Rubin case latest woe for state agency
Hits ongoing for finance regulation office
TALLAHASSEE – When Gov. Ron DeSantis and his Cabinet meet Thursday, they’ll have to wade through a thicket of sexual harassment charges and counter allegations before deciding the future of Ronald Rubin, the state’s suspended top financial regulator.
But what will come next — putting the troubled Office of Financial Regulation on a stable footing — could be a more difficult task.
The agency was dealing with massive turnover, low morale and unsettled leadership at the top before Rubin was hired on Feb. 26 and accused of sexual harassment and suspended in mid-May. An inspector general report released last week found he created an “intimidating, hostile and offensive work environment.”
As the drama has unfolded over the last two months, the agency that oversees banks, regulates payday lenders, investigates financial crimes and acts as a watchdog for securities dealers has languished.
Its budget is $2.3 million less than it was in 2012, has four fewer branches around the state and its 353 positions is 85 fewer than it had seven years ago.
Meanwhile, the number of licensed entities has grown significantly, to 458,000 in total, including banks and credit unions with assets of nearly $100
billion. The cuts took place as the state was still struggling to recover from the Great Recession.
“When you don’t have the personnel you have to cut back. You can’t look at everything like you did once,” said Stephen Masterson, who worked at OFR for two years as lead attorney for the securities division before resigning in April. “If you cut the police force down, they’re not going to stop trying to make arrests but there aren’t going to be that many police out there to stop the crime to begin with.
“I can guarantee you that there are some real bad things that happened because there weren’t that many financial police out there to look,” he said.
The agency has also grappled with high turnover. As employees left for higher salaries in the private sector, they took with them decades of experience and a wealth of institutional knowledge. That problem predated Rubin’s tenure, but his initial decisions made it worse, current and former OFR employees say.
Rubin put in a hiring freeze soon after taking the reins. Then, five top-level staffers left. Some were planned retirements and some took issue with the direction Rubin was taking the agency, but it left a hole in the office as interim managers took on extra workloads.
In addition to Masterson’s departure, Pam Epting, the interim OFR director for the eight months prior to Rubin’s appointment; Lee Kell, securities division director; Steve Horn, bureau of financial investigations chief; Natasha Hurt, who led training for securities division’s enforcement bureau, all left in the three months Rubin was in charge.
There have been 40 employees who left OFR since Rubin took over, and there are currently 67 vacant positions. The hiring freeze remains in effect, although an OFR spokeswoman said the agency is advertising for “mission critical positions.”
The ongoing troubles, combined with the allegations against Rubin, are said to be affecting morale in the department.
“We need (for) people to have confidence in the agency, and we’re concerned about that and it’s demoralizing,” said one longtime OFR employee who requested anonymity because they weren’t authorized to speak for the agency.
The inspector general report on Rubin detailed allegations that Rubin frequently made inappropriate comments, including calling a woman the c-word in front of employees, telling employees about the sex life of his parents, telling employees his brother-in-law was gay and inviting a subordinate to visit his home in Washington, D.C.
There were other claims, too – that he made employees search for apartments for him, help him move, fix his coffee maker – but Michael Tein, Rubin’s lawyer, disputed them in a letter to DeSantis and the Cabinet on Tuesday.
He claims some episodes were made up, such as calling Tallahassee employees “rednecks,” and others were the result of awkward misunderstandings that don’t rise to the level of firing him.
“Ultimately, Commissioner Rubin should return to service,” Tein wrote. “He accepts that, despite the best of intentions, he made some people uncomfortable. And he has sincerely apologized. He has taken supplemental training on management and sexual harassment to ensure this won’t happen again. You can censure him if you wish but, in doing so, you should use the same yardstick to judge misconduct by other Florida officials.”
Tein also demanded that Chief Financial Officer Jimmy Patronis recuse himself from any decision to permanently remove Rubin as director.
Patronis has publicly called for Rubin’s ouster after reading a preliminary report from the inspector general last month. Rubin has accused Patronis of trumping up the harassment allegations as punishment for not hiring Patronis’ hand-picked attorney.
Tein has filed for whistleblower protection for Rubin, saying his termination would be illegal if he has it. Also, an ongoing FDLE investigation into Patronis’ decision to post a redacted version of one of the harassment claims online means Patronis should remove himself from the decision involving Rubin, Tein stated. Patronis has denied Rubin’s claims.
“The CFO will absolutely not recuse himself. Mr. Rubin’s claims are patently false and outrageous,” Patronis spokeswoman Katie Strickland wrote in an email. She also noted that Florida law requires the approval of the CFO and the governor to hire or fire the OFR director.
Tein said the hiring freeze was put in place while Rubin reorganized the agency to minimize departures of employees. He wanted to align the agency by what they did instead of by subject matter, such as putting all investigators in one department instead of having financial investigators and securities investigators in separate departments.
Despite Rubin’s suspension, he has remained in charge of the office, with OFR staffers sending requests for approval for toplevel decisions through his attorneys, Tein confirmed. Rubin continues to receive his $166,000 annual salary as well.
Whether the Cabinet fires Rubin or keeps him on, Masterson whoever is in charge has lots of work to do.
“There’s a big rebuilding issue going on there,” Masterson said. “The bench isn’t very deep because of all of these things that have happened.”
On top of that, Rubin’s allegations against Patronis — backed up by text messages from a lobbyist — of political interference are casting a shadow on the agency, Masterson said.
“Because of the sensitive nature of what that office does it was set up to be independent; it was set up to not be affected by politics,” Masterson said. “There has not been a respect for that, there’s been an attempt to undermine it.”