BY SCOTT HIAASEN, TIM CHAPMAN AND SUSANNAH A. NESMITH

A defiant Raul Masvidal turned himself in to Miami-Dade prosecutors Friday after lashing out at his accusers, insisting he did not steal $150,000 to buy a giant watermelon slice.
The extravagant fruit is a sculpture called Mars that Masvidal purchased in 2004. Investigators say he bought the artwork with money from the Miami-Dade Housing Agency and used a phony receipt to cover it up. He is charged with grand theft and organized fraud.

Before he was booked in jail, Masvidal said he is being smeared by sculptor Julio Larraz -- a childhood friend -- and Larraz's art dealer, Ron Hall of Dallas. The pair gave statements to prosecutors that led to Masvidal's arrest.

''The only reason why I am being indicted is because there are two liars,'' Masvidal said. ``I think that once they look into their papers and look into the lies that they are telling, I will be exonerated.''

Masvidal -- a well-known philanthropist and political insider, one-time Miami mayoral candidate, former banker, Bay of Pigs veteran and, briefly, watermelon farmer -- was released on $200,000 bail.

His attorney, John Thornton, said Masvidal passed a lie-detector test last week that included ``very specific questions and answers on the critical issue that Mr. Masvidal had no intent to steal or defraud.''

Miami-Dade State Attorney Katherine Fernández Rundle painted a different picture during a Friday morning press conference, calling Masvidal a thief and a ''charlatan'' willing to steal money that was supposed to help poor people so he could have a sculpture for his lawn.

''What we have in this case, instead of a home, a house for someone who needed it, we have a watermelon,'' she said.

Added the county's Inspector General, Chris Mazzella: ``The scheme concocted by Raul Masvidal . . . was really one intended to steal money. And it's stealing money that's intended to help those that are the most disadvantaged in our community.''

Mazzella's office and the state attorney's office uncovered the alleged scam.

Thornton cast the arrest of his client as a nasty turn in a simmering fight between Masvidal and the county over Hometown Station, a failed office project in South Miami.

The county leased land to Masvidal's company and committed $5 million to the project, which was to include a new headquarters for the Miami-Dade Housing Agency. With nothing built, the project is years behind schedule and millions over budget.

SECOND ARREST

The deal is one of several highlighted in a Miami Herald investigation of the Housing Agency published in July. Masvidal, 65, is the second developer arrested since the articles appeared, and others are still under investigation.

''I have been tried in the court of The Miami Herald, I have been convicted by The Miami Herald and taken to the gallows today by The Miami Herald,'' Masvidal said.

County auditors said Masvidal and his partners misspent more than $3 million in county money intended for construction expenses at Hometown Station. This included a $287,000 bill for another Larraz sculpture called Space Station that was shipped from Italy. The piece, a 22-foot stack of coffee cups, was supposed to be displayed at the new county building.

Investigators now say the bill was bogus. They say Masvidal actually received two Larraz sculptures and intended to keep one -- the watermelon slice -- for himself. Each piece cost $150,000.

''His pure intent was to buy one and get one free for himself,'' Mazzella said.

Both sculptures were found at the Medley storage yard of Delant Construction -- the contractor on both the Hometown Station project and on renovations to Masvidal's Coral Gables home.

Hall, the art dealer, said Masvidal instructed him to include only the Space Station sculpture on the invoice, according to the arrest report.

In October, Masvidal used the watermelon sculpture as collateral for a $125,000 ''personal loan'' -- listing the item as his personal property, the arrest report says.

County Mayor Carlos Alvarez called the scandal ''embarrassing'' and noted that the County Commission's $5 million payment to Masvidal for work on Hometown Station was passed before he was elected.

''You can't sugarcoat it, you can't make excuses, but what I'm trying to say is what happened in July 2003 would not occur in March 2007,'' he said.

SUED COUNTY

The day before his arrest, Masvidal fired back at the county with a $10 million lawsuit, claiming underground pipes and other problems with the county land caused the construction delays.

The suit also says the county audit was used to threaten Masvidal during negotiations over the delays.

Masvidal's attorneys say he's being attacked to distract attention from the county's use of surtax money -- money intended for affordable housing, not county offices -- for Hometown Station.