A failed Democratic congressional candidate whose campaign is under federal grand jury investigation abruptly amended his financial disclosures to show he loaned himself nearly $53,000 more than he originally reported.
Before filing the new report, Justin Lamar Sternad, 35, insisted his finances were in order and steadfastly refused to say how he paid for tens of thousands of dollars worth of campaign-mail services.
Many of the transactions were in cash — sometimes in the form of $100 bills stuffed in envelopes, a campaign vendor said.
The big cash payments drew the attention of the FBI, which began examining the working-class hotel employee, a political unknown who now claims to have dropped about $64,000 of his own money in his Aug. 14 primary loss.
Campaign vendors told the Miami Herald that Sternad's congressional Democratic primary run was backed by Republican Rep. David Rivera, who says he has never met or helped Sternad. During the campaign, Sternad bashed Rivera's man rival, Joe Garcia. Garcia handily won and faces Rivera in November.
Rivera and Sternad have denied working in concert. Rivera has publicly attacked Sternad's campaign vendors who spoke about his role, calling them liars or Herald lackeys. Sternad has blamed them for his reporting problems.
"I did not previously report this loan because I was unaware of the final monetary obligation incurred by my campaign," Sternad wrote to the Federal Election Commission, which posted his letter Thursday. "I have now received invoices for the expenditures ... and this amendment represents satisfaction of those invoices."
The filing of an amended report doesn't mean that law enforcement is done examining his case, say legal experts. They say it's unlawful to knowingly and willfully file a false federal campaign report — even if it's amended later.
John Borrero, president of Rapid Mail & Computer Services in Hialeah, told El Nuevo Herald last week that Sternad's campaign paid about $43,000 in cash for mailings.
Some payments were allegedly made by Ana Alliegro, Sternad's campaign consultant, totaling at least $7,000, in crisp hundred dollar bills, stuffed in envelopes, several sources familiar with the criminal probe said.
Alliegro, who does not appear on Sternad's campaign reports, declined comment.
Alliegro, according to the sources, also went to Rapid Mail after the initial Herald story, published on Aug. 16, demanding all records linked to Sternad, ordering employees to throw out everything and finally telling Borrero and his staff "I hope you have a lot of clients."
Borrero said he turned everything over — to law enforcement.
As a result, investigators have ramped up the probe, interviewed witnesses and subpoenaed campaign records. A federal grand jury is now involved.
Kenneth Gross, a Washington-based campaign-finance expert not connected to the case, amending a report may help him "mitigate" criminal exposure. "But it depends on the gravity of the case, the amount involved and the intent," he said. "Was the report amended of the candidate's own volition, or were there other pressures at play?"
It's unclear how Sternad afforded the $64,000 in loans he gave himself.
His financial disclosures show he earned about $30,000 last year from working at local hotels.
Sternad noted he had a trust fund, but reported no income from it this year or the previous year. He reported having a one-third interest in the fund, whose value ranges between $50,000 and $100,000.
Under campaign finance disclosure rules, candidates do not have to provide an exact amount of assets — only a range of value. But they are required to disclose loans in the reporting period in which the money was used. Sternad failed to comply.
Sternad has also had financial troubles in the past. He declared bankruptcy in 1997 and more recently Capital One Bank won a default judgment against Sternad's wife for $1,746.48 on Jan. 11, records show. There is no record that the judgment has been satisfied.
Sternad's explanation about needing invoices before he could report his loans and expenditures conflicts with what Borrero, the owner of Rapid Mail and Computer Service, told the Herald.
Borrero said he was paid for all the work, mostly in cash, before the mailings were sent. The amended report notes that the payments totaled $46,973.10. So some, if not all, of the loan should probably have been reported at the time.
Sternad seemed to blame Borrero for the problem, noting in an unusual statement tucked in his amended report that "Vendor refused to provide invoices until 8/17/12. Invoice provided dated 8/8/12. Vendor did not provide detailed postage information."
The only expense not paid by cash to Rapid Mail came from Expert Printing. Sternad's latest report shows Expert Printing billed him for a $6,000 expense. That expense was not listed in his previous report.
An owner of Expert Printing declined comment.
Sternad's latest report and accounting irregularities sharply contrast with the image he portrayed as a fiscal hawk during a May interview with CBS-4's Elliot Rodriguez.
"I do auditing," Sternad bragged in talking about his hotel management job, "And I want to get in there (Congress) and cut out some of the fat, some of the pork."
Questions about Sternad's finances and ties to Rivera were first raised by Garcia's campaign in early August after one mailer attacked the Democrat over his divorce. The Garcia campaign noted that Rapid Mail had done more than $100,000 worth of business with Rivera in 2010.
Another firm, Campaign Data, also performed work for Rivera in 2010. Owner Hugh Cochran said Rivera helped the Democrats targeted by Sternad in his sophisticated 11-piece mail campaign.
Rivera has responded to the charges by questioning the honesty of Cochran and Borrero, who say they're telling the truth.
In his final pre-primary report, Sternad showed he had only $120.97 in the bank. His reports showed no payments to Rapid Mail, Campaign Data or Expert printing. Sternad was repeatedly asked how he could afford the mailers with no money in his campaign, but he refused to answer.
"Kiss my 'lily-white' ass," he said in an Election Day email.
He has since refused comment.
Ironically, Rivera — a Republican lawmaker who's implicated in the unreported cash-for-mailers scheme — is defending Sternad, a Democratic political newcomer.
Even though the congressman said he doesn't know Sternad or have any connection to his campaign, Rivera was the first to obtain the new campaign-finance reports for Sternad.
An FEC spokeswoman said Thursday that the FEC's mailroom had received the reports Tuesday, however they weren't made public until Thursday. Until that point, they weren't public record.
Rivera, who will not address specific questions from the Herald, refused to explain Thursday on Spanish-language Radio Mambi how he got the reports. Also, Rivera suggested that Sternad could afford the personal expenses because he has a trust fund.
Rivera accused the Miami Herald and El Nuevo Herald of working in league with Garcia.
"What I know is that nothing that is written in the Miami Herald can be believed," Rivera said Friday morning on Radio Mambi, dismissing a suggestion by one of the hosts, Oscar Haza, that the Herald story was accurate.
Haza, who also hosts Spanish-language América Tevé's "A Mano Limpia," interviewed Miami-based Reuters reporter David Adams on his program Wednesday night. Adams said he spoke to the campaign vendors quoted in the Herald and that they told him the same information.
Miami Herald staff writers Patricia Mazzei and Scott Hiaasen contributed to this report