Police chief routed his pay through a Realtor. He’s accused of gaming pension system

The former police chief of North Bay Village is under investigation by the Florida Retirement System for actions he may have taken — allegedly with the approval of high-ranking staff — to circumvent rules about double-dipping in the state-run pension.

Lewis Velken, a recently retired Miami-Dade County police officer with an FRS pension, was hired by North Bay Village in April 2018 to be the police chief. A few months later, he was appointed interim manager, a position he still holds. Village records suggest that first as the chief then as the manager, Velken received both his FRS pension and a paycheck from the village, albeit through a third party, in apparent violation of FRS regulations governing pension payouts in the first year of retirement.

Now, Velken — and maybe the village — could be on the hook for paying back more than a year of his FRS benefits. The exact amount of the pension has not been disclosed.

The revelations came during a special session of the village commission Tuesday, called after a local blogger raised questions about Velken being paid through a third party rather than directly by the village as is standard practice. Village records show Velken is paid through a Miami Lakes-based Realtor, Stephanie Leon P.A. Leon could not be reached for comment.

“It’s my understanding that this arrangement was entered into primarily to avoid any potential FRS issues,” said village labor attorney Brett Schneider. He did not work for the village when Velken was hired but told the commission Tuesday he would have told them the arrangement was “not a good idea.”

FRS rules require pension payments be returned if a person takes a job with another FRS-participating employer like North Bay Village within the first six months of retirement. A person can take an FRS-qualified job in months 7 to 12 of the first year of retirement, but FRS pension payments would be withheld for that period of time.

“This stinks,” said recently elected Mayor Brent Latham from the dais. “I think it’s an ethical and moral issue.”

Velken declined to comment at the Tuesday commission meeting, citing the ongoing FRS investigation.

Velken retired from the Miami-Dade County Police Department on Jan. 31, 2018, according to Schneider. In April, then-manager Marlen Martell approached Velken about an opening at the top of the village police department. Martell had fired the previous police chief, Carlos Noriega, and was under pressure to find a replacement as quickly as possible. Velken was recommended to her by the police chief in North Miami Beach.

As he considered taking the job, Velken knew that there was a problem with FRS, Martell said in a sworn statement in January. It was part of a deposition from an unrelated case.

Martell claimed she raised the FRS concerns regarding Velken’s hire, and Village Attorney Norman Powell told her “there were ways, basically, around it [FRS].” She said both Velken and Powell assured her that using a third party to pay Velken for his work in North Bay Village would prevent him from having to pay back the FRS benefits he had been receiving since retiring from the county police force.

“That’s a complete fabrication,” Powell said. Powell told the Miami Herald that Velken made the employment arrangement without his knowledge or approval.

At first, the checks sent to Stephanie Leon P.A. were signed by former mayor Connie Leon-Kreps. In a deposition for an unrelated case, Leon-Kreps said she was aware the payments were made through a third party, which she likened to a staffing agency, but denied knowing anything about the arrangement to circumvent FRS.

Velken used “a straw-man employer to avoid the consequences of reemployment with an FRS employer within six months of retirement from another FRS employer,” according to a strongly worded letter by the Fraternal Order of Police, a police union representing law enforcement and correctional officers statewide.

In the letter, FOP General Council Paul Daragjati called the situation surrounding Velken’s employment a “complete ethical failure by Mr. Velken and his cronies.” He continued, “A very valid argument can be made that many of the personnel decisions Mr. Velken made as police chief were void as he was not employed by a criminal justice agency.”

On April 17, Velken and Martell signed an employment affidavit stating Velken was to be employed by North Bay Village Police Department starting the next day. There was no mention that he would actually be employed by Stephanie Leon P.A., the real estate agent, and not directly through an official law enforcement staffing agency.

Furthermore, Martell and Velken signed that the new chief had met numerous screening requirements required by law including a drug screening and thorough background check.

Given the rushed nature of his hire, the investigator hired by the village to do the background check in less than 24 hours was only able to provide Martell a “preliminary” report. The investigator informed Martell on April 17 that he was still waiting on other key documents in order to finalize the report. Emails from June suggest files were still missing from the report.

Nevertheless, Velken signed his oath of office as a police officer of the North Bay Village Police Department on April 20. He oversaw the elimination of several positions during his time as police chief and then manager.

“It would not be hyperbole to state that if the Village does not act against Mr. Velken, and any other individual involved in this matter, North Bay Village law enforcement could risk losing credibility with the local legal system,” Daragjati wrote.

The commission voted 3-2 Tuesday to maintain Velken as the interim manager but to change his status to avoid potential tax implications and liability until the village finds a replacement.

By Wednesday morning, one commissioner was already rethinking his vote. “I no longer consider the motion I supported to be the best course of action,” Vice Mayor Marvin Wilmoth wrote on Facebook. Wilmoth said he has asked Velken to resign prior to the February commission meeting, and will make a motion at that time to support a replacement.