Former Hialeah Mayor Julio Robaina weaved his personal, political and business lives together while he and his wife illegally hid some $2 million in income, a federal prosecutor charged on Friday.
“They cheated on their tax returns and they did it on purpose,” prosecutor Michael Davis told a 12-person Miami federal jury as the couple’s tax evasion trial opened. “They lied repeatedly on their tax returns, and they did it because they were greedy.”
Davis ticked off a list of shady insider deals he said were perpetrated by the Robainas:
• They did not report $300,000 on high-interest loans the couple made to an investment schemer — cash payments that Robaina himself picked up at the home of a Hialeah political power broker.
• They did not report $800,000 paid by a local businessman to the then-Hialeah mayor for lobbying neighboring Hialeah Gardens on a major land-development deal — money that the couple used to buy a high-rise Miami Beach condominium.
• And they did not report $142,000 paid by a Robaina business partner to cover his outstanding loan on a Ferrari sports car. Robaina later traded in the Ferrari to buy a $172,000 Bentley.
Davis outlined the case in Miami federal court, where only a half-dozen people showed up to support the once-influential former mayor. Robaina represented Miami-Dade’s second-largest city from 2005 to 2011, before losing a race for county mayor while under investigation for alleged tax evasion.
The Robainas’ defense attorney, David Garvin, countered that prosecutors should never have brought a criminal case against the couple, contending the U.S. attorney’s office “didn’t play fair.” He said the entire case really amounted to a civil dispute over back taxes potentially owed to the federal government.
The Robainas, Garvin told jurors, “have waited a long time for this day. This day begins the process of restoring their good name.”
He argued that mistakes were made on the couple’s joint tax returns, but they were “inadvertent” and there was a “completely logical and innocent explanation for” them.
Garvin said the Robainas were “victims” of now-convicted Ponzi schemer Luis Felipe Perez, who is serving a 10-year prison sentence for running a $45 million investment racket. He said his client never collected any cash payments from Perez, only checks, calling the prosecution’s upcoming trial witness a “crook.”
After the opening statements, U.S. District Judge Ursula Ungaro took the defense attorney to task for repeatedly suggesting the prosecution’s case totally lacked evidence and that federal authorities were simply out to nail Robaina because he was the mayor of Hialeah.
“I’m a little concerned about the tenor of the opening statements,” Ungaro told him, without the jurors present.
“You’re walking a fine line,” the judge told Garvin, after he implied “prosecutorial misconduct” on the part of Davis and his colleague, Richard Gregorie.
“I understand that,” Garvin said respectfully.
Last year, a federal grand jury indicted Robaina, 49, and his wife, 40, on charges of conspiring to evade paying taxes between 2005 and 2010. The main conspiracy charge in the indictment accuses the Robainas of overstating losses on their businesses and understating gains in their personal income, according to the indictment.
It further charges that the couple’s reported income swung wildly from a loss of $62,015 in 2006 to a gain of $1,023,672 in 2007, when they knew their “total income was greater than reported” in both years.
Both Robainas also are charged with lying to federal agents about his involvement in his wife’s two lending businesses, and he alone is charged with lying about receiving the undisclosed cash.
Davis, the prosecutor, called Raiza Robaina a “front” for her husband to hide his role in the couple’s lending business.
Perez, who invested in jewelry and pawn shops, borrowed money at high interest rates from the Robainas and nearly 40 other investors to maintain his big-spender image. He would promise 18 percent interest on check payments, and an additional 18 percent interest on cash payments.
The loans were doled out as part of an informal banking system operating below the radar in Hialeah that came to light during Robaina’s unsuccessful bid for county mayor in 2011.
Davis said the late-Hialeah power broker, Rolando Blanco, who hosted fund-raisers and political parties at his home, had matched up the mayor and Perez. Davis called Blanco’s home the “nerve center” of Hialeah.
Perez borrowed $850,000 from the Robainas, including a $100,000 loan deal with Rolando Blanco. The prosecutor said Robaina arranged to have check payments by Perez sent to the mayor’s home, and cash payments delivered in envelopes packaged by Perez to Blanco’s residence.
“Julio Robaina would come and pick up the cash,” Davis told the jurors, adding that Perez paid the Robainas a total of $600,000 in interest until he ran out of money in 2009. Davis did not mention, however, that Robaina arranged for Perez to pay him in cash so he could use the secret payments for his alleged mistress — an accusation raised by prosecutors before trial.
The prosecutor also revealed that a now-convicted former Hialeah police officer, Rolando Bolanos Jr., son of the ex-police chief, also delivered cash to the Blanco residence — but he stopped short of connecting those alleged deliveries to Perez and Robaina.
The Robainas’ lawyer, Garvin, said the couple only received 18 percent interest on check payments from Perez but no cash.
“Julio Robaina and Raiza Robaina accepted no more than 18 percent,” Garvin said. “And that is what they received. … He [the mayor] seldom went to the Blanco residence.”
The defense attorney said Robaina had profited from his involvement with a company, Prestige Builders, during the real estate boom by converting apartments to condominiums. He then sank more than $1 million into his wife’s lending companies, but kept his distance from the operation of her businesses to avoid a conflict of interest while serving as mayor.
But the prosecutor said the Robainas routinely used the wife’s businesses, RVR Holdings and MR Holdings, not only to make loans but to pay for personal and political expenses.
Davis said, for example, that the Robainas ran up $21,000 in gas bills and other costs stemming from running a household of five children. He also said that Robaina expensed bills ranging from $100 to $3,000 for media advertising and political consulting during his 2005 mayoral campaign in Hialeah.
Davis said the Robainas “created phony business expenses” in the couple’s lending businesses to lower their tax bills.