By Steve Herring
Published in News on July 18, 2012 1:46 PM
N.C. Rep. Stephen LaRoque
State Rep. Stephen LaRoque has been charged with illegally using federal money intended for low-interest economic development loans to buy expensive jewelry, including Faberge eggs, and a Kinston ice rink for his wife, as well as a house that he rented to a stepdaughter.
A federal grand jury returned an eight-count criminal indictment Tuesday charging LaRoque, a Republican member of the state House, with theft involving programs receiving federal funds and engaging in monetary transactions involving property obtained from "certain specified unlawful activity."
The maximum penalty for each count is up to 10 years imprisonment.
It also alleges that he failed to report his income to the IRS including a $150,00 loan he said was deferred compensation.
The charges center on LaRoque's non-profit organizations, East Carolina Development Company, created in 1997, and Piedmont Development Corp., created in 2003, that received millions of dollars in federal funding, and his LaRoque Management Group.
The 72-page indictment alleges that from January 2009 through the date of the indictment that LaRoque stole funds from East Carolina Development Company and Piedmont Development Corp.
LaRoque, 48, initially ran East Carolina Development Company on a volunteer basis, but in 1999 became a paid contractor with the company.
From 1998 to June 19, 2012 East Carolina Development Company had paid LaRoque a total of $1,967,289.38.
According to the indictment, LaRoque would often make his East Carolina Development Company compensation checks to LaRoque Management Group.
However, the indictment notes that East Carolina Development Company tax returns "consistently reported all management compensation as being paid solely to LaRoque in his individual capacity. LaRoque Management Group has never had a contractual relationship with ECDC."
Counts one through four allege that from January 2009 until the present that LaRoque was an agent of an organization which received in excess of $10,000 under federal programs through the U.S. Department of Agriculture.
It alleges that LaRoque "did embezzle, steal, obtain by fraud, intentionally misapply and otherwise without authority knowingly convert to the use of any person other than the rightful owner, property described below valued at $5,000 or more that was owned by and under the care, custody and control of such organization."
The indictment lists four checks totaling $300,000 written on the East Carolina Development Company bank account and made payable to LaRoque Management Group.
Counts five through eight allege that LaRoque "did knowingly engage, and attempt to engage, in monetary transactions ... in criminally derived property... of a value greater than $10,000 and which were derived from specified unlawful activity."
The indictment cites three checks totaling $1,570,482.22 used to purchase the ice rink and house.
The indictment includes a forfeiture notice that all of LaRoque's interest in all property specified in the indictment is subject to forfeiture.
The case involves a joint investigation by the IRS's Criminal Investigation Division, the USDA, the FBI and the SBI.
LaRoque referred questions to his attorney, Joe Cheshire of Raleigh.
"Representative LaRoque is proud of what he has accomplished with his non-profit corporations," Cheshire said in a prepared statement. "The corporations' work provided monies that led to new business, and led to hundreds of jobs for North Carolinians who would, otherwise, have been unemployed. Representative LaRoque has fully cooperated with the government in its investigation and is very disappointed in the indictment that was handed down today.
"He believes that when this matter is fully aired, it will be shown that he did not violate the laws of the United States and he looks forward to presenting his case in court Because this matter is the subject of litigation, and even in light of the Government's indictment, which is as much of a piece of advocacy as it is a charging document, Mr. LaRoque will have no further comment."
First elected in November 2002, LaRoque served as District 10 representative until 2006 when he lost his re-election bid. He was re-elected in 2010, but lost the GOP nomination to John Bell of Goldsboro in the June primary. District 10 includes Greene, Lenoir and Wayne counties.
The indictment said that LaRoque "became very adept" at obtaining funding for East Carolina Development Company "often during times when" it was not in need of federal funds.