For his birthday in 2004, Julio Robaina's business partner gave him a silver Ferrari. But was the luxurious Italian sports car a personal gift or income from their real estate company?
The business partner, Martin Caparros, testified Thursday in Robaina's tax-evasion trial that it was given as “compensation” for his “performance” at Prestige Builders Group, which then paid off a $142,000 loan on the car in 2006 — just after Robaina took office.
“It was not a gift,” Caparros said, adding that the company made all the loan payments through a subsidiary, PBG Toys, controlled by him and Robaina. But Robaina was listed as the “borrower” on the loan papers.
But the defense attorney for Robaina, who left Prestige after being elected mayor of Hialeah, argued that it was intended as a “gift.”
The distinction carries great weight because Robaina is accused of not reporting the Ferrari as income — part of the $2 million in earnings he allegedly failed to disclose on his tax returns. If the car were a gift, defense attorney David Garvin argued, then Robaina would not have been required to report it.
The debate over Robaina’s Ferrari marked a transition in the prosecution’s case, which is now highlighting his investments during the real estate boom. The first part of the trial, which began last Friday, spotlighted his high-interest loans to a Hialeah con man while he was serving as the city’s mayor.
Last year, a federal grand jury indicted Robaina, 49, and his wife, Raiza, 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.
On Thursday, Garvin got Caparros to admit that he wanted to “surprise” Robaina with the Ferrari on his birthday a decade ago, as if to suggest it was a personal gift.
“Yes, it was a surpise,” Caparros testified.
But Caparros told prosecutor Richard Gregorie that when Robaina left Prestige Builders in 2006, the Ferrari was included in the then-mayor’s buy-out agreement.
“So it was not a gift?” Gregorie asked.
“No,” Caparros testified.
That July, Robaina traded in his 2001 Ferrari for $134,000 and his 2004 Corvette for $33,000 at The Garage in Miami. He then bought a Bentley for $172,000. To complete the purchase, the mayor had to cough up an extra $5,000.