Fraternal Order of Police President Nelson Cuba and Vice President Robbie Freitas received more than $571,000 through a shell corporation during an 18-month period in connection with an investigation into gambling centers throughout Florida, according to the Florida Department of Law Enforcement.
Sheriff John Rutherford and the FDLE at a news conference Wednesday afternoon announced a coordinated effort involving federal, state, county and local law enforcement agencies commencing Tuesday and continuing Wednesday that resulted in arrests and search warrants involving 49 illegal gambling centers in 23 Florida counties.
The investigation called Operation Reveal The Deal began in 2007, Rutherford said.
He said that's when the Jacksonville Sheriff's Office began an investigation of a potential criminal enterprise. By September 2008, Rutherford said, the investigation had uncovered potential illegal activity on the part of patrolman Cuba, 48.
By 2010, it became clear that Cuba was not part of the original enterprise under iinvestigation, but was possibly tied to a second separate criminal enterprise with multiple entities that appeared to be shell companies, Rutherford said. He said further investigation revealed that some of those companies were affiliates of Allied Veterans of the World.
Rutherford said that at that time, he ordered a separate investigation into the activities of Cuba, Freitas, Allied Veterans and its affiliates.
The investigation found they received more than $500,000 through a shell corporation over the course of a year and a half. The two withdrew cash weekly, attempting to avoid detection by removing amounts just below mandatory federal reporting requirements, investigators said.
Cuba and Freitas both face the additional money laundering charge of structuring transactions to evade reporting or registration requirements. They were booked into the John E. Polk Correctional Facility in Seminole County and were being held without bail. A bond hearing that began Wednesday will continue Thursday.
Attorneys were in the middle of trying to get Kelly Mathis, the attorney for Allied Veterans, released on bond Wednesday, saying he was not a flight risk, when all of a sudden a judge different than the one hearing the argument barged in and said the hearing was over.
Attorneys said they'd never seen anything like that happen before and their clients have the right to a fair first appearance within 24 hours.
"This is a completely illegal process, what happened in this courtroom today," said attorney Mitch Stone, who's representing Kelly Mathis. "They're entitled to a meaningful first appearance within 24 hours. That was not done. My client has been in jail for 30 hours. We tried to have a meaningful hearing today, and the judge who signed the no bond warrant shut the hearing down."
Mathis was one of about 18 people scheduled for a bond hearing in the federal investigation, including Cuba and Freitas.
"I know some of them personally," Stone said. "They're doing business and legally working within the courts. This process today is the only illegal thing that I know of. What just happened in this courtroom, that's the only illegal thing."
Meanwhile, during the gambling investigation, police began to subpoena financial documents of various companies and individuals, Rutherford said.
During the course of that inquiry, in July 2010, the Sheriff's Office was contacted by an assistant U.S. Attorney who alerted it that similar investigations were being conducted by the U.S. Secret Service and by the sheriff's offices in Seminole and Volusia counties.
"We quickly met with the other law enforcement teams and developed a merged investigation into the activities that resulted in yesterday's arrests and today's announcements," Rutherford said.
He said as they began to compare notes they began to understand the following: JSO had a fairly well-developed money-laundering and criminal enterprise investigation, the two other counties had a well-developed gambling and enterprise investigation, and the Internal Revenue Service and Secret Service were already working with the two counties and had "critically important assets" to assist in the investigation.
The U.S. Attorney's Office and the Statewide Prosecutor's Office coordinated with the subpoenas, search warrants, seizures, arrest warrants and other parts of that investigation.
The joint federal, state and local investigation uncovered more than $300 million in proceeds from the gambling centers, with only 2 percent of the proceeds going to charitable organizations, Rutherford said.
Those arrested Tuesday participated in a complex money laundering scheme designed to hide the gambling proceeds and deceive the public and government, Rutherford said.
Charges include racketeering and influenced corrupt organizations, or RICO, money laundering, and keeping of gambling houses, slot machines and lottery.
The scope of the operation included six states, 23 Florida counties, 57 state arrest warrants and 53 federal search warrants. Investigator seized 44 vehicles and vessels, froze and/or seized 260 bank accounts, with $64.7 million seized as of Wednesday afternoon.
At least 500 law enforcement officers were used in the investigation.
"These gambling centers were purportedly operated for charitable purposes," said Dominick Pape, special agent in charge of Florida Department of Law Enforcement's Jacksonville office. "Our investigation suggests the premise of charity is a lie. ... It's a lie to our dedicated veterans who have protected our country, because little money has made it to the charities."
Investigators believe that the reality is that each gambling center is operated by owners' for-profit companies who funneled the bulk of money to the management of organizations not charities.
As for the allegations against Cuba and Freitas, the FOP said Wednesday it was totally unaware and "dumbfounded" by what the two are accused of doing.