There was money laundering in Surfside. Here’s how we found out.


I’m Chris Davis, USA TODAY VP of Investigations, and this is The Backstory, a look at our biggest stories from the week. This week, I resume this column from the editor-in-chief Nicole Carroll to give you an overview of what it takes to uncover life-changing truths and laws. If you’d like to have The Backstory delivered to your inbox every week, sign up here.

When USA TODAY investigative reporter Monique O. Madan sat down to write the letter by hand, she didn’t have much hope of an answer.

“Dear Mr. Rosello,” she began. “I know this is totally hit and miss, and I’m sorry for calling you (or sending you a cold email.) I’m working on a story about the Champlain Tower and I think you can help me.”

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

They wanted to know what people remembered from the early days of the condo tower. When did people first notice issues with the building? How have the homeowners’ association and government regulators reacted to the flooding in the building and the signs of crumbling concrete? Did anyone make any mistakes during the construction of the building?

But the effort was not going well. The whole team was starting to wonder if anyone would be ready to speak.

“I made 160 phone calls to former residents and got someone to talk to me for more than five minutes,” said Pat Beall, a seasoned 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 this list because of his current address: a federal prison cell in Miami.

We knew that Surfside’s story began long before the building collapsed. So we went back to the beginning.

Like many other news agencies, USA TODAY – and its affiliated local newsrooms across Florida – rushed reporters to the small town of Surfside when the building collapsed. We’ve written dozens of stories about the rescue efforts and told our readers about the people who have lost their lives. In the early days of the tragedy, our reporters discovered important factors that could have contributed to the collapse, including the fact that the building had sunk into the sand at an unusual rate.

At the same time, we have assembled a group of reporters from the USA TODAY investigative team to continue the story in a different way. We wanted to go back to the beginning and track down as much detail as possible about what people knew and when. It is a proven technique of investigative journalism. Events are happening now, but often the crucial context lives in the past. It is part of our job to piece together the whole story by bringing together the witnesses of these past events.

READ THE SURVEY: Left to rot: Collapsed condo born of sloppy construction and evidence of money laundering

Our reporters began with a list of people extracted from public records, including deeds and mortgages for each unit in Champlain South. They also contacted current residents and gained access to a wealth of material produced by the building owners association, which for years struggled with how to pay to fix collapsed concrete and other issues.

They began to browse the public documents generated by real estate transactions. Deeds filed in local courthouses show who is buying a property and whether they have borrowed money for the purchase. These records also show the purchase price and who paid the money for the mortgage.

Dan Keemahill, a reporter from the USA TODAY data team, reviewed the sales records en masse. He analyzed 30,000 condo sales in the region to compare prices in Champlain South over time with those of other nearby condo buildings.

Over the days and weeks, reporters began to notice a trend.

Instead of individuals buying condos and borrowing from a traditional bank, they saw purchases from LLC – corporations that can hide who is behind a real estate transaction. Many buyers came from abroad or indicated PO boxes as their main address. Some of the mortgages were issued by a lawyer who worked for the developer.

“As I shoot these acts, I try to explain to myself what might be the legitimate reasons,” Beall said. “Once you started typing the names of the companies… you continued to have total dead ends. Here is a company and there is no other information about it.

Money laundering has long been a part of real estate in South Florida. Money from criminal enterprises, including Central and South American cartels, is pushed through real estate purchases in a way that ends up giving the impression that the money is legally earned.

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

In the late 1970s and 1980s, when Champlain South rose from the coast, Miami was inundated with money from the burgeoning drug trade. Money laundering was rampant.

“The time we’re talking about is when Miami suddenly rose from the ashes. So how do you rush to meet the demand? You cut the corners. You tied the roofs with paper clips. He wasn’t involved with South Champlain, but helped build dozens of homes, apartment complexes, and skyscrapers in the Miami area as the primary money launderer for the Medellin Cartel.

Other telltale signs of money laundering in Champlain Sud emerged from our review of the sales data.

When developers started selling units around 1980, prices were inflated compared to units from other towers sold nearby. Over time, the average price per square foot in the tower stabilized and then dropped relative to other condominiums, evidence that buyers began to notice the building falling into disrepair.

As Beall delved into the deeds, she found one signed by Herbert Batliner, a Liechtenstein investment adviser who had been investigated by German authorities for helping clients evade tax. Another unit was purchased by a couple with a Panama PO box as their home address. To pay, they borrowed money from Stanley Levine, the Canadian lawyer who represented the developer of Champlain Sud. A few months after the purchase, the couple stopped paying their contributions and a lien was placed on their home.

Levine had his own issues, according to the records.

He had been charged after being accused of attempting to bribe an official in Florida over an earlier project. Journalists also learned from other media that a construction contractor hired to work on the Champlain Sud project was forced to surrender his license after numerous infractions. The architectural license was suspended in Florida after the panel structures he designed collapsed in Hurricane Betsy in 1965.

And then there was Rosello.

In the Netflix docuseries “Cocaine Cowboys: The Kings of Miami”, director Billy Corben describes Rosello’s time as a notorious drug dealer working alongside Willy Falcon and Sal Magluta. The series describes the fast-paced lifestyle of drug dealers 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 made the link in a Twitter post shortly after the tower collapsed. Our reporters took note of the message and interviewed Corben.

It was yet another clue as to what might have happened in Champlain-Sud’s early days – and another name journalists needed to add to their pile.

To date, the reporting team had called hundreds of people and sifted through thousands of pages of recordings. Erin Mansfield, a reporter from the USA TODAY Rapid Investigation Team, wrote letter after letter by hand, in English and Spanish, trying to find residents willing to speak. Colleagues reporters Katie Wedell and Sudiksha Kochi had almost reached the end of their list of possible contacts.

“The fact that no one wants to speak, I think that really speaks to the trauma this story carries. It’s a step like any other, ”said Madan. “They felt very naked. They didn’t want to talk about it. They saw no point in it.

Journalists continued to write and call.

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

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

A second letter brought her a little closer. Rosello’s best friend called to screen Madan, ask what kind of questions she wanted to ask and looking for past stories she had written. Madan told him that she had been a longtime reporter in Miami and that she got involved in history because it was important. It was personal.

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

Still, Rosello didn’t call.

Madan tried a third letter and was figuring out what it would take to set up a meeting at the prison when his cell phone rang. She didn’t recognize the number.

Rosello’s voice came softly through the speaker: “My daughter told me I can trust you.”

Over the next several weeks, Madan said, she spoke to Rosello about 20 times. Each time, due to prison rules, the conversation lasted no more than 15 minutes.

Rosello explained how, in the beginning, Champlain Sud provided an under-the-radar haven full of cocaine trafficking, Ferraris and indoor spa parties. When he arrived there in 1988 as a tenant, the luxurious Collins Avenue condo was a hub for the big guys to party, safe from undercover police.

“All the attention was always on South Beach, so I could walk into an elevator knowing no one would catch up to me,” he told Madan. “But in the end, the building fell, just like our old cocaine empire.”

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