No Faberge eggs on first full day of former state Rep. LaRoque’s trial

The criminal trial against former state Rep. Stephen LaRoque began in earnest Tuesday, with testimony from former board members of his non-profit and federal agriculture officials who oversaw the rural lending program he ran.

Yet to be mentioned are a dozen replica Faberge eggs and jewelry the Kinston Republican is accused of buying with money he stole from his economic development non-profit, East Carolina Development Company. (Click here to read a past blog post about the eggs LaRoque bought, and a brief history of the eggs themselves.)

The trial is being held at the federal courthouse in Greenville in front of Senior U.S. District Court Judge Malcolm Howard.

Former ECDC board member John Melling, a New Bern insurance agent, said he served on the board of East Carolina Development Company for eight years and left in 2006 because he didn’t feel at ease serving a board consisting largely of LaRoques—Stephen, his brother Walter and wife Susan.

“I just felt uncomfortable,” Melling said. “You had three directors, they were all related. Stephen, his brother and his wife.”

Melling had also said he was pleased with the non-profit’s earlier work.

LaRoque

LaRoque

During Melling’s testimony, federal prosecutor Dennis Duffy pointed out that in the early years of the non-profit’s inception, board meetings were attended by a variety of directors that loans were approved by. In the later years of the non-profit, LaRoque is accused of having the non-profit whittle down to his immediate family and approving loans of federal money to close associates, in addition to stockpiling cash so that he could receive a generous three percent of holdings for his salary.

LaRoque, 49, is facing more than 90 years in prison, if convicted of the dozen criminal charges he faces accusing him of using the bank accounts of his federally-funded non-profits for his own personal uses on top of the $2.1 million he got in compensation from 1998 to 2012. Federal prosecutor Dennis Duffy has indicated in court filings that LaRoque used the money to buy expensive jewelry and replica Faberge eggs for his wife, as well as a Greenville ice-skating rink and Zamboni ice resurfacer to tend to the rink’s ice. The two non-profits LaRoque ran, ECDC and the Piedmont Development Company, were part of a U.S. Department of Agriculture rural lending program that provided loans at low-interest to intermediary groups like LaRoque’s with the intention the money would be loaned out to small businesses in rural areas unable to get traditional business loans on their own.

The federal investigation came after an August 2011 N.C. Policy Watch investigation that found LaRoque received generous salaries, as high as $195,000 a year, from the one-employee non-profit while loaning out money to close associates and political colleagues.

LaRoque has pleaded not guilty, and in cross examinations Monday, his attorneys Joe Cheshire and Eliot Abrams asked witnesses if LaRoque’s payments were part of an oral contract he had with the non-profit, and pointed out the confusing regulations that governed the U.S. Department of Agriculture’s Rural Lending Program.

The Policy Watch investigation found that USDA provided lax oversight of the $8 million it loaned LaRoque’s two non-profits. It failed to conduct four years of site visits, didn’t pick up on annual audits that warned that LaRoque had sole control of the non-profit’s money and were unaware of LaRoque’s high compensation until a reporter made them aware.

To read some of our past coverage and more background on the case, click here. You can also read our original investigation here.

4 Comments

  1. Doug

    May 22, 2013 at 10:34 am

    You guys need to get onto some bigger names in NC politics. This guy bareley makes news in the WRAL site sponsored by your patron Goodmon, but here is what looks like the longest blog post here in awhile on a farily low level politician. You guys need to set your sites higher and find a bigger name. Otherwise we will have to conclude that the R’s are dissapointingly lacking in the corruption examples set by Black, Phipps, Easley, and Perdue.

  2. wncgirl

    May 22, 2013 at 2:23 pm

    Yeah nothing to see here Doug; just a crooked SOB the GOP was all too willing to overlook… and why don’t we bring back Tillis’s scandal of the traveling panties… I loved that one!!

  3. Doug

    May 22, 2013 at 4:10 pm

    You completely miss the point of my comment (that the dem’s corruption starts at the top while you guys are forced to go the the lowest levels of the R’s) but that is ok….at least have come up some name that makes a difference in Raleigh. Who ever heard of this Laroach goober anyway?

  4. gregflynn

    May 22, 2013 at 4:17 pm

    The fact that you don’t know LaRoque is prima facie evidence that you need articles like this to learn about him and his role in NC politics.