Reference no: EM131202215

In 1995 Richard Mendez joined the Miami International Airport’s (MIA) staff as the assistant director of facilities development. Mendez was paid $127,000 a year in his new job and was placed in charge of overseeing the airport’s $5 billion expansion plan. As a result of this position, Mendez became a very powerful public official. His job responsibilities included reviewing and approving every bid and contract for the airport expansion, and selecting which vendors the airport should use. But in 1999 the Miami-Dade Police Department received an anonymous letter indicating that Mendez had been abusing his authority to award contracts, and there had been other rumblings that Mendez was corrupt. When investigators began to investigate the allegations against him, Mendez suddenly retired.

Despite Mendez’s retirement, the investigation proceeded, and it was eventually discovered that he had been accepting bribes from several airport contractors. One of the most notable examples involved a company called Engineering & Construction Services (ECS), which developed a 3-D computer simulation program to depict how the airport expansion would look after it was completed. During the investigation many staff members commented that there was little use for the -3D computer program and that it was a waste of money. Nevertheless, Mendez had approved a $1.5 million contract with ECS. As it turned out, Mendez received $145,000 in kickbacks from ECS for approving their deal. The company’s CEO made the check out to Mirta Mendez, Richard’s wife, and sent it via FedEx to their home. The money was eventually deposited into the Mendez’s personal bank account.

Mendez also accepted $81,500 in kickbacks from another company that had been hired to clean up the contaminated soil around the airport, and he collected $72,000 from Pios & Sons Enterprises, which was subcontracted on the same project. In court the federal prosecutors said that Hector Ortiz, founder of Pios & Sons, had also paid off a $26,777 mortgage that Mendez owed, and had paid Mendez and his wife another $15,000. Ortiz claimed that the payments were simply financial transactions between friends and asserted that he won his airport contracts legally. Overall Mendez collected $340,000 in illegal cash kickbacks.

In the end Richard Mendez pleaded guilty to 34 federal counts of mail fraud, money laundering, tax evasion and filing false tax returns. Mendez’s wife was accused of 23 felonies, but only pleaded guilty to a bribery conspiracy charge. Mr. Mendez is facing five or more years in prison and his wife is facing a shorter sentence. Additionally, Mr. Mendez was order to pay the Internal Revenue Service $658,000 for back taxes and interest. The couple was also ordered to pay Miami-Dade County $340,565 plus with $175,000 in fines. Lastly, Mirta was ordered to pay a $30,000 fine.

 

Question: What could have been done to prevent this scheme from occurring in the first place? How could the scheme have been detected earlier? Do you think the sentence they received will deter future frauds at MIA?