Former Hialeah Mayor Julio Robaina, wife acquitted of tax evasion charges

04/29/2014 5:18 PM

05/03/2014 1:20 PM

Former Hialeah Mayor Julio Robaina bowed his head in relief and his wife, Raiza, teared up Tuesday as a Miami federal jury found the couple not guilty on charges of conspiring to avoid paying taxes on $2 million in income and lying to authorities.

It was a resounding victory for the Robainas, who had repeatedly blamed mistakes by their accountant for the failure to report that income on their tax returns. Federal prosecutors had declared them “tax cheats” who hid their earnings from the U.S. government throughout the two-week trial.

Outside the courthouse, Julio Robaina, a two-term Hialeah mayor who ran for Miami-Dade mayor in 2011, gave thanks for their acquittals by the 12-person federal jury, which began deliberations late Monday after a two-week trial.

“I told all of you from the beginning that we were going to vindicate our name, and that the truth is the truth,” Robaina, 49, told reporters. “Our name has been vindicated with the truth.”

Asked how her testimony affected the jury, Raiza Robaina, 40, echoed her husband. “The truth,” she said. “There is nothing else to say except that I told the truth, and that’s all there is.”

“We’re not going to talk about the trial,” her husband said. “We’re going to talk about the future, and we’re going to continue to be able to work to help this community.”

Julio Robaina’s acquittal marked the second time in recent history that a Hialeah mayor has survived a federal criminal indictment. In the 1990s, legendary Hialeah Mayor Raul Martinez, who attended much of Robaina’s trial, beat corruption charges.

The couple’s trial spotlighted Hialeah’s “shadow” banking industry of high-interest loans. As a sitting mayor, Robaina loaned $750,000 to a Ponzi schemer, Luis Felipe Perez, who would eventually be convicted of swindling $40 million from the couple and dozens of other investors.

During closing arguments Monday, the couple’s defense attorney, David Garvin, had argued they were “victims” of the unscrupulous jewelry investor, accusing Perez of lying on the witness stand to curry favor for a reduction in his prison sentence.

The couple’s attorney also said the Robainas became targets of overzealous Internal Revenue Service agents, who aimed to take out a prominent politician. The former Hialeah mayor lost to Carlos Gimenez in the runoff for Miami-Dade County mayor while Robaina was under investigation.

“[Perez] gave them someone bigger than him: the mayor of Hialeah,” Garvin told jurors. “They took his word on it. When they started this investigation, they were already convinced that Julio Robaina was guilty of a crime.”

“Julio and Raiza Robaina were not treated fairly,” Garvin said during closing arguments, adding that the IRS never conducted a civil audit of the couple’s tax return, only a criminal probe.

Prosecutors admitted that Perez, the government’s star witness, was a “con artist” who hoped to shave time off his 10-year prison sentence for his diamond investment scheme.

But they also revealed that Perez kept financial records showing he paid 36 percent interest on the loans from the Robainas, half in checks and half in cash — cash that prosecutors contend he kept secret from his wife.

The $300,000 in cash payments were just one chunk of some $2 million in income that prosecutors say the Robianas failed to report on income tax returns in a scheme to avoid taxes between 2005 and 2010.

Assistant U.S. Attorney Richard Gregorie told the jurors that the mayor’s loan deal with Perez was a “shadowy business that had no business going on.”

Julio Robaina, who made a small fortune during the real estate boom converting apartments to condos, used his profits to make high-interest loans through his wife’s two loan companies, MR Holdings and RVR Holdings.

However, the Robainas’ defense attorney, Garvin, said that his clients were victims of “Hurricane Felipito,” who stole millions from them and others to buy a pair of homes in Miami Beach and Coral Gables, a fleet of cars including a Rolls-Royce, and diamonds and other jewelry.

“He had no heart, no conscience and no morals,” Garvin told the jurors.

Garvin insisted that the Robainas, who set up two loan companies registered to the wife so the husband could avoid a conflict of interest as mayor, charged Perez no more than 18 percent interest and never received cash payments from him.

“The whole Perez thing is a fabrication,” Garvin said.

Garvin tried to raise reasonable doubt among the jurors by suggesting that a Hialeah power broker named Rolando Blanco, who died in 2007, matched up Robaina and Perez and later pocketed whatever cash may have been delivered to the Blanco residence for the mayor to collect there.

But Gregorie told jurors that no evidence was presented at trial by either Perez or Blanco’s son, Roberto, or any other witnesses to support that claim. “There’s no one who came in here and said the Blancos are stealing your money,” Gregorie said.

The Robainas each faced tax-evasion conspiracy charges, and two false tax-return offenses for 2006 and 2007. Both were accused of additional counts of lying to federal authorities that the mayor had “no involvement” in his wife's loan companies.

Julio Robaina was also charged with lying to authorities about never receiving any cash payments from Perez.

Had they been convicted of any of the charges, the couple could have faced several years in prison and IRS fines.

Robaina did not testify in his defense. Instead, he let his wife effectively speak for both of them, as she and the couple’s defense attorney blamed their accountant for “mistakes” on their tax returns.

A member of the jury, who did not want to be identified, told reporters outside the federal courthouse that prosecutors did a good job of presenting tax documents and important testimony. But he said the jury found the prosecution's evidence lacked proof of "criminal intent" by the Robainas. In particular, he said the panel found there were communications problems between the Robainas and their accountant's firm that led to "human errors" on the couple's tax returns -- not evidence they tried to hide their income and deceive the IRS.

In addition, the jury member said the testimony of Perez, the convicted Ponzi schemer, was "taken with a grain of salt" because he was imprisoned for running a multimillion-dollar fraud scheme and was "looking for a sentence reduction." He also said the jurors agreed with Garvin's description of the Robainas as "victims" of Perez's scam.

At the closing arguments, Gregorie and fellow prosecutor Michael Davis slammed the Robainas for under-reporting income and over-reporting expenses in a “scam” run through the couple’s two loan businesses and the then-mayor’s company, Realty USA.

But proving the Robainas filed false tax returns proved challenging because of the financial complexity of the case and competing interpretations of the couple’s tax records. Also, the government had no direct proof, such as a recording, of Julio Robaina’s allegedly accepting cash payments from Perez, the Ponzi schemer.

The jury ultimately did not buy the prosecution’s overall case.

After the verdicts were read, U.S. District Judge Ursula Ungaro excused the jurors and ordered that the courtroom be locked for 15 minutes so that reporters could not follow them as they left the federal courthouse.

The judge then told the couple, parents of five children: “Mr. and Mrs. Robaina, the court is acquitting you of all counts. You are free to leave.”

The Robainas hugged about 20 supporters in the courtroom, with Raiza Robaina openly crying. Julio Robaina shook his lawyer's hand and embraced him.

Then he beamed a broad smile.

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