Of­fi­cer ac­cused of fleec­ing fel­low cops gets pro­ba­tion­ary sen­tence

Miami Herald (Sunday) - - Local & State - BY JAY WEAVER [email protected]­ami­her­ald.com

Der­mis Her­nan­dez was a dec­o­rated Navy vet­eran who served in Iraq and a long­time po­lice of­fi­cer who worked the streets and wa­ter­ways of Mi­ami.

But in Jan­uary, Her­nan­dez was por­trayed as a moon­light­ing “Ponzi schemer” by his own po­lice de­part­ment and fed­eral agents af­ter he was ar­rested on charges of fleec­ing hun­dreds of thou­sands of dol­lars from in­vestors. Among them: fel­low Mi­ami cops who sank their sav­ings into his Costa Ri­can busi­ness ven­ture, which promised high re­turns from loans for real es­tate in­vest­ments.

It was all a sham to en­rich Her­nan­dez — ini­tially ac­cused of de­ceiv­ing new in­vestors to pay off old ones as his loan busi­ness un­rav­eled, fed­eral au­thor­i­ties said.

On Fri­day, how­ever, Her­nan­dez was sen­tenced to only five years’ pro­ba­tion by U.S. District Judge Kath­leen Wil­liams, who or­dered him to pay back $400,000 to about a dozen in­vestors in his Costa Ri­can ven­ture. Pros­e­cu­tors, still ac­cus­ing Her­nan­dez of op­er­at­ing a racket, wanted the judge to put the 42year-old away for nine months.

The judge’s ap­par­ent ra­tio­nale was that the now­fired of­fi­cer did not plead guilty to fraud. In Au­gust, Her­nan­dez pleaded guilty to ly­ing to the Small Busi­ness Ad­min­is­tra­tion to ob­tain $50,000 in loans for falsely in­flat­ing roof re­pair costs on his Home­stead home from Hur­ri­cane Irma — money that he used to pay off in­vestors. His con­vic­tion car­ried up to five years in prison, though the sen­tenc­ing guide­lines were be­tween six months and one year.

Wil­liams mostly took Her­nan­dez to task for be­ing a lousy busi­ness­man.

“It is in­con­ceiv­able to me, Mr. Her­nan­dez, that you thought you had any tal­ent or ca­pac­ity to en­gage in this kind of busi­ness,” the judge said. “You are not an as­tute busi­ness­man — you are a cop, and ap­par­ently a good cop.”

Be­fore his sen­tenc­ing, Her­nan­dez apol­o­gized to the judge, his wife and in­vestors, but he in­sisted he was never a Ponzi schemer, as the U.S. At­tor­ney’s Of­fice and FBI depicted him.

“They can ac­cuse me of many things, but I never lied to them [my in­vestors] and I never com­mit­ted a Ponzi scheme,” he told the judge as he wiped away tears. “By tak­ing re­spon­si­bil­ity [to try to pay them back with the SBA loan], I made a se­ri­ous er­ror — an er­ror that has great reper­cus­sions for my fam­ily and my fu­ture. ... That’s why I pleaded guilty, be­cause of that er­ror I made.”

Her­nan­dez’s at­tor­neys, Gre­gory Gon­za­lez and Sil­via Pin­era-Vazquez, strongly dis­agreed with the pros­e­cu­tion’s claim that their client’s crime amounted to in­vest­ment fraud. They ar­gued for a pro­ba­tion­ary sen­tence.

“This past year for Mr. Her­nan­dez has al­tered his en­tire life,” Pin­era-Vazquez told the judge. “He finds him­self on the other side of the law. ... [But] there was no fraud in Costa Rica. This is a civil mat­ter. Money was lost.”

As­sis­tant U.S. At­tor­ney Sean Cronin painted a starkly dif­fer­ent por­trait of Her­nan­dez, how­ever.

“It’s not this past year that has al­tered his life,” Cronin said. “It’s his se­ries of crim­i­nal choices that have al­tered his life. He and his father-in-law [in Costa Rica] were run­ning a Ponzi scheme. They needed to help keep the Ponzi scheme go­ing by bring­ing in new in­vestors.”

In Jan­uary, Her­nan­dez was ar­rested af­ter FBI agents learned he was sud­denly fly­ing to Costa Rica be­cause of an “emer­gency.” Fear­ing he might never re­turn — his wife is a Costa Ri­can na­tional — agents cuffed the cop while he was board­ing a flight at Fort Laud­erdale-Hol­ly­wood In­ter­na­tional Air­port.

Mi­ami Po­lice Chief Jorge Colina fired Her­nan­dez, a 14-year vet­eran of the force, af­ter his ar­rest, call­ing his mis­con­duct “dis­grace­ful.”

Mi­ami in­ter­nal af­fairs and the FBI said Her­nan­dez op­er­ated the al­leged Ponzi scheme be­tween 2011 and 2015 through a com­pany called DD&M In­vest­ments.

Ac­cord­ing to a crim­i­nal com­plaint, he of­fered “low-risk” in­vest­ments in his com­pany, which he claimed was giv­ing high­in­ter­est loans to prop­erty own­ers in Costa Rica. The loan re­cip­i­ents used their prop­er­ties in the Cen­tral Amer­i­can coun­try as col­lat­eral, he said.

But that wasn’t true, ac­cord­ing to agents. Tar­get­ing ac­tive and re­tired cops, Her­nan­dez and “co­con­spir­a­tors” showed phony pa­per­work in­di­cat­ing the com­pany had prop­erty rights to land in Costa

Rica.

“In truth, Her­nan­dez and his co-con­spir­a­tors used the in­vestor funds for per­sonal en­rich­ment and to pay the re­turns of other in­vestors,” ac­cord­ing to the FBI crim­i­nal com­plaint.

At least one vic­tim paid out $10,000 from his po­lice re­tire­ment fund — with Her­nan­dez in­struct­ing him how to with­draw the money. The vic­tim be­lieved he would be get­ting a 20 per­cent re­turn on the in­vest­ment per year.

Mi­ami Her­ald staff writer David Ovalle con­trib­uted to this re­port.

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