Pay-to-play hunt hits Puerto Rico

From Phila., agents followed donations to distant governor.

Posted: November 18, 2007

The FBI's recent pay-to-play corruption investigations have snared Philadelphia public officials, contractors and bankers, and tarnished Mayor Street's legacy.

But the biggest fish on the hook may be someone who lives 1,500 miles from Philadelphia - the governor of Puerto Rico.

Gov. Anibal Acevedo-Vilá, who drew the FBI's attention after receiving suspiciously large contributions from Philadelphia and South Jersey, could face charges as soon as next week, people close to the case said.

The FBI also is pursuing allegations of theft and misuse of campaign funds, and secret payments for TV commercials designed to skirt local campaign-finance laws.

Another central figure in the case is a Delaware County dentist who raised tens of thousands of dollars for the governor. Agents are trying to determine whether he tried to help Philadelphia businessmen win contracts in Puerto Rico.

The Democratic governor's Philadelphia connections, and the news of the grand jury, have roiled Puerto Rico's intense political scene for more than a year, generating big headlines and talk-show buzz. Journalists routinely stake out the grand jury, filming witnesses as they enter the courthouse, including many from Philadelphia.

The controversy has even become enmeshed in the U.S. attorney scandal in Washington - with questions raised about whether New Jersey's U.S. Sen. Bob Menendez, an Acevedo-Vilá ally, tried to block the confirmation of the island's top federal prosecutor.

Last week, Acevedo-Vilá convened an extraordinary news conference and said he thought the investigation was coming to a close.

If indicted, he vowed to fight the charges and run for reelection next year: "This investigation long ago ceased to be about searching for the truth. . . . This investigation became an obstinate desire to look for something, something they could pin on me."

Breakfast at the Four Seasons

The story of how Acevedo-Vilá became entangled in the FBI corruption investigation begins one morning in January 2002 at the Four Seasons Hotel in Philadelphia.

At the time, Acevedo-Vilá was Puerto Rico's nonvoting delegate to Congress, but had aspirations to become governor. His 2002 fund-raising breakfast was sponsored by two Philadelphia-area men, Candido Negron and Robert M. Feldman.

Negron, a Glen Mills dentist with Puerto Rican family ties, admired and hoped to emulate Feldman, an insurance executive and seasoned Democratic fund-raiser who had raised millions for the likes of Gov. Rendell, Mayor Street, Sen. Bob Casey, and former New Jersey Gov. Jim McGreevey.

Negron realized he could make a lot more money in government insurance contracts than in fixing teeth. With help from Feldman and Street confidant Ronald A. White, Negron flourished.

Negron had the link to Acevedo-Vilá. The two men, each about 40 years old, had met in Democratic circles in Philadelphia and Washington. Feldman lent his name - and brought a few wealthy contributors - to the January fund-raiser and another one the following month. Together, they raised about $50,000.

Negron delivered contributions to Acevedo-Vilá during meals, sources said, including one at Le Bec-Fin near Rittenhouse Square and another at Citronelle in Georgetown.

"But so what?" said one person close to the governor. "They bought him dinners and used election funds to buy suits. You have to understand that our previous governors were well-to-do. He is middle-class. He wore $48 shoes from Thom McAn and suits from Sears."

By 2004, Acevedo-Vilá's campaign reported that it had raised $800,000 total, $180,000 from Philadelphia and South Jersey, a figure that would later astound and intrigue investigators.

Why would a Puerto Rican politician have so many generous friends in Philadelphia?

Knocking on doors

Investigators flew here in mid-2005 and began knocking on doors. They pursued two possible crimes:

First, they looked for possible "straw contributions," the illegal method whereby wealthy donors avoid campaign-finance limits by laundering contributions through other people's names.

The Inquirer, in an article last year, identified at least three such contributors who said Negron told them what to do. Bernice Owens, a 71-year-old Germantown woman, had $5,000 contributed in her name. Richard Kenney, a Woodbury printer, said that Negron asked him to write Acevedo-Vilá checks for several thousand dollars that he was reimbursed for the next day.

One contributor suspected of helping Negron is Salvatore Avanzato Sr., a former business partner and mentor before Negron met Feldman. Sources said Avanzato, who had a bitter falling-out with Negron, is cooperating with the FBI. His lawyer, Michael M. Mustokoff, declined to comment.

The second suspected crime is more complex - and often much harder to prove. It is pay-to-play - giving campaign money in exchange for future government contracts.

At the time, Negron and Feldman were working with White, the now-deceased Philadelphia power broker, as consultants to Doral Dental, a company that had contracts with two managed-care plans, Keystone Mercy Health Plan and Health Partners of Philadelphia. The Doral-Keystone consulting gig paid each of them hundreds of thousands of dollars.

None of them knew it, but White was at the center of a federal pay-to-play investigation. The FBI was tapping his telephones.

A February 2003 wiretap obtained by The Inquirer provides a window into the relationship between White and Negron. It opens with a discussion about a tax document from Doral Dental, calculating fees earned in 2002, then shifts to Negron's travels.

"You know, it was the 40th birthday for the congressman from Puerto Rico, and I was with him for his birthday down in Washington. I was down in Puerto Rico."

White brags about a big, easy-money deal in bars at New York's LaGuardia Airport. He tells Negron he shouldn't have missed it.

White: "It was beautiful, man."

Negron: "Awww.";

A minute later, they are laughing about how much money they had earned on the Doral deal.

"Let's make sure we have another two years of this," Negron says. "And if I could break another dental deal for us, you know, one or two deals, we're in good shape."

Within 18 months, White would be indicted with others on pay-to-play corruption charges, but none of them were related to Doral Dental. Neither Feldman nor Negron was implicated or even called as a witness at the trial that followed.

No business ties

In the current case, said Feldman's lawyer, Henry Hockeimer, his client supplied subpoenaed records to the FBI, but has no business ties to Puerto Rico. Feldman's only tie to the San Juan case, he said, is that he helped Negron throw two fund-raisers "over five years ago."

Negron's lawyer, Francisco Robello, did not return phone calls or an e-mail message seeking comment.

Negron initially cooperated with the FBI, sources said. But in June, sources said, things changed. Negron became angry with prosecutors' questions and walked out of a meeting in San Juan.

Within a week, FBI agents in Philadelphia executed a search warrant at Negron's home in Glen Mills.

Negron himself did not win any deals in Puerto Rico, but agents are also examining whether he helped anyone else get business, sources said.

Acevedo-Vilá said last week that he believed Negron stopped cooperating with the investigation because he felt "pressured . . . to say things about the governor that were not true."

The case has also reached Capitol Hill, part of a House Judiciary Committee inquiry related to the national U.S. attorney controversy and allegations of politically inspired investigations of Democrats.

Justice Department spokesman Peter Carr said: "It has been, and remains, the practice of the department to investigate and prosecute individuals who violate federal law without regard to their political affiliation."

Acevedo-Vilá notes that the top federal prosecutor in San Juan, Rosa Emilia Rodriguez-Velez, is aligned with his likely Republican opponent in next year's reelection campaign, Luis G. Fortuno. The FBI has opened an unrelated corruption investigation of Fortuno, too, but Rodriguez-Velez has recused herself from that case.

The situation grew tense this fall, when Rodriguez-Velez was nominated to become permanent U.S. attorney in San Juan. Menendez, the governor's ally, used a U.S. Senate procedural maneuver to delay the appointment, according to published reports. A spokesman for the New Jersey Democrat declined to comment and called the reports "unsubstantiated rumors."

The investigation, meanwhile, appears to be moving rapidly to conclusion. On Wednesday in Washington, Acevedo-Vilá's lawyer, Thomas C. Green, met privately with Rodriguez-Velez and senior Justice Department officials in Washington. It was the kind of meeting typical of an important corruption case, where a defense lawyer gets one last chance to try to stop an indictment.

Afterward, everyone declined to comment.


Contact staff writer John Shiffman at 215-854-2658 or jshiffman@phillynews.com.

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