The Backstory: Long Before The Champlain Towers Collapse, There Was Money Laundering. Heres How We Uncovered It.

I'm Chris Davis, USA TODAY's vice president of investigations, and this is The Backstory, insights into our biggest stories of the week. This week, I'm taking over this column from Editor-in-Chief Nicole Carroll to give you a glimpse into what it takes to uncover truths that change lives and laws. If you'd like to get The Backstory in your inbox every week, sign up here

When USA TODAY investigative reporter

Monique O. Madan sat down to handwrite the letter, she didn’t hold out much hope for a response.

“Dear Mr. Rosello,” she started. “I know this is totally random, and I’m sorry to cold call you (or cold mail you.) I’m working on a story about Champlain Tower and I think you can help.”

Madan and five of her colleagues had been trying for months to track down former residents of the South Florida condominium building that had collapsed in June, killing 98 people in one of the biggest and most tragic stories of the year.

They wanted to know what people remembered about the earliest days of the condo tower. When did people first start noticing problems with the building? How did the homeowners’ association and government regulators respond to flooding in the building and to signs of crumbling concrete? Had someone made mistakes when the building was built?

But the effort wasn’t going well. The whole team was starting to wonder if anyone would be willing to talk.

“I made 160 phone calls to former residents and I got one person to talk to me for more than five minutes,” said

Pat Beall, a veteran investigative reporter working for USA TODAY in South Florida.

Pedro “Peggy” Rosello was just one more name on a list of former residents. But he stood out on that list because of his current address: a federal prison cell in Miami.

We knew the Surfside story started long before the building's collapse. So we went back to the beginning.

Like many other news organizations, USA TODAY – and its affiliated local newsrooms across Florida – rushed reporters to the tiny town of Surfside when the building collapsed. We wrote dozens of stories about the rescue efforts and told our readers about the people who lost their lives. In the earliest days of the tragedy, our reporters uncovered important factors that might have contributed to the collapse, including the fact the building had been sinking into the sand unusually quickly.

At the same time, we gathered a group of reporters from the USA TODAY investigations team to chase the story in a different way. We wanted to go back to the beginning and trace as many details as we could find about what people knew and when. This is a tried and true technique of investigative journalism. Events happen now, but often the crucial context lives in the past. It’s part of our job to piece the whole story together by gathering up the witnesses to those past events.

READ THE INVESTIGATION: Left to rot: Collapsed condo born of botched construction and evidence of money laundering

Our reporters started with a list of people culled from public records including deeds and mortgages for each unit in Champlain South. They reached out to current residents, too, and gained access to a trove of documents produced by the building’s homeowners’ association, which for years had been grappling with how to pay to repair crumbling concrete and other problems.

They began looking through public records that are generated from real estate transactions. Deeds filed in local courthouses show who buys a property and whether they borrowed money for the purchase. Those records also show the purchase price and who put up the money for the mortgage.

Dan Keemahill, a reporter on USA TODAY’s data team, examined sales records en masse. He analyzed 30,000 condo sales in the area to compare prices at Champlain South over time with those of other nearby condo buildings.

Over days and weeks, the reporters started to notice a pattern.

Instead of individual people buying condos and borrowing from a traditional bank, they were seeing purchases from LLCs – corporate entities that can obscure who is behind a real estate deal. Many buyers were coming from overseas or were listing P.O. boxes as their primary address. Some of the mortgages were issued by an attorney who worked for the developer.

“As I’m pulling these deeds, I’m trying to explain to myself what the legitimate reasons could be,” Beall said. “Once you started plugging in names of the corporations … you kept getting total dead ends. Here’s a corporation and there is no other information about it.”

Money laundering has long been a part of real estate in South Florida. Money made from criminal enterprises, including from cartels in Central and South America, gets pushed through real estate purchases in a way that eventually makes the money appear to be legally earned.

Experts told our reporters that money laundering associated with a building could affect the quality of construction and repairs in at least two ways. First, if developers are willing to launder money, they may also be willing to cut corners on construction. And second, if buyers are primarily in the market to wash their money, they may not care what happens long-term to the building they are buying into.

In the late 1970s and 1980s, when Champlain South rose from the coastline, Miami was awash in money from the booming drug trade. Money laundering was rampant.

"The era we’re talking about is when Miami suddenly came out of the ashes. So how do you rush to fulfill the demand? You cut corners. You attached roofs with paper clips. You bribe the inspectors," said Jorge Valdes, who was not involved in Champlain South but helped build dozens of homes, apartment complexes and high-rises in the Miami region as a chief money launderer for the Medellin Cartel. 

More telltale signs of money laundering at Champlain South emerged from our review of sales data.

When the developers first started selling units around 1980, the prices were inflated compared with units in other towers selling nearby. Over time, the average price per square foot in the tower evened out and then dropped compared with other condo buildings – evidence that buyers began to notice the building falling into disrepair.

As Beall dug through deeds, she found one signed by Herbert Batliner, an investment adviser from Liechtenstein who had been investigated by German authorities for helping clients evade taxes. Another unit was bought by a couple listing a Panama P.O. box as their home address. To pay for it, they borrowed money from Stanley Levine, the Canadian lawyer who represented Champlain South’s developer. Within a few months of purchase, the couple stopped paying their assessments and a lien was placed on their unit.

Levine had his own problems, records show.

He had been indicted after being accused of attempting to bribe an official in Florida on an earlier project. Reporters also learned from other media accounts that one building contractor hired to work on the Champlain South project was forced to surrender his license after numerous infractions. The architect’s license had been suspended in Florida after sign structures he designed collapsed during Hurricane Betsy in 1965.  

And then there was Rosello.

In the Netflix docuseries "Cocaine Cowboys: The Kings of Miami," director Billy Corben lays out Rosello’s time as a notorious drug smuggler working alongside the likes of Willy Falcon and Sal Magluta. The series describes the high-rolling lifestyle of drug smugglers in South Florida. In one scene, a photo of Rosello lying in a bed inside his Champlain South unit holds the screen as the narrator speaks.

The location is not mentioned in the series, but Corben connected the dots in a Twitter post not long after the tower collapsed. Our reporters noted the post and interviewed Corben.

It was yet another hint at what might have been happening in the early days of Champlain South -- and another name for reporters to add to their pile.

By now, the reporting team had called hundreds of people and sifted through thousands of pages of records.

Erin Mansfield, a reporter on USA TODAY’s quick-strike investigations team, was writing letter after letter by hand, in English and Spanish, trying to find residents willing to talk. Fellow reporters

Katie Wedell and Sudiksha Kochi had all but reached the end of their list of possible contacts.

“The fact that nobody wanted to talk, I think it really speaks to the trauma that this story carries. It’s one like no other,” Madan said. “They felt very naked. They didn’t feel like talking about it. They didn’t see any point to it.”

The reporters kept writing and calling. 

Rosello received Madan’s first letter in his prison cell, but he didn’t respond.

“I thought maybe he was flooded with letters because this documentary had come out,” Madan said. “I thought my letter would get lost in fan mail or whatever.”

A second letter got her a little closer. Rosello’s best friend called to screen Madan, asking what kinds of questions she wanted to ask and looking for previous stories she had written. Madan told her she had been a longtime reporter in Miami and that she was committed to the story because it was important. It was personal.

“I just wanted to make clear to him that I care deeply about the stories that we tell,” Madan said.

Still, Rosello didn’t call.

Madan tried a third letter and was researching what it would take to arrange a meeting at the prison when her cellphone rang. She didn’t recognize the number.

Rosello's voice came softly through the speaker: “My girl told me I could trust you.”

Over the next few weeks, Madan said, she talked to Rosello roughly 20 times. Each time, because of prison rules, the conversation lasted no more than 15 minutes.

Rosello talked of how, in the early days, Champlain South offered an under-the-radar refuge where cocaine dealing, Ferraris and indoor hot tub parties abounded. When he arrived there in 1988 as a renter, the luxury condo on Collins Avenue was a hub where kingpins partied, out of sight of undercover police.

“All the attention was still on South Beach, so I could walk into an elevator knowing nobody would catch on to me,” he told Madan. “But at the end, the building fell, just like our once cocaine empire.”

Read the entire investigation here.

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Source : https://www.cincinnati.com/story/opinion/2021/10/22/there-was-money-laundering-surfside-heres-how-we-uncovered-it/8532276002/

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