For nearly a year Miami-Dade County Commissioner Bruce Kaplan has been under criminal investigation by the State Attorney's Office for allegedly providing false information on an application for a home mortgage. State Attorney Katherine Fernandez Rundle last week confirmed the ongoing probe but said she couldn't provide any specific details because the matter is still under review.
Sources familiar with the case, however, say a decision about whether to charge Kaplan could come as early as this week.
Contacted at his home, Kaplan refused to answer any questions regarding the investigation. The commissioner, whose district stretches from Miami Beach to Little Havana, has hired criminal defense attorney Steve Chaykin, a former federal prosecutor, to represent him.
The Kaplan investigation centers on the 1994 purchase of his Miami Beach home on Lake View Drive. Kaplan and his wife Janitza applied for and received a fifteen-year, $330,000 mortgage from Margaretten & Co., Inc., a local lending institution.
According to sources familiar with the investigation, prosecutors are examining whether Kaplan lied on his application to Margaretten by inflating his income, his net worth, and his assets in order to gain more favorable terms for the loan. Prosecutors are weighing a charge of mortgage fraud, a third-degree felony in Florida punishable by up to five years in prison.
Investigators have found what they consider to be inconsistencies between the information Kaplan submitted on his loan application and the financial disclosure forms he's required to file each year as a county commissioner, sources say. Last week New Times asked Kaplan to release a copy of his mortgage application, which is not a public record, so it could be compared to his financial disclosure forms. The commissioner refused.
Sources say prosecutors are also scrutinizing that portion of Kaplan's mortgage application in which he detailed his work history. In particular, they are interested in his statements about his employment with Caribbean Telephone Company, a corporation registered in the Cayman Islands and owned by Broward resident Mark Bradbury.
Kaplan's connections to Caribbean Telephone were first reported in New Times this past October. According to one of the commissioner's business partners, Matias Farias, Kaplan was hired to help market the company's operations throughout Latin America. A business agreement between Farias, Caribbean Telephone Company, and a company called Manhattan Holding Corporation (a copy of which was obtained by New Times) states that the three would develop "audiotext information services throughout Latin America and the Caribbean." Says Farias flatly: "It was phone sex."
Farias claims he was to receive 2.5 percent of all revenue generated by any phone-sex lines he was able to establish. Kaplan is identified in the agreement twice -- first as executive vice president of Caribbean Telephone Company and then as attorney of record for Manhattan Holding Corporation, a company registered in Panama. Farias says Kaplan had a similar arrangement in which he too would receive 2.5 percent of all revenue.
According to Farias, the group successfully initiated a phone-sex operation in Panama toward the end of 1992. That business continued, he says, until several months ago. Farias claims Kaplan tried, without success, to persuade Bolivian authorities to allow Caribbean Telephone to operate in their country as well.
Kaplan denied he was ever knowingly involved in the phone-sex business. "I have never been specifically retained to represent phone sex," he said carefully in October. "One of the areas of my [law] practice is telecommunications, but in no contract that I've negotiated has a reference to phone sex ever been made."
Sources say that prosecutors in the mortgage-fraud case have subpoenaed financial records from Caribbean Telephone in an effort to prove that the amount of money he earned from the company was far less than he stated on his loan application. Prosecutors believe that if Kaplan had not inflated his income, he would not have qualified for the loan.
In addition to the original $330,000 mortgage, Kaplan and his wife in 1995 obtained a second mortgage for $20,000. Prosecutors are examining that transaction as well in the belief that the company that granted the second mortgage, Peninsula Mortgage of Miami, relied on the information Kaplan provided for his original mortgage application with Margaretten.
A review of Kaplan's financial disclosure forms for the past several years reveals erratic movement in his personal fortunes. In 1993 he reported his net worth as $35,000. In 1994, the year he bought the house, it increased to $71,500. In 1995, however, he claimed that the figure had plummeted to $15,000. Last year, however, he rebounded dramatically to $118,605.
While investigating Kaplan, state prosecutors have conferred with their federal counterparts. Because most lending institutions are federally insured, mortgage-fraud investigations are generally handled by the U.S. Attorney's Office. (A recent example was the July bank-fraud and money-laundering indictment of Miami City Commissioner Humberto Hernandez.) Early in the Kaplan probe, however, investigators decided the case should remain with the State Attorney's Office, according to sources familiar with the inquiry. One of the issues influencing that decision was the fact that Margaretten was not federally insured. The lender was subsequently taken over by Chase Manhattan Mortgage Corporation, and the Kaplan loan has since been sold to GE Capital Mortgage in St. Louis. Both Chase Manhattan and GE Capital are federally insured, which would give federal authorities the right to review the loans.
But prosecutors reportedly felt that charging Kaplan under federal statutes might raise legal issues concerning jurisdiction. Rather than complicate any possible prosecution, federal authorities deferred to the state, which in the past year has shown an eagerness to make its own public corruption cases.
Prosecutors have at their disposal an array of options. Rather than charging Kaplan with a felony, they could seek misdemeanor charges against him for making false statements on his financial disclosure form. They could also choose to bring civil instead of criminal charges and merely seek a fine.
The mortgage-fraud case grew out of a series of Kaplan-related investigations the State Attorney's Office conducted in the past year. Initially prosecutors were reviewing allegations that the commissioner had misspent money raised during his 1996 re-election campaign, sources familiar with the case say. Those allegations could not be substantiated, but in the process of reviewing Kaplan's financial records, prosecutors stumbled upon the mortgage issue.
Bruce Kaplan has been a Teflon-coated enigma since his controversial election to the county commission in 1993. He ran one of the sleaziest campaigns in recent memory, tarring his opponent, Conchy Bretos, with one falsehood after another. Among other things, he suggested she was anti-Semitic. Kaplan, who is Jewish, even went so far as to distribute campaign literature quoting his own mother comparing Bretos's campaign to the rise of the neo-Nazi movement in South Florida. The campaign material also quoted Kaplan's mother as saying, "Apparently Bruce's opponent thinks being Jewish is a bad thing." (After the election, Kaplan admitted that his anti-Semitic attack was groundless.)
At the same time he was branding Bretos a Jew-hater on Miami Beach, Kaplan was mounting a smear campaign against her on Spanish-language radio in hopes of destroying any support she might have in Little Havana. Kaplan and his campaign managers portrayed Bretos as both a lesbian and a Castro-sympathizing communist. In a last-minute radio attack, Kaplan falsely accused Bretos of wanting to end public housing, to "throw elderly people out of their homes" and "get rid of elderly meals programs." (After the election, Kaplan was asked to provide proof of his assertions regarding Bretos. He had none.)
Also during the 1993 campaign, Kaplan questioned whether the county had too many employees on its payroll and made several pointed comments about Bretos's position as executive director for the Dade Commission on the Status of Women. "I have the honor of sitting next to one of these employees who serves no other function than collecting a paycheck," Kaplan said during one of their debates.
Three months after the election, Bretos was fired from her county job. She claimed that Kaplan pressured county administrators to get rid of her. The governor appointed a special prosecutor to investigate the allegations, and nearly two years later, in April 1995, the prosecutor concluded that although Kaplan did raise questions about Bretos with her superiors, there was no proof he asked them to fire her.
Kaplan didn't fare as well after a June 1995 investigation by the State Attorney's Office into allegations he violated Florida's Sunshine Law by holding private meetings with two of his fellow commissioners to discuss the selection of a new county manager. State law prohibits commissioners from meeting in secret to discuss county business. Kaplan agreed to pay a $500 civil fine. "There was a lapse in judgment, for which I take responsibility, in meeting with my two colleagues without giving the press or the public prior notice," Kaplan declared at the time.
Although he claimed he had accepted responsibility for his conduct, Kaplan still tried to stick taxpayers with the bill -- more than $16,000 in legal expenses he had incurred during the probe. The county commission approved Kaplan's request, but after a public uproar he agreed to pay his own legal fees.
In another sordid chapter from his career as a public servant, Kaplan in 1994 wrote to American Airlines executives suggesting they hire him to represent them as a lobbyist and government liaison in Latin America. The request was highly unusual and probably unethical. At the time Kaplan made his pitch to the airline, he was a member of the commission's powerful aviation committee, which was overseeing the county's plan to spend one billion dollars to build a new terminal at Miami International Airport for American Airlines.
Officials for American were reportedly dumbfounded by Kaplan's request. One commissioner at the time privately told New Times that Kaplan appeared to be shaking down the airline for a payment in order to support the airline's expansion plans. Indeed, several weeks after American rejected Kaplan's proposal, the commissioner berated the airline and criticized the proposed expansion. Kaplan later said his attack had nothing to do with the fact that the company wouldn't hire him. "I call them like I see them," he declared. "I will be critical of anybody."
In June 1996 the Miami Herald reported that Kaplan was under investigation in Peru for his role in an allegedly illegal computer-import operation. According to Peruvian customs officials, in 1993 and 1994 Kaplan was part of a group that tried to smuggle computers into Peru without paying the proper taxes. According to authorities, the smugglers would cram a shipping container full of computer equipment and then declare that the container was less than half full.
In one incident, an inspection of the container revealed that it was loaded with 729 boxes of hard drives, monitors, and other computer equipment -- not the 200 boxes that had been declared. The real value of the merchandise was $781,833, not the stated value of $67,250, customs agents determined.
Kaplan was present when the container was opened. According to a sworn statement by one witness, the commissioner became visibly nervous. Customs impounded the container and through a subsequent investigation determined that at least three other similar shipments had passed through undetected.
Police Col. Jose Leon Arredondo, chief of Peru's customs fraud unit, told the Herald last year there was no doubt that Kaplan was part of the scheme. "He was the one who brought the papers to clear the container from customs," the colonel said. "He was part of an organization dedicated to defrauding the state."
Kaplan denied any wrongdoing, and the charges against him were eventually dropped. Last week New Times contacted the U.S. Embassy in the capital city of Lima but could not determine why the charges were dismissed. Attempts to contact Peruvian customs officials were also unsuccessful.
Even when he's not tangling with prosecutors, Kaplan can't seem to escape controversy. In September he decided to remove his appointee to the county's film advisory board, Peggi McKinley, because she had advocated support for keeping in Dade an international music conference whose sponsors do business with Cuba. Kaplan's rebuke of McKinley, which was approved by the county commission, sparked a protest over her First Amendment right to express her views. Herald columnist Carl Hiaasen dubbed Kaplan the "prince of pandering," arguing that his assault on McKinley was a crude way of trying to curry favor with a vocal and excitable faction of the Cuban-American community.
Last summer Kaplan sponsored an ordinance to provide protection to gays and lesbians in Dade County. At the time Kaplan drafted the legislation, he was privately weighing a possible run for mayor of Miami Beach. Kaplan's gay-rights ordinance was therefore seen by some as a cynical attempt to ingratiate himself with the Beach's politically powerful gay community. The commission, however, never passed the ordinance, as Kaplan was unable to line up the necessary support.
In most American cities, a politician who derives part of his living through the phone-sex industry, who has been implicated in a smuggling operation, who admits spreading contemptible lies about political opponents, and who was caught conducting government business in secret and expected taxpayers to pick up the tab for his legal bills would probably be considered unelectable.
Indeed, Kaplan's latest alleged indiscretion seems trivial compared to other political land mines he has artfully sidestepped. Also working in his favor is the fact that even if the allegations are true and can be proven, the fraud could be viewed as a victimless crime because no individual was specifically harmed by his actions. By all accounts, Kaplan has been making his mortgage payments and the loan remains in good standing.
The larger issue, of course, is the honesty and integrity of elected officials. Already this year the public has seen former Miami City commissioner Miller Dawkins and former Miami city manager Cesar Odio go to prison on corruption charges, and the new Miami City Commission chairman re-elected after being indicted for money laundering and bank fraud. The dead are casting ballots, and the city's new mayor has turned Dinner Key into a manic soap opera.
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This week one of Kaplan's fellow commissioners, James Burke, is expected to be indicted on federal corruption charges for soliciting bribes. Once charged, Burke will almost certainly be removed from office by the governor.
If Kaplan is charged with felony mortgage fraud, he too would be removed. (The governor still has the right to remove him if he is charged with a misdemeanor, but the prospect becomes more remote.)
If, however, he is charged by prosecutors with a civil violation and agrees to pay a fine, Kaplan would remain a commissioner, thereby ensuring the continued employment of several state investigators.