Former Hialeah Mayor Julio Robaina and his wife may be savoring the sweet victory of being acquitted of federal tax-evasion charges, but their troubles with the Internal Revenue Service may not be over.
The civil division of the IRS is likely to launch a tax audit of the couple's alleged unreported $2 million in income. That assessment, at least potentially, could still see Julio and Raiza Robaina paying a price — but in the form of back taxes and penalties, not prison time.
Attorney David Garvin, who successfully defended the couple during their two-week federal criminal trial in Miami, said a civil audit is how the IRS should have started its probe of the couple in 2010.
In an interview Wednesday, a day after a jury found the couple not guilty on a slew of charges, Garvin reiterated the argument he made in court. That federal prosecutors never should have tried to make a criminal case largely built on the testimony of a Hialeah jeweler-turned-Ponzi schemer who borrowed $750,000 from the Robainas — then accused the former mayor of accepting cash payments from him that were not disclosed on the couple's tax returns.
“We're likely to go where this case should have started, but did not — backwards [to the civil audit],” Garvin told the Miami Herald.
An IRS spokesman for the agency’s South Florida civil office declined to comment, saying he was “prohibited by law” from talking about any case.
Civil audits in the aftermath of criminal tax trials are fairly routine. Garvin’s previous high-profile client, Indy 500 champion Helio Castroneves, was acquitted of tax-evasion charges at a Miami federal trial in 2009 but then faced a civil audit.
The Robainas’ victory stung the IRS and the U.S. attorney’s office, which were confident of convictions after making their case against the two-term former mayor and his wife. But the prosecution team — as well as many outside legal experts — were clearly shocked when the 12-person jury returned not guilty verdicts on all counts after only six hours of deliberations late Monday and Tuesday.
The Robainas, in brief but elated comments outside the federal courthouse, declined to discuss the trial but the former Hialeah mayor declared that “our name has been vindicated with the truth.”
Garvin, in discussing the case on Wednesday, reiterated that theme, saying the “story of the Robainas resonated as the truth.”
Garvin said that once he was able to shed light on each of the prosecution’s allegations in the complex tax-evasion conspiracy case, “there was a logical explanation for what happened.”
The couple’s trial spotlighted Hialeah’s “shadow” banking industry of high-interest loans. As a sitting mayor, Robaina loaned $750,000 to the Ponzi schemer, Luis Felipe Perez, who would eventually be convicted of swindling $40 million from the couple and dozens of other investors.
Perez, who is serving a 10-year prison sentence, testified that he paid 18 percent interest in checks and 18 percent interest in cash. He said that his $300,000 in cash payments were delivered to the home of a Hialeah power broker, Rolando Blanco, who had matched him up with Robaina in the loan deals during a Caribbean cruise together.
During closing arguments, Garvin instead argued the Robainas 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. Also, Garvin raised questions about whether the then-Hialeah mayor actually collected the alleged cash payments at the Blanco’s home between 2006 and 2009.
He said that prosecutors Richard Gregorie and Michael Davis — besides calling Perez and another key witness, Blanco’s son, Roberto — could not independently prove there was in fact cash delivered and that Robaina received it.
Garvin also told jurors that 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 in 2011 while Robaina was under investigation.
Judging by the quick verdict, his counterpoints proved convincing enough for the jury to reach the “reasonable doubt’’ standard for aquittal. None of the jurors could be reached for comment.
The U.S. attorney’s office declined to comment about the jury’s verdicts. Jose A. Gonzalez, the special agent in charge of the IRS’ criminal investigations, said in a statement: “We are certainly disappointed with the outcome of this trial, but the jury has spoken and we respect their decision.”
News of the acquittals reverberated throughout Miami-Dade.
Veteran Miami defense attorney Frank Quintero said the verdicts came as a surprise to him and others in the legal community, who got the impression that prosecutors had put on an impressive case against the former Hialeah mayor — but not against his wife.
“The case against the mayor was strong, but the case against the wife was very weak,” Quintero said. “No witness testified they had any conversations with the wife about any interest payments in cash or the percentage of interest paid or about any business dealings Robaina was allegedly involved in.”
Quintero said there were a few possible explanations for the acquittal verdicts. Chief among them: Sympathy for the Robainas because of the widespread unpopularity of IRS.
“The verdict, in my opinion, was in large part the jury’s response to the general public’s dislike towards the IRS — together with the great job done by defense counsel in establishing reasonable doubt as to the government’s case,” Quintero said.
The Robainas also scored points by blaming their accountant for “mistakes” on their 2006 and and 2007 tax returns. Raiza Robaina, who testified instead of her husband, said the couple relied on the accountant, which protected the Robainas from the prosecution's claim that they cheated on purpose. And by asserting that the accountant, Pelayo Vigil, made mistakes on their behalf, it rebutted a crucial element of the offense: criminal intent.
Lastly, investigators did not have any audio or video recordings of the Robainas' talking about hiding their income from the IRS — like the proverbial “smoking gun” in an undercover sting operation.