‘Bag man’ pleads to massive Medicare laundering scam, might turn on fugitive Cuban brother

The Miami Herald

By Jay Weaver

www.cubaenmiami.com

When Cuban immigrant Eduardo Perez de Morales arrived a decade ago in Miami, he could not have imagined the good life that awaited him.

He helped his older brother operate a lucrative remittance company, and then diversified into fine art and other business ventures himself. He and his fiancée began breeding more than a dozen Andalusian horses at his future mother-in-law’s Miami-Dade home.

But just a couple of months before he was to be married at the legendary Biltmore Hotel in Coral Gables this summer, the 27-year-old U.S. citizen was busted for being his big brother’s “bag man,” authorities say. Perez, who once tooled around in a Maserati, faces up to six years in prison at his sentencing in January after pleading guilty last month to conspiring with his now-fugitive brother.

They are accused of shifting $238 million in stolen taxpayer-funded Medicare proceeds through shell companies in Canada and then into Cuba’s secret banking system. The byzantine scheme, described as a “massive money laundering operation” by a federal prosecutor, is unprecedented because it marks the first U.S. case connecting South Florida’s Medicare rackets to Cuba’s national bank.

“Eduardo Perez de Morales served as the middle man,” Assistant U.S. Attorney H. Ron Davidson wrote in a factual statement signed by the defendant in his plea agreement. “He knowingly delivered large amounts of cash to [Medicare fraud offenders] whom the defendant knew were engaging in illegal activities.”

Needless to say, Eduardo Perez’s swank July wedding — paid for by his prospective mother-in-law, who made a $25,000 down payment to the Biltmore — was canceled. That’s because, after repeated requests, Perez’s defense lawyers could not persuade federal judges to let him out on bond after his arrest in May because he was viewed as a “flight risk” to his native Cuba, where his 50-year-old brother, Jorge Emilio Perez de Morales Sante, may still reside.

“We’re talking about $238 million in fraudulent transfers, which is a staggering amount of money,” Magistrate Judge Lurana Snow said at a bond hearing earlier this year. “This defendant has frequent foreign travel, strong ties to Cuba, and every incentive to flee based on the magnitude of the fraud.

“I don’t know where his brother is, but it’s certainly not beyond the realm of possibility that this defendant might have an ability to join the brother.”

Although the U.S. Attorney’s Office has said there is no evidence showing the Castro government’s involvement, Davidson has repeatedly highlighted the Cuba connection established through the scheme’s alleged mastermind, Perez’s older brother, Jorge Perez.

Jorge Perez, a half-brother, is accused of directing the money-laundering operation through his Cuba-licensed remittance company, Caribbean Transfers, from 2005 to 2011. He owns a seaside home in Havana but could be in Mexico, the Dominican Republic or Spain, according to the FBI. Davidson called Jorge Perez’s remittance company, which closed after his indictment in 2012, an offshore Western Union.

Caribbean Transfers provided clean cash — amassed from Cuban exiles sending money to relatives on the island — to corrupt healthcare operators in Florida, Michigan, Tennessee and New York, according to an indictment.

Jorge Perez’s role was uncovered after a convicted Naples check-cashing store owner, Oscar L. Sanchez, fingered him as the man who bankrolled his Florida business and other remittance agencies. The prosecutor said those stateside businesses cashed checks or wired money for Medicare-fraud offenders — then transferred their dirty dollars through Jorge Perez’s shell companies in Canada via Trinidad to Cuba.

At first, investigators estimated that Sanchez laundered more than $30 million on behalf of 70 corrupt Medicare-licensed businesses. But the estimated total grew almost eightfold, as they discovered that Caribbean Transfers financed other check-cashing and remittance businesses involved in the alleged money-laundering scheme.

The money could have been disbursed as remittances to Cuban families or to others living on the island. “The location of hundreds of millions of dollars is unknown, and a vast fortune is likely sitting in a Communist country,” Davidson wrote in court papers.

Because the FBI has been unable to locate Jorge Perez, the younger brother’s former defense attorney suggested in federal court that he was being indicted solely to lure the accused fugitive ringleader to the United States.

Eduardo Perez’s original attorney, Douglas Williams, called the case “a zealous indictment of a younger brother that may to some extent be part of a calculation ... to suggest to his older brother that ... he’s going to be creating problems for baby brother. ... That’s what this case is all about.”

Now the baby brother, with his plea agreement to cooperate with U.S. Attorney’s Office, could turn on his older brother. Eduardo Perez’s deal holds him responsible for laundering only between $1 million and $2.5 million, a range that would limit his prison time to a maximum six years. He had faced up to 20 years in prison on the single money-laundering conspiracy plea.

But as part of the deal, Eduardo Perez has agreed to testify before a grand jury or at trial, if the prosecutor asks. That means that if his older brother, Jorge Perez, is ever captured and brought to court in Miami, the younger brother could be a key witness against him.

Eduardo Perez’s current defense attorney, Gustavo Lage, said his testimony is a possibility, but noted that the deal does not specifically require his taking the witness stand against the older brother.

“The cooperation agreement is standard boilerplate language, so that may or may not come to pass depending on what happens between now and even after his sentencing [in January],” Lage said Friday. “So far, no request has been made.

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