pollster, Keith Frederick of Frederick Schneiders Research, to handle all the polling for the campaign at an expense of $63,000.

The list goes on and on.

Tally it all up and the failed campaign spent more than $1.9 million. To accomplish such a feat, Penelas's political machine had to go into overdrive raising money. Word went out among engineering firms that if they wanted to continue to do business with Miami-Dade County -- and if the ballot measure passed, there would have been a lot of new road work and construction -- then they had better pony up.

And in an effort to make the proposed sales-tax increase more palatable for voters, Penelas tacked on a number of additional projects that would be indirectly funded if the tax passed, including beach renourishment (designed to quiet concerns by environmentalists over the mayor's transportation plans), improved funding for child-welfare programs (designed to win the support of former Miami Herald publisher David Lawrence), tourism promotion (to placate the business community), and a slew of other items, including new scholarship programs for FIU and MDCC.

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