Stephen LaRoque releases statement on four year case

RALEIGH, N.C. (WNCT)- A former North Carolina Representative from Kinston  sentenced to two years in federal prison released a statement Sunday just two days before his report date.

Stephen LaRoque is expected to report to Butner Prison on Tuesday, August 18th by noon.

Below is his statement concerning his case over the past four years:

Thank you for the opportunity to provide a written narrative explaining my criminal conviction. This conviction came at the end of long-running, contested litigation. I was first charged with criminal offenses back in July 2012. In May 2013, I went to trial. The trial lasted three weeks, and after three days of deliberations, the jury voted to convict.

However, within 20 minutes of announcing their verdict, two jurors disclosed that another juror had conducted unauthorized home internet research about the case that caused him to change his vote on all counts from not guilty to guilty—and that the other jurors who had been voting not guilty changed their votes shortly thereafter. Therefore, the district court granted me a new trial. It was shortly before that trial was to begin (in February 2015) that I accepted a plea offered by the government that allowed me to plead to one count of misapplying funds.

In entering that plea, I admitted to misapplying funds of the nonprofit organization East Carolina Development Company (“ECDC”) by taking a loan from the organization (which was less than the amount that I was owed by ECDC for deferred salary) because the bylaws of the organization arguably prohibited me from accepting any loans from ECDC. To understand this plea, it is necessary to briefly trace my salary history with ECDC.

I started ECDC and in 1998 the organization began operations. The organization was established primarily to operate a United States Department of Agriculture (“USDA”) loan program known as the Intermediary Relending Program (“IRP”). Under the IRP program, the USDA loans money to nonprofit organizations called “intermediaries” that established a lending institution for small businesses in rural areas that cannot get loans from traditional banks. In 1998, as part of the application process with USDA to be an IRP program intermediary, I agreed, on behalf of ECDC, not to lend IRP funds to any company in which any ECDC officer holds a financial interest.

In August 1999, ECDC’s board authorized one of its members to negotiate and enter into a salary arrangement with me. This arrangement, which was entered into in September 1999, provided me as Executive Director of ECDC with a management fee of three percent of the funds managed by ECDC. Soon after entering into that arrangement, I provided a copy of the September 1999 management contract to ECDC’s outside accountant.

Beginning in the 1999-2000 fiscal year, and continuing for the next ten years, I received less than the full amount I was entitled to under this contract as annual compensation. Therefore, over the years, I was entitled to an increasing amount of deferred salary from ECDC. I chose not to take my full salary because the organization’s primary task was to provide risky loans to risky borrowers and I wanted to make sure that the organization had sufficient loan-loss reserves to handle defaults.

Unfortunately, I did not specifically highlight this deferred salary to my outside accountant, and that accountant did not compare the amount I was owed under my management contract to the amount I received. Therefore, many corporate records do not reflect this amount being owed to me. Nonetheless, the three percent contract was in the outside accountant’s files since roughly the time it was entered into.

In January 2009, I was owed over $150,000 by ECDC in deferred salary. My mother had recently passed away and left me with a significant inheritance (more than $150,000). But the distribution of that inheritance was delayed due to related legal issues. Shortly before January 2009, My wife sold her carpet and interiors business and wanted to purchase an ice rink in Greenville as another small business. I wanted to use some of my inheritance money to invest in the rink with my wife. Due to the delays in the inheritance distribution, I decided to use the money owed to me by ECDC. However, I did not want to drain ECDC of $150,000 permanently, because ECDC might need those funds to cover loan defaults. Therefore, I decided to loan myself the money owed to me by ECDC with the plan to pay those funds back to ECDC when I received my inheritance distribution.

I did just that—loaning myself $150,000, investing in the ice rink, and paying ECDC back when the inheritance was distributed. Unfortunately, in the meantime, I became engaged in a legal battle with a political rival, and the rival used my operation of ECDC to smear me. The United States Attorney’s Office for the Eastern District of North Carolina picked up on the reporting and began a grand jury investigation. I cooperated fully with the investigation, believing that, since I only took money owed to me, that I had committed no crime. However, the US Attorney’s Office focused on the fact that I had agreed, in the context of the IRP program, not to loan money from ECDC to any organization in which I had a financial interest.

I believed that this prohibition extended only to IRP loans, as opposed to an unrelated organization loan that pertained only to a management decision not to drain ECDC of funds that it may need to cover loan losses. However, the US Attorney’s Office pushed the case to trial. I defended myself and may have been acquitted if it were not for jury misconduct.

On the eve of the second trial, which was to take place in early 2015, after having dealt with the matter since 2011, I decided to accept a plea offer in which I agreed to misapplying the funds on the basis that taking a loan technically violated the bylaws of the organization (even if that provision seemingly applied to a different scenario).

I received substantial decreases in the sentence guideline range due to many government concessions, and the judge ultimately sentenced me to the lowest sentence in that already reduced guideline range reflecting, I submit, that after hearing the first trial, the judge did not believe that my conduct was particularly bad or harmful.

This whole prosecution has been a witch hunt carried on by my political opponents. As a political activist and also as a member of the NC House of Representatives, I had a reputation of being outspoken and an advocate for those who felt like they didn’t have a voice.

I led the effort to have non-partisan elections in my hometown of Kinston in 2008. It was a ballot initiative during the 2008 general election and passed with 64% of the vote. Due to section 5 of the US Voting Rights Act (VRA), that voting change was submitted and subsequently denied by the U.S. Department of Justice (DOJ) under new US Attorney General Eric Holder based on partisan and racist reasons. Due to the DOJ ruling, a lawsuit was filed against Eric Holder with me as the lead plaintiff in a case challenging the constitutionality of section 5 of the (VRA) which had given authority to the DOJ to rule on election changes in certain counties mostly in the south. The case was originally titled LaRoque v. Holder (LaRoque) and became Nix v. Holder after I was indicted. We won our case in that Eric Holder reversed his decision 10 days prior to our case being heard by the US Court of Appeals and Kinston was allowed to have non-partisan elections beginning in 2013. However, we were working with plaintiffs in another case “Shelby County v. Holder” (Shelby) that challenged the constitutionality of section 4 of the VRA. Shelby was heard by the U.S. Supreme Court shortly after the DOJ reversed their decision on “LaRoque” and was won in an historic 5-4 decision. This ruling infuriated Holder and President Obama as they appeared on multiple media outlets decrying the decision. “Shelby’s” victory in effect neutered section 5 which made all future challenges to voting changes under section 5 of the VRA must be brought to court by the DOJ instead of them having the unfettered authority to disallow those election changes on their own.

During my last term in the NC House in 2011, I received a ranting racist email from William Barber, President of the NC NAACP. I replied to the email asking that they discontinue sending me any email from a racist like William Barber. This is the same William Barber, who in 2014 in another racist rant, referred to South Carolina US Senator Tim Scott as a “Ventriloquist’s Dummy”. Shortly after my comments about William Barber, I was smeared by NC Policy Watch, an off shoot of the partisan left wing organization known as the NC Justice Center whose Board of Directors included William Barber. This organization colluded to smear me along with attorneys John Marshall and John Archie of the Kinston law firm of White & Allen who were representing my political opponent from the previous year’s election.

I believe my actions in advocating for my home town’s non-partisan elections and calling out William Barber as the racist he is was why I was targeted by the DOJ.

Assistant U.S. Attorney Dennis Duffy (Duffy) was the DOJ’s prosecutor in my case and was assisted by IRS agent Diane Taggart (Taggart). During the investigation, trial and sentencing, Duffy threatened at least one witness, my civil attorney, who testified at trial to the threat and it is in the trial transcript. This action by Duffy are criminal acts of witness tampering and obstruction of justice. He intentionally lied and misled the jury and judge on many occasions during the trial and the judge during sentencing with statements he knew were false and meant to smear me. He told a witness that he was going to intentionally try to confuse the jury because he had done it before and it worked. During the first week of trial, the judge realized the jury was confused and asked both the defense council and Duffy to issue new opening statements in order to clear up the confusion. My defense council agreed but Duffy disagreed and according to court rules both sides must agree so no new statements were made by either side to the jury to help clear their confusion. This is exactly the strategy Duffy told a witness he was going use prior to trial. Coincidentally, an IRS audit of this threatened witness and his business was commenced on the first day of trial along with an audit of another trial witness. Duffy did not disclose exculpatory evidence in his possession, a continuous problem in the DOJ’s NC branch offices, that was addressed by the US Court of Appeals with a strong reprimand in 2013. His failure to disclose consisted of a copy of my contract which was in ECDC’s accountant’s papers for over a decade and which records were seized by Duffy and Taggart early in the investigation. Duffy even filed an illegal lien on property and was forced by the court to remove the lien. It appears that the rule of law does not apply to corrupt prosecutors like Duffy, and he was allowed to commit multiple felonies while prosecuting my case all without consequence.

The lawlessness of Dennis Duffy hasn’t stopped with just himself. His assistant during the investigation and trial, IRS agent Diane Taggart, while acting in her official capacity along with another US agent in Costa Rica, committed crimes in that sovereign country. She and her accomplice conspired to commit bank fraud, committed bank fraud and engaged in illegal wire tapping while conducting a sting operation. Upon finding out they had committed crimes in Costa Rica, they fled as fugitives back to the U.S. to avoid prosecution. They were never extradited back to Costa Rica to stand trial for their criminal acts. Just like Lois Lerner and Hillary Clinton, once again it appears that agents of our government are allowed to commit crimes yet avoid prosecution.

I would like to see an independent council appointed to investigate criminal actions by Dennis Duffy not only in regards to my case but also other cases he has been involved in.

 

 

WNCT-TV 9 On Your Side provides commenting to allow for constructive discussion on the stories we cover. In order to comment here, you acknowledge you have read and agreed to our Terms of Service. Commenters who violate these terms, including use of vulgar language or racial slurs, will be banned. Please be respectful of the opinions of others. If you see an inappropriate comment, please flag it for our moderators to review.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s