Alan Mendelsohn indictment shows how special-interest cash taints lawmaking in Florida's Capitol

Article Courtesy of The St. Petersburg Times

By Marc Caputo

Published October 10, 2009

TALLAHASSEE — The web of influence and deceit portrayed in the federal indictment of Broward County fundraising powerhouse Alan Mendelsohn tells the story of how special-interest cash taints lawmaking in Florida's Capitol.

In four instances, Mendelsohn was hired by South Florida businesses that had different interests but the same belief: To win favorable legislation to protect profits, you have to pay big bucks to a political insider.

"Alan Mendelsohn is an extreme case," said Sen. Alex Villalobos, a Miami Republican. "But there are probably other Alan Mendelsohns out there. There are sharks swimming in these dark waters."

Mendelsohn, 51, has pleaded not guilty to 32 counts of defrauding the businesses and misusing the money to help bankroll a love nest for a mistress, a luxury car for himself and his kids' education.

The indictment does not name the four businesses Mendelsohn represented, but the Times/Herald has identified them as a dialysis lab, a viaticals company selling "death futures," a casino and a credit counseling company. Nor does the indictment name a public official who allegedly received $87,000 in illegal payments funneled through the doctor's political attack committees and dummy corporations.

Mendelsohn, an eye doctor, became a consummate insider sought by lawmakers hungry for the campaign cash flowing from fundraisers at his Hollywood home, according to the indictment and those who knew him.

The cash and connections made him a force to be feared.

Villalobos survived a tough 2006 re-election campaign in which political attack committees, funded partly by Mendelsohn, flourished. He compared the attack committees to "a third-party super power with a nuke" that detonates in local elections to further agendas in the Capitol.

Professional lobbyists didn't complain openly about Mendelsohn failing to register as a lobbyist. Many feared that legislative leaders — supported by Mendelsohn — would do nothing.

Mendelsohn, his family and his major political committee contributed at least $708,000 to more than 275 legislators, legislative candidates and state causes since 1996.

Mendelsohn's indictment is the second in just six months that sheds light into the sausage making of the Legislature. In April, a state grand jury charged House Speaker Ray Sansom in an unrelated case for helping manipulate the state budget to help a contributor and a local college that gave him a job. Sansom has pleaded not guilty.

None of the four businesses that hired Mendelsohn would comment for this story. Here are details about their arrangements with him:

Contributor 1

Broward lobbyist Russ Klenet saw Mendelsohn as an ally.

For years, Klenet had represented End Stage Renal Disease Laboratories as it fought for legislation changing rules about the ownership of kidney dialysis labs. Sources and the indictment say Klenet introduced the company's owner, Dr. Mark Ginsburg, to Mendelsohn in 2002.

Klenet, who declined to comment, also greatly increased the size of the lab's lobbying team to 20, signing up the wife of then-Senate President John McKay to lobby the House.

The Senate pressured the House to pass legislation containing the company's language. The lab contributed $200,000 to Mendelsohn's committee, Alliance for Florida's Future, about three months later in August.

One of the lab's lobbyists, Scott Hopes, said he didn't know what Mendelsohn did for the lab. Hopes was hired onto the firm's team just a few months after he left a job with the state Agency for Health Care Administration, where he oversaw a report rivals criticized as too favorable to End Stage Renal Disease Labs.

Years later, Mendelsohn was part of Gov. Charlie Crist's transition team and unsuccessfully joined others in recommending Hopes to lead the health agency.

Contributor 2

Another Klenet client, Mutual Benefits, also sought out Mendelsohn as the state investigated complaints of fraud over its handling of viaticals — life insurance policies of the dying purchased by third parties in the hopes of cashing in.

Mendelsohn allegedly told Mutual Benefits owner Joel Stein­ger that he could use his influence to stop the investigation. In exchange, Mendelsohn received close to $1.7 million in contributions over two years to himself and unnamed political candidates, most Republicans.

State Chief Financial Officer Tom Gallagher sought to regulate Mutual Benefits more strictly. But in 2003, Gallagher's effort was stalled in a House committee that included Democratic Rep. Stacy Ritter — Klenet's wife and Broward's current mayor.

In 2004, the Senate's Republican insurance committee chairman, Bill Posey, protected Mutual Benefits with an amendment to a must-pass insurance bill sought by Gallagher, also a Republican.

Gallagher recalled telling Senate President Jim King to strip the amendment, but he says King refused.

"Some things are destined to pass," the late King said, according to Gallagher.

State prosecutors charged Stein­ger's company with racketeering in 2004. In 2007, the FBI closed in on Steinger individually. He snitched on Mendelsohn, helping make the current case.

Contributor 3

The only Mendelsohn contributor not directly tied to Klenet: Dan Adkins, president of Mardi Gras Racetrack and Gaming Center.

In 2005, the Hallandale Beach company sought favorable legislation for slot machine gaming and, the indictment says, began paying Mendelsohn at least $600,000 through 2007.

Despite receiving the money, Mendelsohn never registered as a Mardi Gras lobbyist. Instead, through circuitous means, he used his friend, ophthalmology lobbyist Stephen D. Hull, to lobby for a subsidiary of the parimutuel.

Contributor 4

Mendelsohn and Hull in 2004 worked for another Klenet client, Boca Raton-based Consolidated Credit Counseling Services, to stop Rep. Adam Hasner, R-Delray Beach, who was sponsoring a bill to end what he said were shady industry practices.

"I was outraged when I found out that Mendelsohn and Hull were lobbying behind the scenes to kill my bill even though it had nothing to do with medical issues," said Hasner.

Hasner said he later learned that the company's owner, Howard Dvorkin, helped pay tuition for one of Mendelsohn's children at the private Pine Crest School in Fort Lauderdale.

Lobbyist Sean Stafford, who worked for a Dvorkin rival, said he overheard Hull call Mendelsohn and apologize on the day the bill they tried to kill passed.

"It's like fighting ghosts with Mendelsohn," Stafford said. "We didn't want the hassle of fighting the ghosts."