Feds: Miami developers, contractor to plead guilty in $36 million affordable-housing scam

September 11, 2015

The federal prosecution of an elaborate affordable-housing racket that cost taxpayers $36 million will reach a critical turning point this week: Four prominent Miami developers and a major Fort Lauderdale contractor plan to plead guilty to theft of government funds, according to court records.

On Monday, Michael Cox and Gonzalo DeRamon, co-founders of the Biscayne Housing Group, are scheduled to consummate plea deals in Miami federal court. They are charged with conspiring with the top two principals of the Carlisle Development Group — once the state’s biggest affordable housing developer — as well as two South Florida contractors who already pleaded guilty.

Cox, 47, who cooperated with authorities, is pleading to a single conspiracy offense, which carries up to five years in prison. DeRamon, 51, is pleading to two conspiracy charges, which carry up to 10 years. Combined, they pocketed more than $7 million in illegal kickbacks from contractors, prosecutors say.

Also on Monday, Michael Runyan, president of the family-run Fort Lauderdale construction company BJ&K is scheduled to finalize his plea deal for his pivotal role of paying millions of dollars in kickbacks to Carlisle’s senior executives. Runyan, 66, who also cooperated with prosecutors, is pleading to a lone conspiracy charge.

And on Friday, Matthew Greer, 37, the onetime chief executive officer of Miami-based Carlisle, and the company’s co-founder, Lloyd Boggio, 69, are pleading to two conspiracy offenses accusing them of accepting more than $26 million in illicit funds from Runyan.

Overall, Greer and Boggio are accused of scheming with Biscayne’s Cox and DeRamon as well as Runyan and another contractor to steal a total of $36 million in federal housing subsidies by inflating construction costs and receiving kickbacks, according to charges filed in Miami federal court in July.

In total, Greer, Boggio and the other defendants are accused of plundering U.S. tax credits to line their pockets from 14 government-subsidized projects built mostly for the poor in Miami-Dade County. All but one were built in the low-income Brownsville, Little Haiti and Overtown neighborhoods between 2007 and 2012.

Greer and Boggio even set up shell companies with the names of Marquesas Capital and Caesar and Cleopatra Investments to collect the illicit payments secretly, prosecutors Michael Sherwin and Michael Berger said in court papers. The contractors kept records of the kickbacks on “tick” sheets, they said.

U.S. Attorney Wifredo Ferrer said his office has recovered nearly $11 million in government funds stolen by the two Carlisle principals. That money will be returned to the U.S. Treasury Department, not to the tax-credit program for affordable housing that is run by the state of Florida and Internal Revenue Service.

Boggio had launched Carlisle with the CEO’s father, Bruce Greer, a well-known Miami lawyer, in 1997. Greer’s son, Matthew, later bought out Boggio’s interest. Matthew Greer’s mother is Evelyn Greer, a former Pinecrest mayor and Miami-Dade School Board member.

Cox and DeRamon are accused of pocketing more than $7 million in kickbacks from two contractors who worked on six affordable-housing projects — including a high-rise apartment building in Overtown that was jointly developed with Greer and Boggio, who also received illegal payments in the deal, prosecutors said. Camillus House, a major nonprofit agency that provides shelter and services for the county’s homeless, donated the land for the project, known as Labre Place.

Another defendant: Rene Sierra, 57, president of Plantation-based contractor Siltek, pleaded guilty in July to conspiring with Cox, DeRamon, Greer and Boggio in four projects. Another defendant, Arturo Hevia, a Doral contractor, also pleaded guilty to conspiring with Cox and DeRamon in two projects.

Until the Miami Herald first reported in 2013 that Carlisle’s top principals were under investigation by a federal grand jury, the company had been among the largest affordable-housing developers in the country. Carlisle, which developed dozens of low-income apartment buildings in Florida with both federal and local subsidies, was forced to sell off its few remaining Miami-Dade projects to another development company that year.

The federal investigation into Carlisle started in late 2011 when two senior executives quit and went to the U.S. attorney’s office with their allegations of fraud. They assisted the FBI, Internal Revenue Service and U.S. attorney’s office in the investigation and were not charged.

Greer, Boggio and the other defendants are accused of committing fraud by inflating construction costs of rental apartments to generate higher government-issued tax credits for their projects and to divert the resulting unlawful profits, according to court records.

Tax-credit applications are reviewed carefully on a project-by-project basis by the Florida Housing Finance Corp., which doles out millions of dollars in credits under strict Internal Revenue Service guidelines.

The bids, scrutinized at the front end by developers’ lawyers, are later examined by the state’s underwriters and auditors. Approved credits are then sold to investors, such as banks, to generate tax deductions for them and investment capital for affordable-housing developments.