South Beach nightclub at center of FBI bribery sting loses lawsuit against city

A judge has again dismissed a lawsuit filed against the city of Miami Beach by the owner of a failed nightclub at the center of a 2012 FBI extortion sting that led to the arrest of seven city employees.

The 2013 lawsuit by former Ocean Drive nightclub owner and FBI informant Haim Turgman sought $15 million in damages from the city and claimed that a pattern of harassment by crooked city inspectors led to the closure of his club, known as Chakra 5 and, later, Club Dolce. The lawsuit was previously dismissed in 2016, but the ruling was overturned on appeal.

On March 30, Miami-Dade Circuit Court Judge Mark Blumstein dismissed the suit again, rejecting Turgman’s claim that the city violated his due-process rights and should be held liable for the venue’s 2012 foreclosure.

“Plaintiffs have not offered any evidence that the City acted with deliberate indifference to procedural due process rights or that the City caused or acted as “the moving force of the constitutional violation...,” Blumstein wrote in his order. “Plaintiffs simply seek to hold the City vicariously liable for the unlawful actions of certain rogue City employees.”

The lawsuit also listed the seven former city employees as defendants but most never responded to process servers and defaulted from the case. The city, the primary target of the lawsuit, anticipates the club will again appeal the lower court’s decision.

Still, for Miami Beach City Hall, which over the last few years has endured a spate of high-profile public corruption arrests involving city employees, the court order was news worth celebrating.

Interim City Manager Raul Aguila released a statement Tuesday saying he was “pleased” with the order, emphasizing that the city employs “thousands of honest and hardworking people who serve the community faithfully every day” and has a fair process to field complaints of unlawful treatment by city employees.

“We also worked around the clock to ensure that the misdeeds of a few rogue employees more than ten years ago will never happen again, and we will continue to do so every day,” Aguila said.

The club’s complaint

Turgman, who opened the club in 2006, argued in his legal complaint that the club lost revenue and was unable to pay its mortgage due to harassment from city inspectors who issued phony citations.

In 2011, Turgman went to the FBI after he said a Miami Beach code enforcement inspector threatened to fine the club $30,000 for littered promotional fliers unless Turgman paid the inspector a $3,000 bribe, according to court records.

Following a resulting FBI sting, five code officers and two firefighters were arrested. Turgman, who was made a paid informant, worked with an undercover agent posing as a club manager to catch the city employees paying bribes.

The criminal complaints suggested that the city employees had been taking bribes for years. In his lawsuit, Turgman alleged that the city had failed to create policies to prevent harassment and extortion among employees.

In his order, Blumstein wrote that Turgman has yet to “identify a single date, time or circumstance when the alleged harassing ‘inspections’ or visits’ occurred...or the names of the inspectors or city officials.” And if the harassment did occur, Turgman could have reported it to the city or appealed any citations issued.

The bribes, he wrote, took place more than a year and a half after Turgman stopped making mortgage payments on the club.

Turgman did not immediately respond to a request for comment made to his attorneys Tuesday.

‘Adequate procedures’

First Assistant Miami Beach City Attorney Rob Rosenwald, who led the city’s legal defense, released a statement Tuesday alleging that Turgman “tried to cash in on the unfortunate fact that a rogue former code compliance officer solicited a bribe” from him.

“The simple fact is that Mr. Turgman’s nightclub failed because he had no prior experience running a club on Miami Beach and his first attempt to do so coincided with the Great Recession that crippled many businesses around that time,” Rosenwald wrote. “The court correctly found that Turgman had presented no evidence that the City had caused him any loss, and even if it had, the City had adequate procedures for someone in Turgman’s position to remedy it. Turgman simply failed to use them.”

In a memo to the Miami Beach City Commission on Thursday, Acting City Attorney Rafael Paz wrote that since the FBI sting, the city increased its oversight of code enforcement, outfitting city vehicles with GPS location tracking technology and requiring that code inspectors wear body cameras when interacting with the public and log their inspections.

In 2019, the commission created the Office of the Inspector General at City Hall to, in part, root out corruption.

“After the 2012 FBI operation that led to this lawsuit, the City enacted even more comprehensive reforms that have successfully prevented any further allegation of bribery or other misconduct by Code Compliance or Fire Department inspectors,” Paz wrote.