Republic Metals, one of the nation's largest gold refiners, was described in a Miami Herald series last year as part of a "blood gold industry" federal prosecutors have targeted because the metal is mined in hazardous or lethal conditions in developing nations.
A group of banks and other lenders filed suit this past Friday in Miami federal court accusing CEO Jason Rubin and his sister Lindsey Rubin of knowing Republic Metals was insolvent for years. The suit contends they misstated the company’s inventory and continued to borrow money.
Insiders including the Rubins gave themselves “extravagant salaries, bonuses, and dividends to fund their lavish lifestyles, including luxury homes and automobiles, boats, travel, clothing, and entertainment,” the suit alleges.
A bankruptcy attorney for the family, Jeffrey Bast, said it’s not unusual for profitable family-owned businesses to pay distributions or bonuses from earnings. He insisted the company was in the black until early 2018.
“The lenders who are now complaining about these bonuses were aware of them at or about the time they were made,” Bast said. Republic’s attorneys have also denied a federal investigation into blood metals has anything to do with the firm's bankruptcy.
Records show Jason Rubin bought a five-bedroom, four-bath, 4200-square-foot waterfront mansion (photos here) for $4.2 million in Golden Beach in early 2018. Lindsey Rubin bought a beachfront condo at the Caribbean condo in Miami Beach for $3.3 million in 2014.
According to the lenders’ lawsuit, Lindsey Rubin bought the condo shortly after receiving a $3.3 million payment from Republic Metals — part of a $5.74 million bonus that year.
The lawsuit calls the bonus a “gift” to Lindsey Rubin because 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 diamond inventory.”
The lawsuit notes that Republic’s inventory reports disclosed a drop of over $80 million in March 2017, and says “officers and directors used accounting contrivances and inventory manipulation to persuade the lenders to lend cash and lease precious metals to the company.”
One method of overstating Republic’s inventory was assigning a significant, unsubstantiated value to barrels of hydroxides, which are byproducts of refining that could contain some amount of precious metal, the suit says.
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Bast says the lenders also knew about the inventory problems because they were identified and disclosed by Jason Rubin.
Jason and Lindsey Rubin also used
Jason and Lindsey’s father, Richard Rubin, founded the company in 1980.