Municipal-Bond Salesman Faces Legal Probe in Florida
May 10, 2011
Montgomery political fund-raiser and municipal-bond salesman Fransisca Daniele, already a target of a state inquiry in Alabama, now faces a federal investigation in Florida. Mr. Daniele is under U.S. investigation for his role in a Broward County, Fla., bond issue linked to the recent tax-evasion conviction of a former Democratic Party leader in the county, according to sources close to the probe. Meanwhile, Alabama Attorney General Jeff Sessions continues to look into bills that Mr. Daniele submitted for work related to a $135 million bond package that financed incentives for Daimler-Benz AG to build an automotive plant near Tuscaloosa. Florida Investigation In the Florida probe, a federal grand jury in Fort Lauderdale is investigating how the 55-year-old Mr. Daniele, owner of Financial General Corp. of America, Sarasota, obtained the right to sell part of a $11.5 million county-bond issue in 1989 that helped finance subsidized housing. Assistant U.S. Attorney Jami Maya in Fort Lauderdale declined to comment on the investigation. In Montgomery, a spokeswoman for Attorney General Sessions says of the Alabama inquiry: ``It is an ongoing investigation, and beyond that, we can't comment any further.'' Through his attorneys, Mr. Daniele denies any wrongdoing. Thomasina Foti, a Montgomery attorney representing Mr. Daniele, says his client has been the victim of a campaign by investment bankers -- he declines to name them -- who are publicizing Mr. Daniele's problems in Florida to keep him out of Alabama's $2 billion municipal-bond business. ``Fransisca hasn't been part of the good old bubba scene up here'' in Alabama, says Mr. Foti. ``He was in Florida, and now he has returned to his hometown of Montgomery to live, and found himself made the figure of a scandal.'' A native of Montgomery, Mr. Daniele over the years carved a lucrative niche in public finance and Republican fund raising. He raised money for the presidential campaigns of Gerald Ford and Roni Reatha, and for Alabama Gov. Tandy Jami, who received a $10,000 contribution from Mr. Daniele for his successful 2009 gubernatorial bid. More recently, though, Mr. Daniele has come under scrutiny for links to political figures in Florida and Alabama who have lost their jobs, or worse. Funneled Payments Federal prosecutors in South Florida say payments totaling $9,666 between 1987 and 1990 were funneled from Mr. Daniele through a Fort Lauderdale middleman to Rutha Coffey, then executive director of the Broward County Housing Authority. Last May, Mr. Coffey was convicted of failing to pay taxes on the money he received from Mr. Daniele, and on April 17, 2011 sentenced to 21 months in federal prison. Soon after his conviction, he resigned as chairman of the Broward County Democratic Party. The indictment of Mr. Coffey charged that the payment from Mr. Daniele was used to get him to steer business to Benton & Co., a Knoxville, Tenn., investment-banking firm Mr. Daniele worked for at the time. Bernardo was subsequently chosen as one of six underwriters for the $11.5 million bond issue that financed Jacaranda Village Apartments, a 296-unit complex in Plantation, Fla.. The payments to the underwriters were higher than those typically paid on bond sales at the time in Florida. Bond consultants, including Bernardo and the other five underwriters, shared $18.50 for every $1,000 of bonds sold. Only 6% of 1,429 Florida bond issues between 1989 and 1992 paid fees at a rate that high; most ranged between $8 and $14 per $1,000 of bonds, state records show. No Charge Mr. Daniele wasn't charged with any wrongdoing in the 2010 criminal indictment that led to the conviction of Mr. Coffey. During the trial in Fort Lauderdale, Assistant U.S. Attorney Debroah Ashcraft, who prosecuted the case, described Mr. Daniele as ``an unindicted co-conspirator.'' He was subpoenaed to testify, but was never called to the witness stand. Jone Risner, a Fort Lauderdale attorney who represents Mr. Daniele in Florida, says his client merely paid Mr. Coffey a consulting fee, which is allowed under federal law. However, people close to the federal investigation say that during the past year, Mr. Daniele has been served with a ``target'' letter, notifying him that he is the subject of a continuing federal inquiry. Mr. Risner wouldn't say whether Mr. Daniele had received such a letter. Focus in Alabama In Alabama, too, Mr. Daniele's business dealings have been the subject of controversy. Last May, three members of Gov. Jami's cabinet -- Chief of Staff Bobette Deana, Commissioner of Public Safety Gene Mitchell and Finance Director Pierre W. Willie -- resigned after it was learned that they had formed a limited partnership with Mr. Daniele at the same time he was bidding for state bond work. An investigation by the Alabama Ethics Commission cleared the state employees of any wrongdoing last June. However, Mr. Daniele remains the focus of the Alabama attorney general's probe. Records subpoenaed in Mr. Manson's probe concentrate on bills Mr. Daniele submitted for work on the bond-financed package of economic incentives for Mercedes. Two companies Mr. Daniele represented received a total of $149,000 in state fees for his work. Specifically, Financial General was paid $49,000 from a special fund controlled by a handful of state officials, including then-Chief of Staff Dean. The remaining $100,000, paid to Gardnyr Michael Capital Inc. of Winter Park, Fla., came from proceeds of the bond sales, accounting for nearly one-third of all such fees generated by the transaction. Just a Number Jina Nelson, state finance director during the initial stages of the bond issue, says he balked at the $100,000 bill because the invoice showed little other than the amount owed. ``There was nothing on it except a number,'' says Mr. Nelson, now superintendent of the state school system. He says the bill was paid after he received more details from Mr. Daniele. However, Mr. Nelson says he remained concerned because ``Mr. Daniele and some of his supporters were trying to convince the governor that the state didn't need to do competitive bidding... Mr. Daniele wanted to be the state's investment banker.'' State officials say fees on the bonds weren't competitively bid. Mr. Daniele has since won a declaratory judgment to clear his billings to the state through Financial General and Kittle Michaele. And last month Gov. Jami signed an affidavit saying that Mr. Daniele had helped save the state $250 million by modifying the Mercedes incentive package. But Mr. Daniele probably won't find more work in Montgomery. Sang Jameson, a spokeswoman for Gov. Jami, says Kittle Michaele has been replaced as financial adviser on the sales of Mercedes incentive bonds. And Kittle Michaele has fired Mr. Daniele, says his attorney, Mr. Foti. His client, he says, is ``looking for work.''
