By Chuck Strouse
By Scott Fishman
By Terrence McCoy
By Ryan Yousefi
By Ciara LaVelle, Kat Bein, Carolina Del Busto, and Liz Tracy
By Pepe Billete
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By Kyle Swenson
The newly revealed existence of Diaz-Balart's Hamilton Bank CD raises a few questions about Cristina Diaz-Balart's role in her husband's campaign financing. In 1997, when the Hamilton certificate (probably for about $100,000) appears to have been opened, Cristina, an economist, worked at that institution. Hamilton had built an impressive reputation as a specialist in international trade and for years was a darling of banking analysts. Interestingly in a 1994 article headlined "Bank's Success Due Almost Entirely To Trade," the Miami Herald's Larry Birger wrote: "Hamilton Bank is no ordinary bank. If you're in the market for an auto or boat loan, don't bother applying. Ditto for a home mortgage. Forget about finding favorable interest rates on certificates of deposit. But, wow, can Hamilton finance international trade."
Thus some might question the choice of Hamilton for a sizable CD. The Diaz-Balart campaign also maintained an operating account there. If Cristina Diaz-Balart received any bonus or incentive for investing her husband's campaign funds there, or if the CD earned a more favorable interest rate than usual, that might be construed as an alleged illegal campaign contribution. Regardless why didn't Diaz-Balart report the CDs until the FEC auditors found them?
In any event bad loans in Latin America resulted in big losses for Hamilton Bank beginning in 1998, prompting a series of stockholder lawsuits and problems with regulators and rating agencies. Cristina Diaz-Balart left Hamilton sometime in 1999 (the FEC audit began that spring) and started working at Miramar Securities, a Columbus, Georgia-based investment brokerage. She is listed with the Florida Secretary of State as the firm's registered agent. The Diaz-Verson family in Columbus, key players at Miramar, have been generous donors to Diaz-Balart throughout his career; Salvador Diaz-Verson, in fact, was one of the individuals who overcontributed to the 1998 and 2000 campaigns.
It was Cristina, according to Diaz-Balart's January 2001 letter to the FEC, who helped Riesco and "committee representatives" correct eight years of financial report forms, working throughout November and December 2000 and early 2001. It is not clear what records Cristina Diaz-Balart used to correct the disclosure reports, which included the 1997-98 reports that had already been amended once during the audit process. FEC accountants state in the audit they weren't able to verify 50 percent of the financial information submitted by the campaign because documentation, such as receipts or invoices, was missing. "In order to adequately address these apparent errors, the audit staff would require bank statements for all accounts (including certificates of deposit) and LDC workpapers showing the derivation of its reported figures," the audit notes.
Were the missing bank statements and workpapers available to Cristina Diaz-Balart as she corrected the campaign's books? If so, why didn't the auditors see them? If not, what makes the corrections more correct than in the former reports? Riesco's most recent memoranda to the FEC do mention that some previously lost records were later located.
Also recently discovered were about $26,000 worth of checks made out to vendors who provided services to the campaign during a five-year period through 2000. Though the checks had been reported to the FEC as disbursements, for unknown reasons they had never been cashed. After the checks were unearthed late last year during the preparation of the 1994-2000 amendments, they were voided, changing the campaign's cash balances yet again.
"This sounds in general like a level of error and records mismanagement that is certainly far beyond the norm," remarks professor Anthony Corrado, a campaign finance expert at Colby College in Maine, who has not read the audit. "Given the scope of the amounts of the discrepancies, it's an anomaly that's going to raise a red flag at the Federal Election Commission."
The campaign currently is responding to methodical FEC questioning of the most recently submitted amendments as well as the 2000 annual disclosure report. In the meantime a Miami PAC that has contributed to Diaz-Balart's re-election efforts has come into the FEC sights. This past January the commission threatened the Free Cuba PAC with an audit and enforcement action, after repeated warnings about late disclosure-report filings. Free Cuba, which lists its address at the medical offices of Cuban American National Foundation director Dr. Alberto Hernandez, gave an uncharacteristically large (for this PAC) donation of $5000 to Diaz-Balart's 2000 re-election effort. Nothing wrong with that. But there are several apparent fabrications and omissions on Free Cuba's disbursement forms. Among the contributions never reported by the PAC is a $5000 donation in February 2000 to Pete's PAC, the committee founded by U.S. Sen. Pete Domenici (R-N.Mex.) to raise money for Hispanic Republicans. Pete's did report the $5000 and the following month contributed $1000 each to Diaz-Balart, Ileana Ros-Lehtinen, and Texas Rep. Henry Bonilla. Ros-Lehtinen and Bonilla promptly reported the donations; Diaz-Balart waited three months to do so. Could Free Cuba and/or Diaz-Balart have been trying to avoid a direct contribution from Free Cuba to Diaz-Balart, thinking an extra $1000 would exceed limits (even though PACs may give $5000 per primary per candidate and then $5000 per general election)? Even on an amended April 2000 quarterly report ordered by the FEC, the Free Cuba PAC didn't note its $5000 to Pete's. Was Free Cuba trying to hide that contribution because it actually was intended to go indirectly to Diaz-Balart and the other two lawmakers? (That type of conduit contribution is illegal.)