The Making of Patrick Murphy

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MIAMI (CBSMiami) – Today Congressman Patrick Murphy is on the fast track to the United States Senate. After just three years in the House, the Democrat from West Palm Beach is the anointed star of his party, enjoying the full-throated backing of President Barack Obama and Vice-President Joe Biden – both of whom came to Miami in recent weeks to campaign for him.

Tens of millions of dollars will be spent to get him elected, with Democrats hoping to take back control of the Senate if he prevails.

Republicans, fearing no one can stop the handsome 33-year-old, have pressured Marco Rubio to jump back into the race and try and retain his seat.

For Murphy, the newfound role as the Democrat's Most Eligible Candidate is extraordinary; and not just because he's only been a Democrat since 2011.

Murphy's rise is extraordinary because of how little he seems to have accomplished to get here.

A child of divorce, Murphy spent his formative years living with his father, Thomas P. Murphy, Jr., who built a multimillion dollar construction empire from scratch. Thomas Murphy made sure his son attended private schools including an elite prep academy in the Northeast, The Lawrenceville School. The school's alumni include five Governors, three Congressmen, a Senator, two Pulitzer Prize winners and a Nobel Laureate. The school has also produced an array of business titans in its storied history.

Patrick Erin Murphy circa 2010, however, did not seem destined to join their ranks.

A star athlete in high school and college, injuries kept him from pursuing that further, opting instead for a more functional degree in business administration from the University of Miami. His time at UM was marred by a drunken brawl at a South Beach night club that left him with a mugshot and a black eye. After graduating in 2006, he joined Deloitte & Touche as an audit assistant. He did not meet the minimum requirements to become a Certified Public Accountant in Florida, opting instead to apply for a license in Colorado, even though he did not live or work there. He applied in Colorado because the requirements were lower.

Before gaining approval in Colorado, Murphy took the licensing exam multiple times before passing it. Even with a CPA license in Colorado, his opportunities in Florida were limited because his license was not valid in the Sunshine State.

He was 27 years old and living in a high-rise condo on Miami Beach.

Thomas Murphy, no doubt, wanted the best for his son. Patrick's two older brothers were already entrenched in the family business, graduating with degrees in construction management and well on their way to becoming co-presidents of their father's firm, Coastal Construction.

Patrick Murphy has said he found the business side of the family's construction company intriguing. Nevertheless, it's now clear he had other interests, including politics. His father was a major contributor to both parties. A review of Federal Election Commission records shows that by 2010 Thomas Murphy had donated more than $130,000 to races across the country. And his donations weren't partisan, but seemingly strategic. In 2008, he gave $25,000 to John McCain and $23,500 to Barack Obama.

If Patrick were to enter the world of politics, his father's money was only going to get him so far. He would need to give the appearance he was more than some rich kid. He would need something of his own to stand on.

And that's when it happened. On April 20, 2010, the Deepwater Horizon oil platform exploded off the southern shores of Louisiana. The rig, operated on behalf of BP, burned for nearly two days before finally sinking more than 5,000 feet into the Gulf of Mexico. Eleven men died in the blast. During the 87 days that followed, 200 million gallons of crude oil spewed from the busted wellhead on the ocean floor.

President Obama declared it "the worst environmental disaster America has ever faced."

And in that calamity arose, in hindsight, the opportunity Murphy needed.

"When that spilled happened I was working at Deloitte & Touche," Murphy recalled for CBS4 News during an interview last year after he announced he was running for the United States Senate. "They talked about the oil coming down the loop current, coming down Florida's west coast, through the Florida Keys and then up the Gulfstream. And I'm from the Florida Keys, born down there. Nobody was talking about what they were going to do to really clean up or be prepared. So this was a real opportunity to say, `Wow, I'll be the guy to get the oil skimmers ready, protect our shores.' I was ready to move on and start my own business anyway, so this was a great opportunity to not only protect Florida but do my own thing."

After two and a half years at Deloitte & Touche, Murphy resigned and less than three months later started Coastal Environmental Services. Coastal would be one of the hundreds of companies and businesses that would take part in the cleanup.

"So I was able to get some oil skimmers together, move to New Orleans for several months," he explained. "We were prepared, we actually redesigned the oil skimmers to put them on a trailer bring them down to the Keys. Thankfully that oil didn't make it in the loop current [for Florida] so I stayed in New Orleans cleaning up up there."

In his two runs for Congress and his current campaign for the Senate, Patrick Murphy has repeatedly pointed to his experience as a Certified Public Accountant and a small business owner as reasons why voters should support him.

"I believe that my background as a CPA and a small business owner is exactly what we need to put our country back on track," he said in 2012 during his first House race against the incumbent Republican, Tea Party darling Allen West.

In 2014, when he ran for re-election, he was asked in a debate to detail the professional and life experiences which qualify him to serve in Congress. "I would say my background as a CPA," he said. "Also being a small business owner, you know someone that can relate to those concerns of small business owners I think is particularly important."

Last year, shortly after announcing his desire to replace Marco Rubio, Murphy once again touted his experience as a CPA saying: "One of the biggest problems we have in our country is our debt, is unemployment, you need to understand numbers to do that. I believe I bring that experience to the table. Having a small business background, understanding the issues, the problems small businesses are dealing with on a day to day basis, I think I bring that experience to the table."

Portraying himself as an experienced CPA and small business owner has always been critical to the political persona created for his campaigns. They conveyed a sense of seriousness and stability which he otherwise lacked.

A CBS4 News investigation into Murphy's history as both a CPA and a self-described small business owner, however, shows Murphy has in some cases exaggerated his experience and in other instances made claims that were misleading or outright false.

For instance, he has never worked a day in his life as a Certified Public Accountant.

And he was never a small business owner.

If you'd like to see the Murphy campaign's response to our story, click here.

PATRICK MURPHY: C.P.A.

In a televised debate during his 2012 run for Congress, Patrick Murphy provided the following description of his work as a CPA: "Well, first of all when I graduated college I went to work at Deloitte & Touche, I got my CPA license and I spent years going to numerous Fortune 500 companies, looking for inefficiencies, waste and fraud."

That statement gives a decidedly misleading impression of Murphy's time after he was licensed as a CPA.

Murphy joined Deloitte & Touche on September 16, 2007 working in the firm's Miami office located at 200 South Biscayne Boulevard.

Yet despite working in Miami, Murphy has never held a CPA license in the state of Florida.

Instead, he obtained a license in Colorado. And because the requirements are lower in Colorado, Florida does not accept the license as valid in Florida. As a result, none of the work Murphy did in Florida for Deloitte & Touche was as a CPA.

Through a public records request of the Colorado Department of Regulatory Agencies, which oversees CPA licensing, CBS4 News obtained a copy of Murphy's Colorado application. In the application, dated June 26, 2009, Murphy listed his position with Deloitte & Touche as "Audit Assistant."

Experts in the accounting industry said it seems unlikely that someone, fresh out of college and without a CPA license in the State of Florida, and holding the entry level title of "Audit Assistant" was tasked with "looking for inefficiencies, waste and fraud."

"The entry level audit assistant is kind of like a gopher," said Charles Lee a professor at the Graduate School of Business as Stanford University and a former senior manager with the accounting firm KPMG. "He would be given a green pencil and told to check a series of numbers. That's a very junior position."

Moritz Hiemann, a professor at Columbia University's School of Business and a former senior auditor with Ernst and Young, said an auditor merely examines a company's financial records to determine if they have been following accepted accounting practices.

"That is fairly mechanical work," Professor Hiemann explained. "You don't look for inefficiencies. An audit doesn't really look for fraud either. That is not the role of an audit."

Professor Lee agreed saying "it's definitely an exaggeration" for an audit assistant to claim their job was to look for inefficiencies, waste and fraud.

Both professors said in a few rare instances an auditor might stumble onto something that might seem suspicious, but they would then just pass the information along to someone else in the firm.

And Professor Hiemann noted that since he was not licensed as a CPA in Florida he could not be the signatory on any of the work he performed. "You need a CPA license if you want to sign an audit opinion," he said.

CBS4 News contacted John Gordon, a partner at Deloitte & Touche in Miami, who oversaw Murphy's work and signed an affidavit on his application for a CPA license in Colorado stating that between 2007 and 2009 Murphy had completed the necessary number of hours of work to qualify for a CPA license under the rules in Colorado.

"Yeah, I think so," Gordon said when asked if he remembered Murphy. "I'm not really familiar with him."

He then declined to answer any other questions saying the firm does not comment on former employees.

Documents obtained by CBS4 News reveal Murphy took the separate parts of the CPA licensing exam nine times. The exam is often conducted in four parts and each part can be taken on separate occasions.  The records show, Murphy took the exam by signing up for the test through the State of Vermont's Board of Public Accountancy.

The reason: Murphy did not meet Florida's requirements to sign up for the exam. He did meet the requirements in Vermont. (Murphy did not have to physically travel to Vermont each time to take the test. There are testing centers around the country he could have gone to. And no matter where you take the test, all CPA exams are the same.)

Colorado accepted the Vermont test results and issued a CPA license to Murphy on September 4, 2009. Murphy left Deloitte & Touche in May 2010.

So when Murphy said in 2012, "I got my CPA license and I spent years going to numerous Fortune 500 companies," the truth is he only spent at most eight months – and not years – with Deloitte & Touche holding a CPA license valid only in Colorado, a state where Murphy has never lived or worked.

A campaign spokesman acknowledged Murphy did not meet Florida's educational requirements to become a CPA, nevertheless he sought a license in Colorado because "Patrick was excited to start his career."

The campaign then added: "As a fully-licensed CPA, Patrick is a member of the Florida Institute of Certified Public Accountants."

Murphy has made this statement in the past as well. Murphy appeared on the September/October 2015 cover of Florida CPA Today, which is the magazine for the Florida Institute of Certified Public Accountants (FICPA).

The FICPA is not a government body or a regulatory agency. It is a private association. Being a member of the FICPA does not allow someone to work in Florida as a CPA. Only the state's Department of Business and Professional Regulation can grant a CPA license.

As far as Murphy's work at Deloitte & Touche, the campaign said: "Patrick worked at Deloitte as an auditor for Fortune 500 companies. Most of these audits were for companies' annual reports, and he often worked to help companies meet the reporting requirements of Sarbanes-Oxley [a 2002 law designed to protect investors from potentially fraudulent accounting practices]. He also worked on internal audits designed to find wasteful or duplicative spending and make companies more efficient.

"This was team-based work that involved long hours and close attention to detail, reviewing spreadsheets and many different kinds of financial reports," the campaign added.

This is not the first time Murphy has been accused of exaggerating or embellishing his professional record. In May, the Miami Herald pointed out Murphy claimed for years to hold dual degrees from UM in Accounting and Finance. He even listed it as part of his official biography for the House of Representatives. In fact, he holds a single undergraduate degree in Business Administration.

PATRICK MURPHY: SMALL BUSINESS OWNER

His record as a "small business owner" also reveals troubling apparent falsehoods.

During his interview with CBS4 News last year, Murphy was asked about the cleanup efforts Coastal Environmental undertook in the Gulf following the 2010 Deepwater Horizon/BP oil disaster.

CBS4 NEWS: So how many contracts did you end up getting?

MURPHY: Several, it's been five years.

CBS4 NEWS: How much did you make during that period of time?

MURPHY: We did okay, yeah. (laughs) We did okay.

DEFEDE: I'm just curious how many contracts there were? What the nature of the contracts were?

MURPHY: Be happy to get you those documents. It's been five years, though. We did, we did well.

Despite Murphy's claim that he would "be happy" to provide the documents, he failed to do so in the weeks and months following the interview. On March 2, CBS4 News made a request of the campaign in writing to release the records. What followed were months of negotiations with campaign staffers. (Because the records are the property of a private business, Coastal Environmental Services, they are not subject to the State's Public Records Law and the company was under no legal obligation to provide anything.)

Ultimately, the campaign agreed to allow CBS4 News to review copies of the contracts but only if we agreed not to name the companies who hired Coastal or the dollar amounts of the contracts.

The campaign said it would also provide financial records to support the claim the company was profitable. Once again, they refused to allow CBS4 News to cite any specific numbers.

On May 17, a CBS4 News reporter, producer, and a CPA certified in financial forensics hired by the station, spent an hour reviewing the records and taking notes. We were not allowed to make copies of the records.

Nevertheless, a review of the material, as well as additional documents obtained by CBS4 News, and interviews with those involved, revealed several new details that directly counter the impression Murphy has given over the years about his experience in the Gulf.

It's worth noting, at the outset, Murphy's involvement with Coastal Environmental was brief, no more than two to five months. And while it did operate, according to state records, Murphy wasn't the president of the company. He was vice president.

The most significant revelation, however, is that neither Patrick Murphy nor Coastal Environmental Services were awarded a single contract to clean up oil in the Gulf.

The Murphy campaign provided two documents related to the cleanup.

The first contract was dated June 28, 2010. And since the Murphy campaign will not allow CBS4 News to release the name of the firm that issued the contract, we'll refer to them as "Company One."

Under this contract, "Company One" hired an oil skimming company called Crescent SR, a Louisiana-based firm owned by Kenneth Taylor Beery. Nowhere in this agreement is Coastal Environmental or Patrick Murphy mentioned. The contract is for no more than 90 days with Crescent being paid an undisclosed daily rate.

The second contract is dated July 30, 2010 with "Company Two," and it is also with Crescent SR, to perform oil skimming work in the Gulf as needed. Once again, neither Coastal Environmental nor Patrick Murphy's name appears anywhere in the agreement. The only name listed is Crescent's owner, Kenneth Taylor Beery.

The Murphy campaign then provided a third document, showing that on August 9, 2010, Coastal Environmental Services bought Crescent SR for an undisclosed amount of money. Signing the transfer agreement on behalf of Coastal Environmental wasn't Patrick Murphy, but rather Daniel Whiteman.

Who is Daniel Whiteman?

Whiteman is the President of Coastal Environmental.

In public, Murphy always said his business was "affiliated" with his father's business Coastal Construction, one of the largest construction companies in the country.

In fact, it is now apparent, Coastal Environmental was controlled and operated by Coastal Construction.

Incorporation papers show the depths to which Coastal Environmental and Coastal Construction are intertwined.

Patrick Murphy's father, Thomas Murphy, Jr., is the chairman and CEO of Coastal Construction and a director of Coastal Environmental.

Daniel Whiteman is not just President of Coastal Environmental; his primary role is vice chairman of Coastal Construction.

The corporate address for Coastal Environmental is the same as Coastal Construction.

It would appear that rather than start a small business that did work in the Gulf, Murphy, with the support of his father and Coastal Construction, acquired a business that was already doing the work. (Thomas Murphy did not return calls seeking his comment for this story.)

The Murphy campaign, however, says Patrick Murphy was involved with Crescent SR through, what it termed "an informal partnership" that started in June. The campaign maintains it was Murphy who developed the plans for the Crescent oil skimming operation.

Reached by phone, Beery said he cannot remember when he first met Patrick Murphy but he was certain of one thing. "I started the concept before I met Patrick," Beery said.

Beery said he launched Crescent SR immediately after the oil spill began. A lifelong resident of Louisiana, Beery said he helped in the cleanup following Hurricane Katrina in 2005 and wanted to get involved again. He said he started with one boat, a naval skimmer built in the Seventies which he dubbed Crescent 1.

"The naval skimmer was old but it did do a good job," Beery recalled.

Beery was looking to add a second boat and was looking to buy a new vessel from a shipyard in Connecticut. Beery said he was introduced to Murphy through a boat builder.

"We were connected to each other by the shipyard," he said.

Beery said there was a "team" of engineers from Coastal that worked with the Derecktor designers on coming up with a new line of oil skimmers. He said he wasn't sure if the engineers were employed by Coastal Environmental or Coastal Construction.

"I definitely laid down a deposit on a boat," Beery recalled. He was not certain of the date, but likely sometime around June.

The campaign said Murphy's contributions were integral to Coastal and Crescent's success because he helped design a new type of oil skimmer that could collect oil three feet below the surface. Also, the new skimmers were being specially made so they could be placed on trailers and transported quickly to Florida in case the oil spread into the loop current.

By mid-Summer it became clear Florida was not in jeopardy, so Murphy, who had two of the new oil skimmers under construction for himself, turned his attention to the clean-up in Louisiana.

Rather than develop his own deal, Murphy offered to buy Crescent.

Beery said he agreed to sell Crescent to Coastal Environmental Services because he wanted to see his company grow and have a permanent presence in the Gulf in case another disaster occurred.

"They had the resources I couldn't provide," Beery said. "I was really happy because I was selling to a group that would take what I started and take it to the next level."

Murphy would not reveal whether he financed Coastal Environmental himself, placing his own money at risk, or if his father financed the business, including the purchase of Crescent as well as design and construction of the new boats.

(As CBS4 News was preparing this story, Murphy gave the Miami Herald a completely new explanation for his work with Coastal Environmental. He no longer described himself as a "small business owner," and said he was an employee of Coastal Construction assigned responsibility for Coastal Environmental which he now described as a subsidiary of Coastal Construction. "My job was looking for more contracts and building these boats," he told the Herald.)

Beery, who keeps in touch with Murphy through the campaign, said he enjoyed working with Murphy and said he was very capable.

"Having dealt with him and worked with him," Beery said, "I have a lot of respect for him."

Seven weeks after Coastal Environmental Services bought Crescent, the Coast Guard called off oil skimming operations in the Gulf. As a result, Coastal Environmental was soon out of work.

MURPHY: "WE DID OKAY. WE DID WELL."

The Murphy campaign said they would provide documents showing the profitability of Coastal Environmental. However, what they provided to CBS4 News was a single sheet of paper with three numbers on it – Revenue, Operating Costs, Operating Profit.

"It's not a financial statement, it really doesn't give you any picture of the financial health or operations of the company," said Jesse Singer, a CPA certified in financial forensics and who was hired by CBS4 News to review the documents provided by the campaign.

The document from the campaign claims a profit for the company in 2010. Singer said there was no way to verify that claim given the material provided.

The Murphy campaign said Coastal Environmental has not generated any revenue since oil skimming operations ceased in late September and early October. The campaign said Coastal Environmental Services has not generated a dollar in revenue since the end of 2010.

Coastal Environmental has the four oil skimmers in storage in Louisiana and Alabama in case another disaster strikes. The campaign provided invoices to show the boats are in storage. Ironically, reviewing the invoices, the cost of storing the vessels for the last five years is more than the company claims to have made in profit during 2010.

In other words, it appears Coastal was not profitable. It likely lost money. And it continues to lose money to this day.

Once oil skimming operations ceased, Murphy returned to South Florida.

Within a matter of weeks, in January 2011, Murphy hired a political consultant to map out his run for Congress and soon began stressing his credentials: "As a small business owner, as a CPA, I've actually created jobs."

That same year, his father, Thomas Murphy, gave more than $100,000 to key Democrats, including $30,000 to the Democratic National Committee and $16,000 to the Democratic Congressional Campaign Committee, which soon rallied around Patrick Murphy's bid for Congress.

Thomas Murphy ended up contributing more than $550,000 to PACs and committees supporting Patrick's 2012 congressional campaign.

And federal records reveal he has given close to $300,000 for this year's Senate race.

Wednesday afternoon, Thomas Murphy issued a statement: "Like any father, I've always supported my three sons and their endeavors. When Patrick told me he wanted to run for Congress, I was surprised. However I admire his drive and determination and I am extremely proud of all the good he has done. He will make a fine senator and I will be there to support him in any way possible."

Read: Part 2