Millions of leaked documents and the biggest journalism partnership in history uncover the financial secrets of world leaders as well as Miami’s rich, powerful and celebrated.
In March 2013, Italian real estate developer Antonio Velardo was charged in two separate real estate money-laundering probes connected to organized crime in Italy.
But by then, he and three other associates had already turned their attention to a new target: South Florida.
As they would soon learn, the charges were no impediment to snapping up millions of dollars worth of property in Florida.
Companies tied to the four men have purchased more than 130 homes in the state since 2012 — the bulk of them in Miami-Dade County. A hundred of the homes were purchased after Velardo was charged, a Miami Herald analysis of property records found.
The charges against Velardo were connected to real estate deals in the southern Italian region of Calabria, including a seaside development called the Jewel of the Seas.
Prosecutors alleged that Velardo’s activity was tied to the fearsome ‘Ndrangheta, a powerful southern Italian criminal organization that dominates the Calabrian region and has been described by U.S. officials as “Europe’s most dangerous organized crime syndicate.”
Velardo was charged alongside lawyer Francesco L’Abbate and accountant Domenico Musarella in one of the probes, while the fourth man, Jacopo Iasiello, was picked up on a wiretap discussing Velardo’s desire to present a gold chain and Rolex watch as gifts at the baptism of the grandson of an ‘Ndrangheta boss, which Velardo described as a “political operation.” Iasiello wasn’t charged in either of the probes.
The four men began their South Florida real estate buying spree in the wake of the Great Recession, when banks were looking to unload foreclosed properties for pennies on the dollar. The homes favored by companies tied to them were typically inexpensive and often purchased in foreclosure, with an average price of roughly $120,000. But taken together the purchases added up to more than $16 million.
Most of them appear to be cash transactions, records show. A significant number of the properties were subsequently sold to linked entities, typically at a steep markup and sometimes in a matter of days.
The activity of the four men in Florida is known thanks in part to the “Pandora Papers,” a massive leak of offshore financial documents that has revealed how the ultrawealthy stash assets overseas and take advantage of shadowy financial systems to evade taxes and, in some cases, move illicit cash. The documents come from 14 offshore service providers from around the world and include 11.9 million records. They were leaked to the International Consortium of International Journalists, which shared the trove with the Miami Herald and 150 other news outlets. The Herald worked in conjunction with the Italian publication L’Espresso to produce this story.
Companies tied to all four men appear in the leaks, several of which indicated they were established to invest in real estate in the United States.
L’Abbate, the lawyer charged alongside Velardo in one of the probes, told the Herald that he faced “no problem” buying properties in South Florida despite the charges. He even secured mortgages for seven of the nine properties his companies purchased.
While there is no indication that any of their purchases involved the laundering of illicit funds, the fact that they had no difficulty purchasing so many properties as they faced charges in connection with a money-laundering probe highlights the ease with which anyone can buy property in the United States with few questions asked and raises the possibility that money connected to Italy’s powerful ‘Ndrangheta has flowed into South Florida’s real estate market.
American real estate, especially in South Florida, has long been an attractive target for those looking to launder illicit cash and anti-money-laundering laws require banks and most mortgage lenders to perform due diligence on home buyers seeking a mortgage and file suspicious activity reports if the source of a buyer’s funds could be connected to criminal activity. But it isn’t clear whether L’Abbate’s companies faced any scrutiny at all in securing the mortgages.
As the men were in the midst of their buying spree, the U.S. Treasury Department began to roll out Geographic Targeting Orders requiring title companies to disclose the true beneficial owners for all cash purchases above a certain threshold in a few jurisdictions across the country, including Miami.
The GTOs came in the wake of numerous stories detailing the growing trend of anonymous shell companies buying up high-end real estate in major U.S. cities such as New York and Miami. The influx of outside cash has distorted the real estate markets in these cities, driving up the price of housing and driving out local residents in cities like Miami that are favored by investors and foreign buyers. But the modest homes scooped up by the four men all were below the threshold that would require reporting.
The men balked at any suggestion that their purchases were illicit and explained their focus on Florida as strictly a business decision.
“[W]hen the mortgage crisis hit the U.S., I saw a unique opportunity to invest in real estate,” Velardo said.
Velardo was ultimately acquitted in one of the probes, dubbed “Metropolis.” Despite an initial four-year sentence on a tax charge in the second probe — “Black Money” — that charge was ultimately dropped on appeal for exceeding the statute of limitations and the other charges were dropped, as well. L’Abbate and Musarella, meanwhile, face a new trial after appealing their initial sentences on a tax charge in the “Black Money” probe, while the other charges have been dropped.
‘The ‘Ndrangheta calls the shots’
The ‘Ndrangheta doesn’t get the headlines of its more famous peers, the Sicilian Mafia and the Neapolitan Camorra, but law enforcement experts say its influence is far greater. Italian officials believe it controls up to 80% of the cocaine trade between Colombia and Europe. The group has accumulated massive wealth — one 2014 estimate pegged its annual revenue as roughly $70 billion, more than McDonald’s and Deutsche Bank combined and around 3% of Italy’s total gross domestic product that year — but it’s members have historically cut a lower profile than their peers in other Italian crime syndicates.
The group’s origins are murky. The FBI dates the beginning of the ‘Ndrangheta to the 1860s when a group of banished Sicilian outlaws settled in Calabria, but regional lore and some historical references trace its origins to the 16th century with the arrival of three Spanish knights, each of whom went on to found a syndicate: the ‘Ndrangheta, the Camorra and the Mafia. The group captured international attention due to a series of kidnappings, the most high-profile of which was the 1974 abduction of American oil magnate J. Paul Getty’s grandson, the subject of the 2017 movie “All the Money in the World.”
The ‘Ndrangheta dominates its home region of Calabria, the foot and toe of Italy’s boot-shaped peninsula and one of the poorest regions in the country.
“If Calabria were not part of Italy, it would be a failed state,” wrote J. Patrick Truhn, the former U.S. consul general in Naples, in a classified 2008 diplomatic cable titled “Can Calabria Be Saved?” later released by Wikileaks.
“Throughout Calabria, we heard the same laments over and over: the ‘Ndrangheta calls the shots and there is little hope for the region.”
Truhn, who retired from the State Department in 2013, told the Herald that the ‘Ndrangheta’s success in the region stems in part from its ability to provide services that local governments cannot.
“One aspect of the ‘Ndrangheta’s enduring success is that they get something done,” he said. “Public services are hopelessly ineffective in much of southern Italy.”
The unique structure of the ‘Ndrangheta, whose members are blood relatives connected to various clans within the organization, has historically made it nearly impenetrable to law enforcement.
“This group is without a doubt the hardest organized crime group to infiltrate,” said Joe Cicini, a former FBI agent in South Florida who has extensive experience investigating organized crime.
Cicini said the FBI would regularly get tips that the group was involved in real estate and other businesses in South Florida but was never able to flip any of the group’s members to build a case.
“We were always told ‘That money comes from Calabria,’ but we could never prove it,” Cicini said. “If you don’t have somebody on the inside explaining it, it’s all a theory.”
None of the three men charged in connection to the Calabrian developments were convicted of being direct members of the ‘Ndrangheta. The men deny any connection to the group.
Velardo’s whereabouts were murky when he was charged in the two investigations in March, 2013. He claimed to be living in Tunisia and soon after popped up in Belize, where he was briefly detained by authorities for allegedly failing to declare more than $20,000 in cash.
Velardo declined to say where he lives when asked by the Herald.
“As my business ventures require a lot of traveling, I currently do not have a fixed residence,” he said in a written response to questions sent by the Herald.
Prosecutors in the “Metropolis” and “Black Money” investigations said that Velardo worked closely with men tied to another of Europe’s most notorious organizations. He had created a company to market the seaside properties to foreign customers in the United Kingdom, Ireland, Russia and elsewhere with a former member of the Irish Republican Army, Henry James Fitzsimons, who had served prison time in the 1970s for bombing a hotel in Belfast.
Prosecutors also alleged Velardo had worked closely in Italy with Antonio Cuppari, who prosecutors said was part of the ‘Ndrangheta’s powerful Morabito clan and Antonio Maccarone, the son-in-law of one of the leaders of another powerful ‘Ndrangheta sect, the Mancuso clan.
In the wiretapped call picked up with Iasiello, Velardo makes clear that Maccarone is “a very important person in Calabria.” He discusses buying a gold chain for Maccarone’s son on the occasion of his baptism, and a Rolex for Maccarone, insisting that the gifts be genuine articles that are “certified,” lest he be driven out of Calabria.
The conversation with Iasiello occurred in March 2011, a year before companies tied to Velardo began buying properties in Florida.
Velardo said he was drawn to invest in Florida because he saw a good business opportunity, and because he had family in the state and had spent time there.
“For me it was an obvious choice, as I knew the area well and had been there many times,” he told the Herald. “Even though many investors were running away from and afraid of the real estate crisis, I knew that this was a unique opportunity.”
His companies continued buying properties after Velardo was charged in 2013. Velardo’s name appeared on most property and corporate records for early transactions, but within months of the criminal charges, Velardo’s name was largely replaced by another Italian man, Antonio Naddeo.
“While I was on trial in Italy, I did not feel that it was appropriate to be the sole manager and CEO of my companies in the U.S.,” Velardo said.
The majority of the homes purchased by these companies, which included APAX Investments (later renamed American Wise Investments), Jafi Holding Corporation and DGI USA Real Estate Investment, were in South Florida. Miami-Dade County accounted for nearly half of all the homes purchased, the Herald found.
These companies purchased more than 75 properties between 2012 and 2017, for a total of more than $7.6 million. The homes were modest, with a median price of $85,000, and many of them were purchased in foreclosure. Velardo’s companies have sold most of the homes, bringing in more than $13 million, a 74% return, though it isn’t clear how much they spent to rehabilitate or maintain the properties.
Velardo’s companies sold more than a third of the properties to other companies they were linked to, sometimes in a matter of days and for a steep markup.
For example, on Aug. 8, 2013, APAX America 01 LLC purchased a two- bedroom house in the West Little River neighborhood of Miami for $74,000 and turned around and sold it to a company called Lodgings in Florida Corp five days later for a 62% markup. The sale is listed by Miami-Dade’s property appraiser as occurring between affiliated parties.
The National Association of Realtors lists immediate sales with a dramatic change in value as one of the potential red flags that may indicate money laundering.
In eviction records, Lodgings in Florida Corp’s properties were managed by American Wise Management Services, listing Velardo’s associate, Antonio Naddeo, as the landlord.
The bulk of properties purchased by companies tied to Velardo appeared to have been bought through cash transactions, with the exception of three properties listed on a 2015 mortgage between two of Velardo’s companies and FL Lodgings Corp., a company with a similar corporate structure to Lodgings in Florida. The mortgage filing indicates that APAX secured a $640,000 mortgage from FL Lodgings in 2013 for no interest and that the mortgage was satisfied in 2020.
Velardo said he has no connection to the companies and that there was nothing unusual about the transactions.
“They belong to different individual investors who formed U.S.-based companies to invest in U.S. real estate,” Velardo said. “The sales to those buyers were legitimate, properly recorded, and in compliance with U.S. and Florida law.”
‘The darkness went away’
As Iasiello tells it in a slick biographical video posted to one of his various real estate websites, the glut of foreclosed South Florida properties following the Great Recession offered him a form of redemption when his jewelry business in Italy fell on hard times.
“The darkness went away and the light was coming to my life,” Iasiello says.
Iasiello, a licensed real estate broker, exhaustively and cheerfully documents his work buying, rehabilitating and flipping these homes, providing daily video diaries of the work and line item breakdowns of the entire cost — and profit — associated with some of his projects. He even describes his efforts to evict some of the tenants who occupy the homes he acquires.
Iasiello has had a lot to document.
The Miami Herald’s analysis of South Florida property records turned up more than 50 homes scooped up by companies associated with Iasiello since 2013 for a total of more than $7 million, working out to less than $150,000 per home, on average. Nearly all were all-cash transactions and the properties were typically held for less than a year. Some of the homes were purchased by companies that listed Iasiello’s attorney, Louis Stinson Jr., in the paperwork, Stinson deferred to Iasiello when contacted by the Herald about the properties.
Less clear is where the money comes from. The normally loquacious Iasiello, who was not charged in either probe, has had little to say when asked about his investors.
“No comment,” he said. “I am a working guy, I pay my tax.”
Pandora Papers trail
Iasiello is listed as a beneficial owner for a British Virgin Islands company called Accent Wealth Development Limited, according to the Pandora Papers. The leaked documents list a Miami address and indicate that it was engaged in real estate investment.
Iasiello was listed as an owner of the company alongside L’Abbate, the lawyer, and Musarella, the accountant, who were charged in Italy alongside Velardo in the “Black Money” probe.
L’Abbate and Musarella, both from Calabria, were also listed as beneficial owners for several other companies registered in the British Virgin Islands, the Pandora Papers show. One was called USA Tax Lien Investment Ltd, and registration paperwork indicated that the company’s income would come from real estate consulting work, with anticipated clients from across Europe.
In now-leaked October 2012 correspondence, L’Abbate said that the funds for registering several of the companies would be coming from LTB Consulting Tunisia. Two months later, Velardo submitted paperwork to the state of Florida in which he listed a company called LTB Consulting SuarL, based in Tunisia, as one of the three shareholders for one of the companies he had used to purchase Florida real estate. L’Abbate and Iasiello were his two other partners in the venture, which Velardo said ended in late 2012.
Accent Wealth Development was also short-lived. L’Abbate says the 2013 charges and resulting notoriety spelled the end of Accent Wealth Development.
“We decided to split,” L’Abbate said. “I didn’t want to drag down anyone else with this problem.”
While their partnership might have been short-lived, companies tied to L’Abbate, Musarella and Iasiello did all purchase properties in 2014 tied to the same man: David Franza.
Franza told the Herald he had no recollection whether the three men were acting in concert and no knowledge of the criminal charges against L’Abbate and Musarella.
“As far as anything about any of their past activities, I didn’t know anything about it,” he said.
A Miami Gardens home purchased by Accent Investments RE, LLC from a Franza-affiliated company is the only property the Herald found associated with Musarella.
The home L’Abbate purchased from a Franza-connected company was one of several in South Florida.
Companies tied to him bought nine properties, for a total of $1.3 million, between March of 2013 and October of 2015, and L’Abbate took out mortgages on seven of the nine properties.
Lenders are supposed to vet borrowers to try to determine the source of their funds and ensure compliance with anti-money-laundering laws, but L’Abbate said he didn’t encounter difficulties purchasing the properties, despite the sentencing in Italy, because the legal process for his case is still ongoing.
“The criminal record cannot be updated until there is a final decision,” said L’Abbate, a lawyer by training.
The lender and title company that approved the bulk of the mortgages each pointed to the other when asked about whether they had vetted L’Abbate’s companies.
Richard Stanton, the president of the Miami-based Principal Lenders Group Inc., which issued several mortgages to L’Abbate’s company, said he had “no idea” about the charges against L’Abbate and that the lender relies on title companies to perform a check on buyers.
“We actually have it in the instructions package for the title company,” he said.
Not so, says Working Title, LLC, the Coral Gables title company that worked on these mortgages.
“If somebody is buying property in Florida, there’s no background check done on a buyer, unless a lender does one,” said Cookie Slingbaum, a national sales manager at Working Title. “All we check is the seller.”
Lakshmi Kumar, the policy director for the anti-money-laundering non-profit advocacy group Global Financial Integrity, said that the charges against L’Abbate should still have raised red flags but that smaller lenders like the ones used by L’Abbate aren’t as equipped to spot potential money laundering or other suspicious financing.
“Outside of the large financial institutions, a lot of these guys are ill-equipped to do [anti-money-laundering] due diligence,” Kumar said. “It’s a gap.”
Deena Sabry of the Miami Herald, Leo Sisti and Paolo Biondani of L’Espresso and David Szakonyi of the Anti-Corruption Data Collective contributed to this story.
This story was originally published December 7, 2021 10:00 AM.