Left to rot: Collapsed condo born of botched construction and evidence of money laundering

When Champlain Towers South ascended from the beachfront 40 years ago in the quaint Miami suburb of Surfside, the new condominium gleamed with promise.

It was the first swanky high-rise condo in the tiny town, and it solidified the neighborhood as a gathering place for the rich and famous such as Frank Sinatra, who hung out down the road. For its residents – from millionaire cocaine smugglers to family vacationers – it was all about landing their little slice of paradise.

But even before developers sold off the 136 condominiums to their first owners, the construction had been botched and the building had been set on a course to rot from the foundation up, a USA TODAY investigation shows.

USA TODAY set out to compile a complete accounting of the forces at work on the building that collapsed June 24, killing 98 people. Reporters pored over thousands of pages of documents, including deeds, inspection records and homeowner association minutes. They interviewed dozens of people, including money laundering and engineering experts and residents who called the building home from its birth in 1981 to its deadly end in 2021.

The reporting reveals for the first time that early condo sales exhibit tell-tale signs of a money laundering scheme. Experts said cutting corners on construction often accompanied money laundering. At Champlain South, engineers noted an incorrectly designed pool deck and improperly constructed support columns. Money laundering might have meant that some early buyers weren’t living in the condo building or concerned with its long-term maintenance.

"The era we’re talking about is when Miami suddenly came out of the ashes. So how do you rush to fulfill the demand? You cut corners. You attached roofs with paper clips. You bribe the inspectors," said Jorge Valdes, who was not involved in Champlain South but helped build dozens of homes, apartment complexes and high-rises in the Miami region as a chief money launderer for the Medellin Cartel.

The reporting reveals that troubling evidence of the building’s decay emerged earlier and was ignored longer than previously known. Residents noted flooding in the garage in 1981, the year the tower opened. By 1996, they were making repairs to the concrete in the garage ceiling. In 2016, as construction rumbled on a new condo next door, a Champlain South resident was shaken off a treadmill.

Homeowner association records and interviews with residents show that these problems were addressed in isolation, a series of seemingly small problems that no one connected until 2018, when an engineering report laid out construction errors that investigators are examining to determine if they contributed to the collapse.

Even when engineers finally alerted residents to design flaws that were causing chronic water intrusion and growing damage to concrete, the arguments and delays over needed repairs did not focus on safety but about the cost and inconvenience of fixing the problems. During the building’s final years, homeowners voted to delay a repair of "deep" concrete deterioration near the pool, so they could keep it open through the summer, a 2020 engineering document shows. It was the first part of the building that caved, witnesses said.

As building maintenance was deferred and problems continued to crop up, the condo’s luxury designs and high-end finishes became dingy and dilapidated. People looking for top-tier beachfront living in Surfside went to the newer places next door.

A USA TODAY analysis of 40 years of real estate sales in Surfside tracked the rise and fall of Champlain’s fortunes, from one of the most expensive in the region to a tarnished bargain.

Champlain South’s biggest sale in 2021 came in May when a couple paid $2.8 million for a four-bedroom penthouse in the 40-year-old building. By contrast, a three-bedroom at the 2-year-old Eighty Seven Park condos next door sold for $9 million, more than three times as much.

To understand how the building declined and fell from its inception, "timing is key," said Nicholas Griffin, who wrote a book exploring cocaine, the race riots and refugee crisis in Miami in 1980.

“This is all going on at exactly the time they are putting together the Surfside deal,” Griffin said. “So you can imagine how far down the bottom of the list honest inspections of potential building disasters would be.”

He paused.

“Seeds were planted that took 40 years to grow and then collapse.”

Born bad

The plot of land where Champlain South once stood grabbed developers’ attention in the earliest days of America’s beachfront condominium boom.

For most of the 1970s, the entire block that became Champlain South was a fenced-off pit, about 12 feet deep. Developers had bought the 3-star Coronado Hotel, demolished it and announced a 12-story condo to take its place.

But that project never came to be. Developers couldn’t resolve a fight with Miami-Dade County over sewer system upgrades, according to a Miami Herald article in 1973. Instead, a shack sprouted in the pit, where kids “smoked pot and hung out,” said Ray Lovado, 54, who grew up two blocks from the site.

The property sold in 1978 and again in 1979, eventually landing in the hands of developer Nathan Reiber and his partner Nathan Goldlist and associates.

They revived big plans for the spot – plans that made Surfside leaders’ eyes sparkle.

“It was going to be money in the coffers to keep the tax burden low for the residents,” said Mitchell Kinzer, who was the mayor of Surfside at the time Champlain South was built. Champlain South and its nearly identical twin, Champlain North, ballooned the tax rolls by a reported $35 million in 1982, generating more than enough to cover plans for 5% pay hikes for town employees.

Reiber faced tax trouble in Canada. His lawyer, Stanley Levine, had been indicted for attempting to bribe an official in Florida on an earlier project; and one building contractor hired to work on the Champlain South project was forced to surrender his license after numerous infractions. The architect’s license had been suspended in Florida after sign structures he designed collapsed during Hurricane Betsy in 1965.

Reiber, Levine and others who led the building’s development have since died. Attempts to reach their relatives were unsuccessful.

Thousands of pages of deed and mortgage documents reveal that within 24 months of opening, at least 62 sales exceeding $9.5 million showed classic signs of money laundering.

To use money from drug sales, cartels have to make sure the cash can’t be tracked back to its illegal source. Purchasing real estate with drug money through an anonymous corporation can do that because proceeds from sales or rentals become a plausibly legitimate source of money that can be safely banked or spent. Mortgage repayments also create a legitimate revenue stream.

That’s why concealed buyer identities, all-cash sales, hidden sources of private loan money, overpaying for condos and rapid repayment of loans are all considered red flags for money laundering.

Not all such transactions are illegal. In 1981, money laundering was not a crime. That changed in 1986 with the Money Laundering Control Act, which prohibits engaging in financial transactions using money from certain crimes.

At Champlain South and North, red flags were commonplace. Buyers purchased units through shell companies in countries such as Panama and the Netherlands Antilles, both notorious for laundering drug money through anonymous corporations. One buyer was headquartered at the same address as more than 200 other offshore companies, according to the Panama Papers. Multiple sales involved all cash and overpayments.

"Shell companies, cash deals, fast sales, strange buyers, tax haven companies as owners, hidden beneficial ownership, all the bells and whistles of suspicious transactions that compliance officers today would recognize in a New York minute,” said Ken Rijock, a Miami financial crime consultant and former banking attorney who laundered money for Colombian cocaine cartels in the 1980s.

Records show a fund controlled by Reiber’s attorney loaned millions to people buying condos from Reiber and his partner.

If they took part in money laundering in the sales, experts said, the developers were probably cutting corners on construction and anywhere else they could boost profits.

“You wanted to put up real estate as quickly as possible because the money was flowing,” said Valdes, the former Medellin money launderer. “We could buy any building inspector at any given moment. There were no stringent codes. There were no money laundering laws.”

Levine used a trust account with an unidentified source of money to shell out more than $3 million in high-interest loans to early buyers at Champlain South in its first two years and at least $1.4 million to Champlain North, a red flag for money laundering schemes, said Charles Intriago, one of the nation's most trusted chroniclers of the war on money laundering in Miami during the 1980s.

“If the main players of a building are engaged in corrupt activities, they are more than likely to be involved in corruption in every single phase of it. That includes from the time the person buys it, to the construction, to the completion and the sales of it. There's going to be a temptation to cut corners, and Miami was – and is – fertile ground for this,” the former federal prosecutor said. “That Surfside tower is no exception.”

Levine’s loan terms could be back-breaking. Interest rates frequently topped even the average 16 percent charged by banks in 1981. Twelve-month paybacks for six figure loans were not unusual at Champlain South. But the loans were popular: Even Reiber’s Champlain business partner, Goldlist, borrowed $150,000, records show.

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Another sign of money laundering: At its start, Champlain South commanded top-of-the market prices for condominiums even though condos with more amenities were selling for less.

For instance, in 1980, Triton Tower condominiums advertised everything Champlain offered – and then some: a restaurant and two pools. It was in Miami Beach, a better-known address with more cachet.

There, the asking price for a penthouse was $121,000; $137,000 for a luxury two-bedroom. At Champlain, a penthouse in 1981 sold for $216,800.

Despite the inflated price tags, early buyers flocked in from Brooklyn, Denver, New Jersey and Canada, where Reiber and Goldlist had business and personal ties.

When Marely Fuquen overpaid for her fifth-floor, two-bedroom in 1982, she didn’t just join the ranks of offshore and foreign buyers paying cash for condos. She put the Cali, Colombia, cocaine cartel into the heart of Champlain South.

The mother of four was the mistress of Jose Santacruz Londono, the cartel’s lead money laundering overseer.

Working from a network of Panamanian banks and corporate shell companies, his Luxembourg-based financial wizards moved money from street drug sales in the U.S. to Panamanian banks, and from there, to European and Colombian accounts and corporations.

Fuquen told others she feared for her children if something should happen to her. And something did.

In 1989, Fuquen disappeared. DEA agents investigating the drug kingpin believed Santacruz ordered her murder.

Assessment checks on her Champlain South condo kept arriving until three months after authorities arrested Santacruz’s European money laundering team and froze millions of dollars of his personal fortune. Federal prosecutors filed to seize the Champlain condo unit, part of a broader seizure of cartel assets.

“When you’re dealing with dirty money, it seeps into the sales. Something’s gotta give, so the prices are inflated. It increases the cost of the unit,” Intriago said. “They gotta make that money back somehow, and it's easy to disguise. Who the hell is gonna know?”

Errors all around

Rebecca Posner was one of the first to move into Champlain South. Her father bought the condo in 1981, she said, so she would have a place to spend time with her children when they took breaks from their boarding schools in the North.

Posner liked the condo. She liked her neighbors, “all very friendly,” she recalled. She had only one complaint: From day one, every time it rained, the garage flooded.

“We always had to take the cars out,” said Posner.

From garage floor to penthouse ceiling, construction choices and certain deviations from blueprints made the condos more appealing, and in some cases, more vulnerable.

Near the pool deck, added decorative planters layered on thousands of extra pounds of weight. A hot tub was not on structural drawings; a filled hot tub can weigh 6,000 pounds.

The area was already vulnerable. The pool deck had been designed as a flat surface, a “major error” identified decades later in a 2018 report by the condo board’s engineering consultant. With no slope, water did not drain away, but pooled below-ground, compromising the concrete structure.

Beneath the ground floor, a switch in parking garage design eliminated certain support structures. One garage column used 80 percent of its support capacity to hold up concrete slabs above it, said Abi Aghayere, a professor of structural engineering at Drexel University. Only 20 percent was left to handle any other weight, including people, furniture and appliances.

The New York Times and the Miami Herald each first reported on certain errors and changes in concrete columns and slabs. Aghayere conducted an independent analysis.

There were too many steel reinforcing rods – rebar – inside some columns, the engineer said, which can weaken those supports by leaving too little room for concrete. And while building codes at the time required a minimum 1.5 inches of concrete covering for slabs, Aghayere found plans called for less than an inch of the protective covering.

"Providing lower than the required concrete cover to the rebar in the garage slab – especially given that the slab had no waterproofing membrane and was frequently exposed to sea water infiltration – could have led to corrosion," said Aghayere.

That would create a vicious cycle: As the steel support rods inside concrete corrode, they expand, he said, cracks would form. Cracks create openings for more seawater to corrode still more rebar and weaken more concrete. Ultimately, said Aghayere, it undermines the strength of the slab, risking "a sudden rupture" and collapse.

There’s no explanation, and in some cases, no known records, of changes and crucial components. The entire penthouse was an add-on to original plans, in effect creating a 13th floor. Documents show gaps in specifications on types of columns to be used and how much steel support they required.

However, marketing photos show a slender rectangular column on the sweeping penthouse balcony where blueprints for other floors in that same area called for stronger square columns. Rectangular columns are weaker, but provide a better view, a key selling feature for the penthouse.

The exterior penthouse balcony columns were exposed to corrosive salt air and rain. Construction codes required a two-inch-thick concrete covering for those and any other exterior columns. Aghayere said he found no plans for coating in a search of city-supplied blueprints and building records.

No one apparently noticed at the time.

“You can imagine a municipal government as small as Surfside, not having many layers of safeguards,” Intriago said. “Not doing inspections in this region of Florida is as common as you having breakfast in the morning.”

Showing cracks

For millionaire drug smuggler Pedro “Peggy” Rosello, Champlain South offered an under-the-radar refuge where cocaine dealings, Ferraris and indoor hot tub parties abounded.

He arrived there in 1988, at the peak of the drug war in Miami. Cash flowed in, he said, and the luxury condo on Collins Avenue was a hub where kingpins partied hard, out of sight of undercover cops.

From the outside, he said, the building was beguiling. The inside: discreet.

“All the attention was still on South Beach, so I could walk into an elevator knowing nobody would catch on to me,” Rosello, told USA TODAY from his prison cell. He’s serving a sentence for a cocaine conviction at a federal prison in Miami until February 2022.

In 1991, Rosello, a “cocaine cowboy,” said he was weeks away from buying the fifth-floor, two-bedroom condo he was renting under an alias in Champlain South. Those plans changed when authorities indicted him for his role in Miami’s biggest cocaine ring.

“Who knows? If I would have bought it, my son, ‘little Peter,’ could have been the one living there at the time of the collapse,” he said. “But at the end, the building fell, just like our once cocaine empire.”

By 1996, according to permits for the work, contractors were already making major repairs to the concrete in the garage ceiling, the underbelly of the improperly designed pool deck. It was just 15 years after the building had opened and already concrete at its base was falling apart.

No one knew it at the time, but Champlain South was also sinking at a rate of about 2 millimeters a year in the 1990s, according to a study of historical satellite data in 2020 by Shimon Wdowinski, a professor in the Department of Earth and Environment at Florida International University. USA TODAY first reported on the study hours after the building collapsed.

Cracked walls or shifting foundations can be clues that sinking has affected the stability of a structure, experts say. Residents of the building might have noticed changes.

“Had there been changes in the building? Cracks in the walls, in the floor? Floors not being level, things rolling off tables?” Matthys Levy, author of “Why Buildings Fall Down: How Structures Fail,” told USA TODAY in June. “That would indicate the building was shifting.”

In 2001 and 2015, a Champlain resident filed lawsuits against the same concrete contractors the condo board hired for repairs in 1996, alleging that cracks in the building’s outer skin had allowed water to penetrate into their units.

Meanwhile, Champlain Towers South was already sliding in desirability, relative to the surrounding buildings. Champlain South had topped the market when it opened, but by 1996, a USA TODAY analysis of real estate sales shows, the median sales price of a Champlain North or South condo was $105 per square foot, compared to $129 for other Collins Avenue condos in Surfside and Miami Beach.

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By 2001, the gap had widened: $143 per square foot at Champlain North and South compared to $193 per square foot at other beachfront condos in the area.

Regardless of price, Champlain condos still offered the two most important South Florida selling points: They were on the sand. Windows framed ocean views.

And while prices may have reflected the building’s age, those lower prices also bought owners more space, said Peter Zalewski, a South Florida condo consultant.

“It might not have been the building they wanted,” he said. “But pound for pound,” he said, a lower cost and proximity to sand and surf made Champlain desirable: “It’s square footage versus price.”

Steve Rosenthal agrees. In 2001, he jumped at buying a two-bedroom unit with a view of the bay.

“It was a bargain. It was the place to buy, well, until it wasn’t,” said Rosenthal, who for the span of almost 20 years witnessed puddles appear in the parking garage during the full moon and high tide, as well as cracks snaking across balcony floors.

“They would appear, you would complain, and nothing was ever done. They would grow, and it was the same pattern,” he said, echoing another resident on the eleventh floor, who in 2019 complained to the condo board that a piece of concrete fell from the balcony above his.

Balconies are a perennial weak link. Nationwide, prior to the Champlain collapse, all but two of 26 injuries involving a condo structural failure between 2015-2021 involved balconies.

“People would come to my house with a stick and poke the balcony ceiling but no work was ever done,” Rosenthal said.

For a brief time while Rosenthal was seeing cracks spread, Florida law required deeper inspections that might have caught larger problems at Champlain South. But in 2010, Florida's legislature killed the 2008 law that called for condominium associations to inspect and assess maintenance needs every five years.

It would be 2018 before engineers examined the building’s structure and only then because Miami-Dade County takes the rare step of requiring an inspection as a building turns 40.

But by then, time was running out.

Shaken

It took being tossed off a treadmill for Steve Rosenthal to become a believer.

By 2016, the sharp jolts and shakes roiling the lower levels of Champlain South were the talk of the building. But for residents who lived anywhere above the third floor, the vibrations from the construction of a new high-rise next door sounded like a myth. Rosenthal had felt nothing in his seventh-floor unit.

Then, running in the first-floor gym, Rosenthal said, “I felt it for myself. The banging literally shook the gym.” His feet slipped off the treadmill, but he clutched a handle to avoid falling.

“I had to hold on tight to the tread.”

The construction of Eighty Seven Park – a taller, plusher condo complex than Champlain Towers South – brought more than just complaints of shaking. It brought incessant noise. Unabating dust. Styrofoam bits floating in the communal pool.

The 18-story building broke ground in 2016 on the lot immediately south of its aging neighbor, just a few yards across the city line in Miami Beach.

Construction vibrations are a common enough problem that builders take detailed photos of neighboring buildings, experts say, so that they can compare them afterward to determine whether their activities might have caused cracks, settling or other damage.

Champlain South should have been inspected prior to the start of Eighty Seven Park and after its completion, Aghayere said. Those pre- and post-construction surveys should have noted any existing cracks and any new cracks that formed during construction.

“The construction vibrations should have been monitored during the construction using a seismograph to verify that they were not excessive,” he said.

Developers declined to provide the vibration documents and surveys to USA TODAY.

Seven of the 33 lawsuits filed by the families of victims of the collapse list Eighty Seven Park’s developers as defendants, saying they didn’t take precautions to protect Champlain South during construction.

Miami Beach code compliance officers were called out to the construction site 94 times over the five years of the condo project, USA TODAY found. Records show about 62 percent of those were noise complaints; among the others were Champlain South residents concerned that the vibrations were damaging the decaying building. As a result, the contractor and development firm paid the town $26,500 in fines.

But no matter how many times Champlain South residents complained, nothing was done to address concerns at their building, records show. Emails between residents, the condo association and the town of Surfside document that.

Board member Mara Chouela wrote an email to then Surfside building official Ross Prieto in January 2019 with concerns about the building’s structural integrity.

“We are concerned that the construction next to Surfside is too close,” she wrote. Workers were “digging too close to our property and we have concerns regarding the structure of our building.”

She attached two photos of construction equipment just over the pool deck wall and asked if someone from Surfside could come check on the situation.

Prieto responded 28 minutes later: “There is nothing for me to check.”

USA TODAY reached out to Chouela and 26 other former Champlain South board members who served as far back as 1997 through a combination of calls, emails, and hand-written letters. Chouela hung up on a reporter. Others either did not respond or would not talk for this story.

Red flags

Jay Miller, who purchased his third-floor unit in 2018, took a chance on the older Champlain South.

“Unlike a lot of new buildings, it had very large rooms, it had very spacious hallways and apartments, so it just needed to be refreshed,” Miller told USA TODAY. “But apparently, there were underlying structural problems that nobody had raised a major alarm about.”

The retired journalism professor noted that it wasn’t until he had moved in that he spotted red flags such as paint peeling off the ceiling and regular flooding.

“The garage was a total disaster,” he said. “Sometimes when there was a lot of water in the basement, you literally had to wade through the water to get to your car. When I first moved in, it was bad but it wasn't awful, but after that, it kept deteriorating.”

Condo owners, many living on fixed incomes, are known for furious opposition to even small repair assessments, and Champlain South was no exception. Board members repeatedly emphasized the need to keep costs under control.

Wrote one in 2016, “My main concern is to oversee future projects and ensure money can be saved … and that we can make necessary upgrades without having to dig into each other’s pocket.”

Champlain board members and activists were not uneducated: The treasurer was a CPA. Board candidates and activists included a construction company president, a chemical engineer, a residential property manager, a real estate specialist and a former bank executive. And setting aside a bit more than $151,000 a year for repairs between 2018-2020, Champlain South board members may have thought their $706,000 in reserve money was ample.

It was a fraction of the more than $15 million needed by 2021 to fix urgent repairs and safety hazards such as cracking concrete, but, said Eric M. Glazer, a Florida condominium law attorney, “The reality is that condo buildings with even $700,000 are few and far between. Some have zero dollars in their reserve accounts.”

Surfside’s building age, and how that could impact repairs and costs, mattered to some. Before Miller bought his condo, a title company asked Surfside town officials whether the condo’s 40-year electrical and structural certification had been completed. The town said no. The sale went through.

Four months later, in October 2018, a Morabito Consultants engineering report detailed a litany of concerns to the board. Among them: Rebar, the iron rods strengthening concrete, were exposed and deteriorating in the parking garage area. Concrete was cracking in columns, beams and walls. Previous concrete repairs were failing.

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And consultants emphasized the original design flaw underpinning the pool deck area. There was an urgent need to rip up the concrete slab in the pool deck, they wrote, so that a waterproofing “membrane” could be installed; not doing so would cause the concrete’s existing deterioration to “expand exponentially.”

When Prieto, Surfside’s lead building official, received the Morabito report, he took no action, just as he did with concerns about Eighty Seven Park, records show. Instead, he told condo residents their building was “in very good shape.”

In the months following the 2018 Morabito report, condo board minutes reflect almost none of the alarming language of the findings.

Board members reassured the worried resident that they were in the process of selecting a contractor for concrete restoration. That was in August 2019.

Almost a year later, an engineer who had been asked to walk around the building looking for needed repairs reported to the condominium manager that he had “Knocked some concrete edges off patios that looked emanate(sic) of falling.” In July 2020, a contract for concrete restoration and waterproofing work had still not been finalized. However, the board had stepped up other repair efforts.

Almost 19 months after Morabito Consultants catalogued “abundant” cracking in concrete columns, beams and walls of the parking garage, the board voted to approve a contract with the engineering firm to oversee the repair work.

They needed millions. “We should have started saving at least five years ago,” a condo board slideshow on finances concluded.

As the board played catch up, Champlain South was nearing its final hour.

In the early morning of June 24, the floors rumbled. The walls shook. Windows shattered.

Was it an earthquake? A bomb? Rosenthal had no clue. As picture frames crashed to the floor, the 72-year-old moved fast, pushed by an adrenaline rush of fear.

He grabbed a duffle bag and shoved what he thought he would need for a few days: Two pair of shorts, two shirts and 6 pairs of socks and underwear. His favorite "Sunday funday” shoes – bright blue loafers with shiny gold toes – made it in there too.

He thought he would escape the crumbling building down the stairwell, but rescuers on a cherry picker had to pluck him from his balcony.

“I opened my door in the dark that night only to see the sky beneath my feet.”

Contributing: USA TODAY reporter Romina Ruiz-Goiriena and Palm Beach Post reporter Wendy Rhodes

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This article originally appeared on USA TODAY: Money laundering evident at collapsed Surfside condo building