South Florida

Family behind Miami gold refinery raided coffers to fund ‘lavish lifestyle,’ lawsuit claims

When Republic Metals declared bankruptcy last year, the Opa-locka-based precious metals refinery — one of the largest players in an industry under investigation by federal prosecutors for dealing in “blood gold” — blamed an accounting error.

But now a group of creditors is suing a member of the family that owns Republic, saying Lindsey Rubin and her brother Jason, Republic’s CEO, raided more than $6 million from company coffers through “extravagant” salaries, bonuses and dividends.

The payments, which the lawsuit characterizes as “fraudulent,” were made in order “to fund their lavish lifestyles, including luxury homes and automobiles, boats, travel, clothing, and entertainment.” The lawsuit claims Republic was insolvent long before the Rubins disclosed the troubling news to creditors in 2018, meaning the company was allegedly misstating its inventory while continuing to borrow money.

The lawsuit was filed in Miami federal court last week by eight creditors who say they loaned Republic nearly $200 million, including the New York private bank Brown Brothers Harriman, Rabobank of the Netherlands, and Texas-based Woodforest. It names only Lindsey Rubin as a defendant. The Miami New Times first reported the suit.

Jeffrey Bast, an attorney for the Rubin family, denied the lenders’ claims that his clients had raided the company or fudged inventory.

“Lindsey Rubin looks forward to the opportunity to defend herself against these allegations, and she believes that process will also expose the harm some of these lenders caused to this company and its customers,” Bast said in an email.

Miami-Dade County property records show that Jason Rubin paid $4.25 million for a mansion in the exclusive waterfront community of Golden Beach in early 2018. Lindsey Rubin bought a Miami Beach condo for $3.3 million in 2014, on the same day she received a $5.7 million bonus, the lawsuit states.

The Rubin family has operated Republic since 1980. Over that time, Republic has grown into one of the largest precious metal refineries in the United States, with roughly 200 employees. But federal prosecutors in Miami have targeted the U.S. precious metals industry for buying “blood gold” from illegal mines in South America that ravage the rainforest, poison local people with dangerous chemicals and are often financed by narco-traffickers. In 2017, three traders at a rival Miami firm, NTR Metals, were convicted of a $3.6 billion money-laundering scheme. NTR’s Dallas-based parent company, Elemetal, also paid a $15 million fine for failing to maintain an anti-money-laundering program.

Refineries like Elemetal and Republic sell gold to Fortune 500 firms — including tech companies, automakers and jewelers — highlighting the role American consumers unwittingly play in illegal mining. A Miami Herald series “Dirty Gold, Clean Cash” published last year revealed widespread problems in the industry.

Miner+¡a Ilegal en Nari+¦o_ Colombia by JMBB 015_01.jpeg
A gash in the middle of Colombia’s southwestern jungle was created by an illegal mining operation. Colombia’s police are scrambling to shut down these operations, which the government says are funneling cash to criminal gangs. The Miami Herald’s “Dirty Gold” series shined a spotlight on the central role Miami plays in importing gold into the U.S.; much of that gold may have come from illicit South American mines. Juan Manuel Barrero Bueno Special to the Miami Herald

Bast, the Rubins’ attorney, said Republic remained solvent into 2018.

“When this company was profitable, as everyone involved understood it to be, the lenders took no issue with the compensation to the family, all of whom worked there full time. And there is not one shred of evidence to suggest that the Rubin family or anyone else at Republic was aware of the inventory discrepancies that were discovered by Jason in 2018,” he said. “The lenders that are now suing Lindsey had their own accountants and advisors auditing the inventory on a regular basis. They are simply now using the benefit of hindsight to blame the family for the same discrepancies that nobody discovered.”

Jason Rubin and Lindsey Rubin could not be reached.

The refinery has said its Nov. 2 Chapter 11 bankruptcy filing was not related to the industry-wide federal investigation. It has blamed inventory “discrepancies” for a financial shortfall.

In the lawsuit, the lenders say this $75 million loss “remains unaccounted for today.”

But they suggest financial chicanery was afoot. For instance, the lawsuit states Lindsey Rubin was awarded two bonuses of $5.7 million and $306,000 in 2014, as well as additional bonuses totaling more than $2.8 million in subsequent years.

The suit argues that Lindsey Rubin was not entitled to such compensation, saying she “has not performed any significant work on behalf of Republic other than occasionally signing documents as a director and the company’s corporate secretary, and managing the company’s [small] diamond inventory.”

The lenders believe the bonuses were irresponsible because the refinery was at the time functionally “insolvent, and has remained so,” and were awarded to her only because she was a company “insider.” Meanwhile, Republic misstated its inventory by tactics such as overvaluing barrels of “hydroxides ... [which are] byproducts generated from refining that contain unknown amounts of precious metal,” according to the plaintiffs.

They are asking for a judge to order Lindsey Rubin to return at least $6 million.

In its bankruptcy filing, Republic declared liabilities of $265 million, compared to assets of $175 million.

The company may not shut down permanently. Before filing for bankruptcy, Republic had been in negotiations to sell its Opa-locka plant to the Swiss refinery Valcambi. Bankruptcy court records state a deal with Valcambi is expected to go through on Feb. 28. Other filings also indicate Republic has agreed to auction some of its assets to the Japanese metals conglomerate Asahi for $25.5 million.

Miami Herald staff writer Jay Weaver contributed to this story.

Nicholas Nehamas is an investigative reporter at the Miami Herald, where he was part of the Pulitzer Prize-winning team that broke the Panama Papers in 2016. He and his Herald colleagues were also named Pulitzer finalists in 2019 for the series “Dirty Gold, Clean Cash.” He joined the Herald in 2014.
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