In My Opinion

Fred Grimm: Integrity left behind in Hialeah loan sharking scandal

In fairness to Mayor Carlos Hernandez, in that famous tantrum of a press conference back on Oct. 13, 2011, he didn’t say, “I have integrity.”

Clearly, that would have been misleading. Someone unschooled in Hialeah political ethos might have termed that a lie.

What he said, taking umbrage, taking lots of umbrage, taking more umbrage than the occasion might have demanded: “I won't allow anyone to question my integrity.”

Which is not the same as saying, “Hey. I possess gobs of integrity. I’m dripping with the stuff. Got integrity running out my ears.”

As Hernandez demonstrated with his testimony last week in U.S. District Court, he had very good reason in the run-up to the city election back in 2011 to not “allow anyone to question my integrity.” Because the answer would not have pleased the electorate, given that mayor had none of that particular commodity on hand. Hernandez was fresh out of integrity.

The “anyone” referenced by the mayor in the 2011 press conference was not just anyone. It was us. The Miami Herald. Back in 2011, Herald reporters Jay Weaver and Laura Isensee had noticed that the mayor’s name had surfaced during the federal investigation of Ponzi schemer Luis Felipe Perez. Perez had told federal prosecutors that he had borrowed seed money for his $40 million Ponzi swindle from both Hernandez and former Hialeah Mayor Julio Robaina.

It was as if lending large chunks of cash was part of the mayoral job description in Miami-Dade’s second largest city. And collecting interest at loan shark rates were simply perks of the office.

Except, as Weaver and Isensee reported in 2011, Hernandez seemed to have forgotten to list either loans or interest income on financial disclosure forms filed with the county and Hialeah. Nor did he remember the $180,000 in interest payments Perez claimed he paid Hernandez from 2007 to 2009 when he filed his federal tax returns.

Perez claimed he was paying the Hialeah politicians annual interest rates of 36 percent. Very sharky. Hernandez responded with, “I will not let any newspaper question my integrity based on the word of a convicted felon like Luis Felipe Perez.”

He dredged up the old Cuban American National Foundation’s “Don’t Believe the Miami Herald” campaign, as if reporters wanting some answers about a local pol’s dodgy private loan business in 2011 had some correlation to newspaper editorials written 22 years ago that had questioned whether tightening the Cuban embargo would hasten the ouster of the Castro regime.

Hernandez was seated at a table with a cabal of vexed and defiant supporters standing behind him, looking ready to tussle if media scoundrels tried to storm the podium. Or to ask discomfiting questions. There was no interest payments, the mayor declared. He said that he only collected money on the principal. He said the Herald, “as with Julio Robaina,” was only dredging this stuff up “to influence the outcome of the election to benefit the candidate of its choice.”

He issued a news release declaring, “I will not allow my integrity to be questioned by The Miami Herald as they attempt to once again do, as they did to former Hialeah Mayor Julio Robaina.”

Questions about those damn loans bubbled up again last week. This time, however, it was a federal prosecutor doing the asking. This time, Mayor Hernandez was not so belligerent.

Apparently, under oath, memories change. Hernandez testified that he collected 3 percent interest a month on that $180,000 he had lent Perez. At 36 percent a year. Which was exactly what the Herald reported in 2011. Back when we were not allowed to question his integrity.

He happened to be testifying at the trial of his predecessor. What a coincidence. Julio and his wife Raiza Robaina are accused of tax evasion, of failing to report more than a million bucks in income, including 300 grand collected from this very same Luis Felipe Perez. The Ponzi schemer testified last week that he had loaned the couple $750,000 and that he made regular payments to cover the 36 percent interest. “I sent it to him in cash.”

Now it was true that the Herald reported Robaina’s loan sharking sideline back during his campaign for county mayor in 2011. No doubt, it was rather inconvenient timing for Robaina’s political ambitions. But at the time, we thought that a murky, shadow-banking business seemed like a peculiar pursuit for a mayor, city or county. (Since, however, we’ve discovered that this is pretty common in Hialeah.)

But if Robaina had won, imagine the trauma the Miami-Dade County would have suffered these last few weeks, with a mayor on trial in federal court, with testimony that its chief executive had been involved in hinky financial transactions with a convicted con man, that his explanation for keeping details of the transaction secret was that he didn’t want his wife to find out he was spending the interest money on his mistress, that he had once received a swell $142,000 Ferrari (which he failed to disclose on his income taxes) from a business partner. (Later Robaina swapped the sports car for a Bentley. The idea of a county mayor in either a Ferrari or a Bentley seems unsettling.) Voters would be begging for a Carlos Álvarez comeback.

The lesson here is that we should keep Hialeah mayors, with their loan sharking sidelines, confined to Hialeah. Just don’t borrow money from them. And don’t question their integrity. You might not like the answer.

Read more Fred Grimm stories from the Miami Herald

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