Former Hialeah mayor’s land deal and $800,000 payday also cost taxpayers millions

Trial put new spotlight on former Hialeah mayor’s role in securing a land-use change that enriched him and a powerful developer.

06/01/2014 12:52 PM

06/02/2014 5:33 PM

Former Hialeah Mayor Julio Robaina beamed and clenched his fist when he and his wife beat a criminal rap in their recent tax-evasion trial.

But as he ponders a possible return to political life, one particular piece of trial evidence could dog Robaina on any future campaign trail — a secretive $800,000 fee he collected years ago for helping a developer make a $16 million profit on a taxpayer-funded land sale to the Miami-Dade public school district.

The payment came from Robaina’s most generous political patron, the late Roberto Cayon. The wealthy developer tapped Robaina — then the powerful president of the Hialeah City Council — to help overcome strong community opposition to a proposed high-density, multifamily housing development in neighboring Hialeah Gardens. Residents had expressed fears that more new homes would further pack already-jammed schools.

Robaina, appearing as Cayon’s real estate broker and lead advocate at a packed public hearing, helped persuade the Hialeah Gardens City Council in January 2003 to allow a substantial land-use change. It doubled the number of allowable dwellings on the parcel — up to 1,050 units on 84 acres in the tiny city.

What critics of the project and the Hialeah Gardens council were not told then was that the Miami-Dade school district had already approached the Cayon family about purchasing the very same tract to help ease school overcrowding.

The up-zoning, approved 3-2, amounted to a jackpot for Robaina and the Cayons — instantly increasing the value of a tract that had just been purchased for $14 million. But it also cost taxpayers millions.

Although they never built the ambitious original project, the Cayons eventually sold a big chunk of their property to the school district, which decided to buy it under an eminent-domain “taking.”

Four months before the up-zoning, records show, the school district first approached the Cayons about buying 56 acres of their tract. Even after the up-zoning, appraisers assessed its value at about $17 million. But in December 2006, after more than three years of legal wrangling and mediation, the school district wound up shelling out much more to close the deal — $30 million .

The Cayon family’s profit, before expenses, came to about $16 million. And Robaina, for his brokerage services, scored an $800,000 fee in February 2007. The payment was not revealed until his tax-evasion trial in April.

At trial, Robaina’s wife, Raiza, testified that her husband told her to use that money to pay off their mortgage on a high-end Miami Beach condominium and poolside cabana that they had purchased in 2006.

While Robaina did nothing illegal in his role as the Cayon family’s real estate broker, it is unusual for a politician to be lobbying a neighboring city on legislative matters. Robaina and his attorney, David Garvin, did not return calls or emails requesting comment on his pivotal part in the taxpayer-funded land sale.

Miami attorney Paul Novack, the former mayor of Surfside who served on a state-appointed schools oversight board studying construction and maintenance, said revelations from the tax-evasion trial underlined residents’ concerns about Hialeah Gardens’ up-zoning and Robaina’s role as the developer’s representative.

It wasn’t until months after the up-zoning’s approval in 2003 that the school district’s pursuit of the land came to light. Novack, at the time, said Hialeah Gardens’ decision to double the density was “like waving a golden wand over a piece of property.”

“The up-zoning gave [the Cayons] a legal basis to demand more money for their property,” Novack told the Miami Herald in a recent interview.

Miami attorney Juan Muniz, a land-use specialist at the law firm Gunster Yoakley, said such up-zonings clearly increase a property’s value.

Muniz said that when the Miami-Dade School Board pursued its eminent-domain taking of the Cayon’s land in 2003, the value would have been based on the higher-density zoning and more-lucrative development potential of the 56-acre parcel.

“They’re not just buying the raw land,” Muniz said, referring to the effect of up-zoning on the property’s value. “They’re now buying the project.”

Robaina, who was elected twice as mayor of Hialeah, in 2005 and 2009, before his unsuccessful run for Miami-Dade County mayor in 2011, insisted there was nothing wrong with how he handled his role as an all-purpose real estate broker in the Cayon family’s Hialeah Gardens deal — or with his compensation.

“Roberto Cayon is a respected person in the community, impeccable,” Robaina told el Nuevo Herald after a Miami federal jury acquitted him and his wife in late April of filing false tax returns. “Is he going to pay me for something I didn’t do?”

From a real estate perspective, the deal was a big winner for Robaina’s client.

As a result of the up-zoning and other factors such as rising land values, a Cayon corporate entity doubled its initial investment, according to records. The family also retained 28 acres of the original parcel , which they went on to develop as an apartment complex.

Although Robaina played a prominent public role in the Cayon family’s zoning bid, his payday for the deal remained a mystery until the couple’s tax-evasion trial.

Two months after closing on the Hialeah Gardens land sale, family patriarch Roberto Cayon wire-transferred $800,000 into the then-Hialeah mayor's personal bank account, which was held with his wife at U.S. Century Bank, according to evidence and testimony in the couple’s trial.

Federal prosecutors highlighted the former mayor’s fee, showing that Robaina did not report the earnings on his joint 2007 income tax return or on his financial-disclosure form as an elected Hialeah official that year.

At trial, prosecutors said Robaina was paid the fee for the “lobbying” work he had done for the Cayon family on their so-called Vicenza residential project in late 2002 and early 2003.

Nine months after the up-zoning, Robaina acknowledged in a Miami Herald story that the school district had approached the Cayons about buying a big piece of the land. But he said the family did not want to sell.

Robaina also defended his efforts on behalf of the developer, telling the Herald back then that he had “no obligation” to disclose to Hialeah Gardens officials that the school district was pursuing the land.

The school district first expressed an interest in buying 56 acres from Cayons in September 2002 with the aim of building three new schools, citing crowded classrooms in the county’s northwest area, according to public records. But the Cayons rebuffed the school district.

“After exhausting all attempts to negotiate a willing sale with the property owner,” the School Board voted in April 2003 to file a lawsuit to force the family to sell the 56 acres through an eminent-domain taking, according to a School Board resolution.

The school district commissioned two independent appraisals, which placed the value of the 56 acres at $16.9 million and $17.1 million, according to records. The district made the Cayon family an initial offer of $16.9 million for that land, which was rejected.

After a court ruling in favor of the School Board’s taking in October 2003, the panel authorized a “good-faith” payment of $16.9 million on the property. The Cayon family used that to pay off the $14 million purchase of the entire 84-acre tract, an acquisition entirely bankrolled by a loan from Union Planters Bank, and to cover other expenses, records show.

After mediation to determine the “final value” of the School Board’s portion of the property, the district authorized paying the Cayons an additional $13 million in December 2006, bringing the total land deal to $30 million.

At the Robainas’ trial, prosecutors described the unreported $800,000 payment to the former mayor as the most “blatant violation” among the charges lodged against the couple. Robaina was also accused of pocketing secret cash payments on his high-interest loans to a Hialeah jeweler.

The former mayor, a real estate broker who has also invested in development ventures, said he helped Roberto Cayon, who died in late 2013, and his son, Maurice, on zoning issues, site plans and project designs for the family’s Hialeah Gardens entity, 84-A Holdings LLC.

“I was not a lobbyist,” he told el Nuevo Herald in an interview a week after his acquittal. “I was a real estate professional.”

“I looked at it under the umbrella of my real estate company [Realty USA],” said Robaina, arguing he had no conflict of interest as a Hialeah politician who was paid a huge fee to represent the Cayon family in Hialeah Gardens. “It was my job as a professional of my real estate company.”

But Hialeah Gardens City Clerk Maria Joffe confirmed that Robaina, who was the Hialeah City Council president in 2002-03 when he worked on the Vicenza project, had registered as a lobbyist to represent the Cayon family.

“To my recollection, yes,” Joffe told the Miami Herald in May, adding that the city no longer had the paperwork from the Cayon’s project.

In the end, the Cayons never built their approved multifamily project, along with a promised charter school, in Hialeah Gardens. Maurice Cayon, who inherited his father’s development business, testified about Robaina’s role in the project during the former mayor’s trial. But the son did not returns calls to the Herald for comment on his family’s profitable land deal with the Miami-Dade School Board.

The family’s eventual sale to the school district resulted in the construction of three schools — an elementary, middle and high school. They are north of Okeechobee Road between Northwest 92nd Avenue and Hialeah Gardens Boulevard.

On the remaining 28 acres, the Cayons and their partners recently completed a 216-unit apartment complex near the new public schools and a retail center anchored by Walmart.

Robaina’s relationship with the Cayon family ran deeper than the Hialeah Gardens project.

Roberto Cayon, a Cuban immigrant who came to the United States in the years before the Castro revolution, played a longtime role as benefactor to a string of Hialeah politicians, especially Robaina. Cayon showered him with political campaign dollars.

The influential developer and onetime bank president — through dozens of companies and partnerships — delivered upward of $100,000 to Robaina's two successful Hialeah mayoral campaigns and to his losing effort in the fiercely contested county mayor’s race in 2011, according to campaign finance records.

And through his affiliations, Cayon donated far more money than any other contributor to Robaina’s three campaigns, which accepted almost $3 million from political donors.

Dozens of those contributors had real estate connections, including Robaina’s former partner, Martin Caparros. In 2002-06, he and Robaina were partners in Prestige Builders Group, which specialized in converting apartments in Hialeah and elsewhere to condominiums during the real estate boom. Cayon was also involved with Caparros in numerous real estate ventures during the past decade and a half, Caparros testified at the Robainas’ trial.

After Robaina was elected mayor of Hialeah in November 2005, he divested his interests in Prestige and put his wife in charge of his real estate and loan businesses so he could avoid any conflict of interest, according to the couple.

At trial, Raiza Robaina insisted that the couple made a “mistake” when they did not report Cayon’s payment as income on their 2007 tax return. The wife said she “assumed” — incorrectly — that the payment was a profit distribution from one of her husband’s investments in Prestige.

In late April, a Miami federal jury found the Robainas not guilty of filing false tax information, but the couple still faces a civil Internal Revenue Service audit for not reporting a total of $2 million in income.

In early May, Robaina told el Nuevo Herald and other news outlets that he is considering a return to public life, possibly another bid for Miami-Dade mayor or for the state Legislature.

Dario Moreno, a political consultant who worked on County Mayor Carlos Gimenez’s successful campaign against Robaina, said some evidence from the couple’s trial, such as the unreported $800,000 fee, would be fair game — and a problem for Robaina.

“Even though he was acquitted at trial, there is enough doubt about his behavior and some of his business dealings that would make it very rough for him to run for public office — even in Hialeah,” Moreno said. “The trial transcripts would be required reading for his opponents. Any opponent he has is going to be armed with very damaging information to his candidacy.”

Raul Martinez, the legendary Hialeah mayor who beat his own corruption charges in the 1990s, overcame negative publicity to be reelected in his hometown, though he lost a later bid for Congress. Former Miami City Commissioner Humberto Hernandez was convicted of absentee-ballot fraud after the 1997 municipal election, though he retained a strong following of Little Havana supporters.

Moreno believes that voters would be less likely to tolerate misconduct — real or perceived — in today’s political environment.

“The days of Raul Martinez and Humberto Hernandez, where politicians go through these trials and emerge as local heroes, are over,” Moreno said. “The public has become aware that there is a price to pay.”

Miami Herald Staff Writer David Smiley contributed to this report.

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