The high-profile federal raid on a South Florida ophthalmologist's office was more about potential Medicare fraud than about U.S. Sen. Bob Menendez, a longtime friend of Dr. Salomon Melgen.
Joining FBI agents on the two-day raid at the doctor's West Palm Beach eye center: a team of investigators from the U.S. Department of Health and Human Services, which investigates Medicare wrongdoing.
The FBI is separately examining the ties between Menendez, a New Jersey Democrat, and Melgen in a parallel corruption investigation launched last year, The Miami Herald has learned.
FBI agents are investigating the allegations of a shadowy tipster who claimed the doctor flew Menendez on his plane to the Dominican Republic.
Earlier this month, Menendez quietly sent a $58,500 personal check to Melgen's company to reimburse the cost of two flights to and from the Dominican Republic, the senator's office confirmed Wednesday.
The tipster's most explosive charge: that the two allegedly hired underage prostitutes.
Menendez strenuously denied the accusation and blamed it on an election-year conspiracy involving the conservative website, the Daily Caller, which stands by its reporting.
"Any allegations of engaging with prostitutes are manufactured by a politically motivated right-wing blog and are false," Menendez's office said in a statement Wednesday, following the raid on Melgen's clinics in West Palm Beach and two other South Florida locations.
The ethics watchdog group that brought the tipster to the FBI's attention also suspected that a partisan, political motive underpinned the allegation about the prostitutes.
The information was pushed just months before Menendez's successful re-election in November.
What has transpired since is a web of political recriminations, big money, sex, hard-ball investigations and a public-relations nightmare for a powerful politician and his longtime friend, Melgen, who couldn't be reached for comment.
The raids on Melgen's eye centers involved dozens of agents with the FBI and HHS's Office of Inspector General hauling away boxes of financial documents, patient records and other materials that will be used for their joint Medicare fraud investigation into the doctor's business.
In South Florida, the two agencies routinely join forces to investigate allegations of fraud, such as false claims submitted by health care providers to the taxpayer-funded Medicare program for the elderly and disabled.
Agents began their raid late Tuesday and continued their search into Wednesday at the doctor's West Palm Beach office. At one point Wednesday, agents escorted a locksmith onsite.
Agents conducted the raid primarily to investigate possible fraudulent billing activities by Melgen's business. But they could use any evidence they find for the parallel corruption investigation concerning the prostitutes, trips Menendez took on the doctor's private plane and the senator's gift disclosures.
Menendez's office said he flew only three times on Melgen's plane: two personal trips in August and September of 2010 that did not need to be publicly reported and a May 2010 trip that was reimbursed by the Democratic Senatorial Campaign Committee, which Menendez chaired at the time.
During Menendez's tenure, records show, Melgen and his wife contributed $60,400 to the group.
Since 1998, Melgen and his family have contributed another $33,200 to Menendez's various campaigns out of nearly $358,000 in political donations they gave to him and other candidates and causes. Most recipients are Florida Democrats.
Melgen's contributions appear typical for a mid-range to large political donor. The FBI is examining whether Melgen gave any unreported or impermissible gifts.
The FBI also is investigating the allegations involving hiring prostitutes, some of whom the tipster said were minors. Sex with a minor is a U.S. federal crime even if it occurs with a child in another country. Menendez has called the allegations of illicit sex "fallacious."
The Senate Ethics Committee chairwoman, Barbara Boxer, said her committee couldn't comment on any pending complaint and said it wouldn't act in the short term.
"If you go back to the way we've handled it in prior cases, if there is a Justice Department investigation going on, then there's normally a deferral until they've completed that investigation," said Boxer, D-Calif.
Sen. Charles Schumer of New York, the No. 3 Senate Democrat, responded angrily when asked about the Menendez matter.
"I am not going to comment," Schumer snapped at a reporter.
Neither would Florida Sen. Marco Rubio, a Republican and member of the bipartisan immigration-reform group that includes Schumer and Menendez.
News of the two-day raid sent shockwaves from the Dominican Republic to Washington to New Jersey. The search and seizure at Melgen's office happened just as Menendez becomes a national figure for his leadership in the immigration debate and as he assumes the chairmanship of the Senate Foreign Relations Committee.
Just before Menendez took over the chairmanship, anonymous sources began circulating a batch of emails between the FBI and the tipster discussing allegations that Menendez had sex with Dominican Republic prostitutes at Melgen's Casa de Campo estate.
The emails between the FBI and the tipster, who went by the name "Peter Williams" and used a Yahoo! email account, indicated that an FBI agent became frustrated with his elusiveness in recent months.
He refused to call the lead FBI investigator, Miami-based agent Regino Chavez, or meet with him personally. All correspondence was by email.
Early on, Chavez told the tipster that "we have been able to confirm most" of the information he provided. But it's not clear what that information was at the time. And over the months, the tipster kept dodging him and failing to provide information, according to a dossier of the emails sent to reporters anonymously.
Chavez was given the tipster's email account in August by the group Citizens for Responsibility and Ethics in Washington, called CREW.
CREW's executive director, Melanie Sloan, said the group made sure the FBI investigated the case after the FBI failed to follow up on another inquiry years before involving then-Congressman Mark Foley, a Republican from West Palm Beach.
Still, Sloan had concerns.
"It didn't seem credible," she said. The tipster "said he wanted justice done but also suggested he knew about this activity since 2008," she said. "But he decides to hold off on telling anyone until the spring when Menendez is up for re-election and the control of the Senate is at stake? It doesn't make sense."
But the story was sensational and when the information made it to the Daily Caller, the publication was able to interview two women it identified as the prostitutes. It then ran a story before the November election, which Menendez won anyway.
Melanio Figueroa, a Dominican lawyer who represented the women, told The Miami Herald in the Dominican Republic on Wednesday that he no longer represents the two alleged prostitutes.
Figueroa said his former clients had not returned his calls for months. "I'm no longer in contact with those girls," he said. "That's what I told the (FBI) investigator, too."
Figueroa said he found their interviews with the Daily Caller credible. "I have no reason to believe it was politically motivated," he said. "It wasn't like that."
Figueroa said he believes the same fear pushed his clients into hiding. "I think they're afraid," he said. "That's why they are not coming forward."
(Miami Herald staff writer Carli Teproff in West Palm Beach, special correspondent Ezra Fieser in the Dominican Republic and James Rosen of the McClatchy Washington Bureau contributed to this report.)
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OCTOBER 30, 2014
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