The Politics of Wetlands Destruction: US Century Bank, Sergio Pino, Ramon Rasco, and Jeb Bush ... by gimleteye

In the United States, Occupy Wall Street protesters are taking aim at the vast inequity of wealth created through financial engineering, without knowing how the small gears link up to the big ones. The engine of destruction starts with home mortgages linked to financial derivatives matching up to credit default swaps: leveraging small errors into a blizzard of money raining billions in compensation. It all depended on speed of execution.

The evidence in Florida piles up. It manifests through the carnage of housing markets, especially where low-cost, production housing turned wetlands into petri dishes for the particular culture of suburban sprawl. In South Florida, the last fumes of the housing boom consumed vast acreage in former Everglades wetlands. Its results permanently etched the landscape as lifeless ghost suburbs where foreclosure rates have soared. They were pushed through local zoning and permitting processes as "what the market wants". In fact, they were what the financial markets could sell to gullible and greedy investors, seeking better return with risks comparable to government bonds.

The insatiable demand for financial derivatives tied to mortgages was met by willing suppliers: builders and developers, lobbyists, traffic engineers and planners. Everyone needed to execute quickly, carelessly and rampantly. At public hearings in Florida, at the base rung of the step ladder of approvals for planned developments, dissenters during the run-up of the housing boom were relentlessly opposed 99 percent of the time.

Today Florida has the highest foreclosure rate in the nation. And still in local and stage legislative arenas, demagoguery persists that land use and environmental regulations, such as those that protect wetlands, are barriers to job creation. It is the mantra of Republicans mainly: knock down regulations as fast as possible so the scrapers, the bulldozers, and stick frame and particle board can fly off the shelves the way they did in 2004.

The landscape can't speak for itself in Florida. Wetlands can't exchange business cards at political fundraisers with promise of new opportunities. That is the problem with wetlands. And it the problem that Jeb Bush, policy tinkerer of the conservative right, imagined he could solve through "wetlands mitigation banking".

In 1996, still smarting from his loss to Gov. Lawton Chiles, citizen Jeb Bush used his Foundation for Florida's Future to outline his case for "free market" environmentalism. The foundation publication, "Outside The Lines", led toward an essay by Denver Stutler, who would be Bush's chief of staff and later, secretary of the Florida Department of Transportation. Stutler laid out the case for mitigation banking of wetlands.

In a Senate hearing in 1995, then US Senator Bob Graham introduced Stutler and ECOBANK as "one of the older of those programs and... we will have the benefit of his extensive experience." Graham-- who claims Everglades restoration among his signature achievements--didn't even know ECOBANK had not obtained its first permit. Wetlands mitigation banking turned out to be all myth. It all sounded good on paper: match the need to protect wetlands with the profit principle, never mind that when it comes to wetlands protection, future commitments are worth the paper they are printed on. 

In a 2006 St. Pete Times report, Craig Pittman (whose book "Paving Paradise: Florida's Vanishing Wetlands and the Failure of No Net Loss" is the definitive record of the role of government agencies and policies in the destruction of Florida wetlands) wraps up the ECOBANK story, "On June 25, 2004, Ecobank filed for Chapter 11... Though Ecobank's Chapter 11 filing jeopardized the operation of both mitigation banks, no one notified state and federal regulators. The state figured it out after two months, but federal regulators failed to notice anything amiss for more than a year." 

This is an important point: that federal regulators "failed to notice anything amiss". 

In 1994, Lawton Chiles defeated Bush. His victory was secured in part by bending growth management regulations to fit the needs of big developer/campaign contributors in South Florida, like Sunset Lakes in western Broward County. Jeb Bush ran and won the race for Florida governor in 1998, with a tidal wave of support from builders and developers like Miami lobbyist and production homebuilder Sergio Pino, for whom political contributions were fertilizer aiding the growth of housing tracts into wetlands.

For as long as platted subdivisions have attracted the interest of financial engineers who understood how a simple home mortgage in South Florida could generate leverage to cast off commissions far in excess of appraised value, environmentalists have been trying to hold onto the salvage value of Florida's remnant Everglades. It has been a bloody, dismal fight played out through public exhaustion, a grim economy, and well funded lawyers tying up federal courts in Miami and Atlanta for decades.


The problem is simple to understand. What is needed to protect a wetland is exactly opposite to the speed in execution that governs every aspect of jamming more homeowners into subdivisions. On the one side are environmentalists trying to nudge government to the tasks of enforcing the law. The purpose of these laws is to enable wetlands to function according to the seasonal ebb and flow of rainfall not the constant patter of lobbyists to ditch, drain, swale, and "mitigate" their removal. Big farmers (Big Sugar), developers and rock miners -- when they aren't destroying wetlands directly or indirectly through control of the political levers of water supply and regulatory agencies-- are convinced their profit models protect the public interest and lands in government stewardship better than regulations.


Financial ratios won't make wetlands work. In the Everglades, science proves the maximum limit for phosphorous is is ten parts per billion. Phosphorous is a key constituent in fertilizer used by the sugar industry on 700,000 acres around Lake Okeechobee. Use more than 10 parts per billion-- the equivalent a few grains of sand in a bucket-- and the Everglades withers and dies, along with all the wildlife that depends on clean, fresh water. What happens when Big Sugar's pollution runs off into millions of acres affects everything 90 miles between Lake Okeechobee and Florida Bay at the tip of the Florida peninsula.


How to manage wetlands has preoccupied Florida politics since the first white man with business ambitions set foot in South Florida. Drain them. Populate them. Build business on them. And during this span of time, more than a century and a half, wetlands and the environment were sacrificed one generation at a time. "It's an unstoppable force!" GOP finance chair Al Hoffman crowed to the Washington Post in its landmark 2002 series on the Everglades. 


Hoffman, then one of Florida's major developers, organized the economic elite built around housing to propel Jeb Bush to the Governor's Mansion in 1998 and George W. Bush to the White House in 2000. And why wouldn't Hoffman-- appointed to an ambassador post before the markets blew up-- believe he was right? Only a few years earlier, Hoffman had built WCI Communities from its small roots in south Florida into a major condo developer, consuming wetlands at a furious rate.

One of Hoffman's first projects was Keys Gate, through WCI Communities in Homestead, Florida. During the housing boom, Homestead and its neighboring communities like Florida City bore the brunt of the worst assaults against wetlands protections. The entire region is virtually at sea level and subject to regular flooding. Only the highly managed water conveyance system, dominated by agricultural and developer interests, protects the economy from the implacable force of water.


Keys Gate was carved out of wetlands, with the assistance of the US Army Corps of Engineers permitting system. Today, the wetlands are gone and so are home values. According to a recent survey for Businessweek, Homestead was the worst performing real estate market in the nation, with median home values dropping 48.8 percent since 2009. Although Hoffman's company, WCI Communites, crashed and burned by 2006, its current owners gloss over the bankruptcy as though it never happened.


Florida, the state with the highest foreclosure rate in the nation, is the epicenter of the housing boom and bust because this is the state where attacks on regulatory authority--mainly related to filling wetlands--provided the energy for a political engine as well. Although Democrats certainly had their fill of clamoring aboard the growth-at-any-cost, destroying wetlands at the same time swearing commitment to protecting them--the worst of the excesses in "free market" thinking were a direct result of finding a speedier way to execute -- that is to say, kill off wetlands-- in order to foment construction and development in wetlands. The abuses of Wall Street continue, with virtually no one held to account, and the same is true in places like Homestead. 99 percent of the landscape is affected, but 99 percent of voters have no idea what happened.

Knocking down regulatory barriers protecting wetlands still motivates the Chamber of Commerce, the homebuilders and realtors. The target is not state agencies-- captured long ago by state politics and campaign contributors-- but federal ones. In Florida, The 40 Year War Against The Environment has prominently featured the growth of an entire class of "environmental land use" attorneys and engineers and planners whose key objective is to run through loopholes created by and expanded to block the intent of federal regulations.


In one view, the persistence of attacks against federal regulatory authority-- when agencies like the US EPA and the US Army Corps have been beaten to the ground-- is the mistake of always fighting the last war. In another view, it is like watching a toy train that has jumped the tracks and crashed, with its wheels still furiously turning because its batteries are still intact. The lobbyists who advocated for the train to move faster than it could be operated, the builders who built the tracks too tightly to handle turns, and the high and mighty who provided the electricity, the schedules, and the passengers are all standing around the wreckage, throwing middle fingers to anyone with the temerity to suggest that they are responsible.


And this is literally what is happening. One top developer/ campaign contributor in Miami, Sergio Pino, has been in the news lately. 


Pino, in addition to being a developer and lobbyist, is also a banker. The bank he founded with chairman Ramon Rasco, US Century Bank, is on the verge of collapse. As reported by ProPublica recently, in 2009 the bank received the largest infusion of taxpayer cash in Florida, through TARP, at a time when its loan portfolio was cratering. The financial rating agency, Bauer Financial, gives the Pino/Rasco venture a "zero rating"; its lowest and partly the result of so many insider transactions (including a home mortgage to US Senator Marco Rubio) that Eyeonmiami has dubbed US Century the insider piggy bank.

In an October 12 filing in federal court, the US Department of Justice, on behalf of the US Army Corps of Engineers, asked for Sergio Pino to be held in contempt for violating a consent decree he entered with the government in 2009 for dumping dredge and fill material and destroying "hundreds of acres of wetlands for the construction of homes."

The contempt citing was based on a fine levied in December 2010 by a federal judge against Pino who noted Pino's "limited ability to pay" (Huge Fine Levied For Wetlands Violation Against Marco Rubio Supporter, Sprawl Builder Icon Sergio Pino, December 28, 2010). According to the website, CampaignMoney.com, Pino gave $98,000 to political candidates in 2008 and $32,000 in 2010. He gave hundreds of thousands to the Foundation For Florida's Future and its advocacy for "free market" environmentalism. Pino and Rasco's influence in Miami politics extends to the conduct of local elections and lobbying, in particular for the constant pressure to blow out the Urban Development Boundary in Miami-Dade where huge speculative bets on farmland and wetlands in the early 2000's continue to drag down the directors of US Century Bank. (The most recent development is to revive a plan to extend the major state arterial highway SR 836 to provide transit to outlying lands only a few miles from the Everglades. The value of affected property--developable or wetlands--is hundreds of millions, much of which is owned by politically connected individuals and corporations.)

Pino dumped into "a 51 acre preserve consisting of wetlands, a pond and a perimeter berm" that he had promised to be converted into mitigation.

In a December 2010 settlement, Pino pledged to pay a civil penalty of $400,000 to the United States "in specified installments". An additional requirement barred Pino from transferring the mitigation parcel without consulting the government, just like ECOBANK simply failed to notify federal regulators that is was going out of business. 


Like a good neighbor, the US DOJ will kiss and make up if Pino just pays what he owes. By comparison, if an ordinary citizen gives a stiff finger in protest to a Miami policeman--maybe one of those kids down at Occupy Miami--how easily do you think he will get off?

On April 11, 2011 Pino violated his agreement by selling the mitigation parcel to a Latin American rock mining company, Merbaca Agropecuaria Y Minerales. This is part of the fire sale that is going on, with big tracts of land in West Dade where Pino made his millions and US Century Bank, its daunting reputation with regulators at County Hall and county commissioners. 

In an earlier report, Pittman wrote of the government effort to regulate wetlands destruction, quoting current and past agency staff: ""It's a huge scam," said Steve Brooker, who has spent 15 years reviewing wetlands destruction permits for the U.S. Army Corps of Engineers in Florida. The no net loss policy is not being enforced in Florida because of the corps, the government agency primarily responsible for protecting wetlands. "We're not protecting the environment," said Vic Anderson, who recently retired after 30 years with the corps. "It's a make-believe program."


In a recent report by the US Department of Interior announced that US wetlands are "at a tipping point", another flight of language obscuring the corruption underlying the loss of irreplaceable wetlands. Craig Pittman, writing on his blog, noted dryly, "As we found, the US Army Corps of Engineers issues more permits for their destruction than in any other state."


In January 2010, Pino was identified at an auction of personal goods of the convicted fraudster Scott Rothstein (read the report at this link: Sun Sentinel). Pino was asked why he had purchased signed photos of both Gov. Charlie Crist and Jeb Bush, he glibly answered, "I'm Charlie's nightmare. ... Florida's worst governor and best governor." 

On June 14, 2011 according to the filing in federal court, Pino failed to pay the first installment of the payment to the United States according to the terms of the consent decree he had signed. On September 23, 2011, Century Homebuilders LLC-- Pino's standard bearer-- was administratively dissolved.

Pino's partner in US Century Bank, Miami attorney Ramon Rasco, plays the Democratic side of the ledger. He recently hosted a fundraiser for US Senator Bill Nelson who may have played a role in the 2009 award of $50 million in TARP money to US Century Bank at a time when, according to ProPublica, the bank was failing.

"It is hard to imagine a more obviously reckless and foolish use of TARP funds than U.S. Century in 2009," said Richard Newsom, a former FDIC bank examiner who has looked at the bank's public financials. "Contrary to TARP guidelines, this bank was in deep, likely fatal, trouble when it received TARP funds. It should have been subject to an enforcement action in mid-2009, not awarded $50 million in taxpayer dollars."

Unsurprisingly, the mainstream media has largely missed the connection between the financial crisis-- caused by insiders manipulating speed in execution from mortgage backed securities to wetlands destruction permits--and the wetlands crisis of the Florida Everglades. They are two sides of the same coin. As usual, federal agencies are concerned.


In a recent report St. Pete Times journalist Craig Pittman notes, "The U.S. Interior Department declared (its) concern over its findings of a continuing decline in the number of swamps, bogs and marshes. “Wetlands are at a tipping point,” said Secretary of the Interior Ken Salazar. “While we have made great strides in conserving and restoring wetlands since the 1950s when we were losing an area equal to half the size of Rhode Island each year, we remain on a downward trend that is alarming." But these alarms have been ringing for decades. Democrats, when in control of federal agencies, have not only been weak and ineffective at enforcement (cf. Pino), when Republicans are in power-- as they are in control of Congress today-- they fixate on environmental rules and regulations as the main barrier to jobs, when it is their own reckless behavior from positions of power that plunged the economy into the worst crisis since the 1930's.


"For Florida, the news is all bad." Pittman writes. "The state with the second-most wetlands (after Alaska) lost both saltwater and freshwater wetlands. But that's no surprise, as readers of "Paving Paradise" could attest. As we found, the U.S. Army Corps of Engineers -- which is in charge of protecting those vital wetlands -- issues more permits for their destruction in Florida than in any other state."


The coda to this story is the furious undercurrent of the Tea Party and the GOP Congress efforts to throttle the US EPA, an agency that accounts for approximately .3 percent of daily federal expenditures and yet consumes an enormous volume of the hot air. The EPA has a role in reviewing wetlands destruction, but the agency has failed its key missions. Yet according to the GOP, the EPA has not failed enough. In response the Obama White House is repeating the same mistakes of the past when Democrats, too, sacrificed wetlands and water quality for the political imperatives related to campaign contributions from wetlands destroyers. 


Of the EPA collapse on a decade-long struggle by environmentalists to impose numerical standards for nutrient pollution in Florida waters, the Palm Beach Post Randy Schultz writes, "(EPA's) capitulation has nothing to do with a debate about science. President Obama wants Florida's 27 electoral votes, and the EPA has become the Republican Party's excuse for all the nation's economic problems. It isn't true, but "job killing regulations" is a cry Mr. Obama doesn't want to hear in Florida." 


Giving the finger to federal agencies is apparently a tolerable offense, so long as you are not demonstrating in the streets. One ventures there is a double-standard and always has been. The thieves have the key to the granary-- in this particular case, the value of our nation's wetlands have been stolen and are being stolen, parcel by parcel. For all the law breaking and spewing venom at law enforcement attempting to protect wetlands, they really and truly believe they are doing the Lord's work.