Three South Florida Defendants Charged in $10 Million Government Fraud Involving Six Miami Low-Income Housing Developments
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Nadine Gurley, Special Agent in Charge, United States Department of Housing and Urban Development, Office of Inspector General (HUD-OIG), and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announced the filing of charges against three defendants in a joint investigation of individuals who fraudulently obtained federal money and property in connection with the construction of low-income housing developments in Miami-Dade County.
Gonzalo DeRamon, 51, of Coral Gables, a co-founder of Biscayne Housing Group, Inc. (“BHG”), an affordable housing developer in Miami, Florida, was charged by complaint with one count of conspiracy to commit theft of government money (18 U.S.C. § 641), one count of theft of government money (18 U.S.C. § 641), one count of money laundering (18 U.S.C. § 1957), and one count of obstruction of justice (18 U.S.C. § 1519). These charges together carry a maximum potential sentence of forty-five years of imprisonment.
Rene Sierra, 57, of Southwest Ranches, who was the founder of Siltek Affordable Housing, LLC (“Siltek”), a general contractor located in Planation, Florida, and Arturo Hevia, 63, of Miramar, who was the founder of Design Management and Builders Corporation (“DMBC”), a general contractor located in Doral, Florida, were charged by information with one count of conspiracy to commit theft of government property and money (18 U.S.C. § 371). This charge carries a maximum sentence of five years of imprisonment.
Seizure warrants were also filed for the proceeds of the alleged theft of government funds and money laundering.
The charging documents allege the following facts. The criminal scheme involved the following developments for elderly, low-income families or formerly homeless persons in Miami-Dade County (the “Subject Developments”): Bonita Cove: an apartment complex in Little Haiti; Casa Matias: an apartment complex in Homestead; Georgia Ayers: an apartment complex in Opa-Locka; Labre Place: an apartment complex in Overtown; Notre Dame: an apartment complex in Little Haiti; and Village Carver II: an apartment complex in Little Haiti.
The defendants conspired to defraud the federal government in order to embezzle, steal and convert to their own use federal tax credits and funds. The criminal scheme worked as follows: The designated state housing finance agency, Florida Housing Finance Corporation (“FHFC”), selected some of BHG’s low-income developments as eligible to receive federal tax credits and grant monies, including the Subject Developments, for the construction of low-income housing developments.
Once each Subject Development was selected, DeRamon solicited a final construction bid from contractors Sierra and Hevia reflecting the total compensation that these contractors would receive to build each Subject Development. After receiving the final construction bid, DeRamon provided Sierra and Hevia with an inflated price to use in the construction contract for each Subject Development that would be submitted to FHFC’s representatives. DeRamon had an unwritten agreement with Sierra and Hevia that the contractors would keep only their final construction bid amount and would kick back the remaining inflated amount in the contracts to DeRamon and his co-conspirators.
DeRamon, Sierra, and Hevia signed construction contracts with these fraudulently inflated prices for each Subject Development and submitted these contracts to FHFC’s representatives. FHFC’s representatives relied on these fraudulent contracts in determining the amount of federal tax credits and grant monies to issue. As a result of these fraudulently inflated prices in the construction contracts, FHFC allocated in excess of $10 million in federal tax credits and grant monies to the Subject Developments that should not have been allocated. During the course of the scheme, Sierra and Hevia kicked back millions of dollars of these excess federal funds to accounts for the benefit of DeRamon and his co-conspirators.
Mr. Ferrer thanked FBI, HUD-OIG, and IRS-CI for their work on the case. The case is being prosecuted by Assistant U.S. Attorneys Michael R. Sherwin, Michael N. Berger, Evelyn B. Sheehan and Eloisa D. Fernandez.
A criminal complaint or an information is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.