Note: this post will be updated throughout the morning.
Stephen LaRoque was sentenced to two years in prison this morning by a federal judge for stealing more than $300,000 from a federally-funded non-profit he ran.
LaRoque, a former Republican state representative from Kinston, pleaded guilty earlier this year to the theft, shortly before a second trial was expected to start on criminal charges that he used two economic development non-profits he ran to fund a lavish personal lifestyle.
In court on Wednesday, LaRoque did not make any statements. His attorney, Keith Williams of Greenville, had asked that LaRoque be given a probationary sentence, calling him a broken man whose political, financial and personal lives were shattered by the prosecution.
“Stephen LaRoque is the kind of man who has learned his lesson because of what’s he’s been through,” Williams said Wednesday morning in court.
But Dennis Duffy, the federal prosecutor in the case, said that taxpayers lost $2.7 million from LaRoque’s actions, more than $1 million in excessive salaries paid to him over a period of several years and additional federal money used to fund bad real estate deals and expenses paid to LaRoque.
“This is a massive amount of fraud,” Duffy said.
LaRoque was also ordered to pay back $300,000 in restitution to East Carolina Development Company, the non-profit he founded, as well as $5,100 in fines. He will be on parole and will be placed on parole for two years after he leaves prison.
He will self report to federal prison sometime in the next 30 days, and was not taken into custody immediately. Senior U.S. District Court Judge Malcolm Howard said he opted to have LaRoque self-report because it saves taxpayers money, by not having LaRoque wait in a county jail before a bed in a federal prison is ready.
LaRoque was indicted on federal charges in 2012, following a 2011 N.C. Policy Watch investigation into the non-profits he ran.
The non-profit was funded with millions in U.S. Department of Agriculture funding, as part of an anti-poverty rural lending program intended to offer loans to small businesses in rural area unable to obtain financial backing on their own.
Court testimony for this first trial, in which convictions were thrown out because of juror misconduct, showed that LaRoque transferred money to and from the bank accounts of the East Carolina Development Company to pay for things like cars, replica Faberge eggs for his wife, a Greenville ice skating rink and a Zamboni ice resurfacer. He also approved loans to close associates and friends, including his lawyer Bert Diener and two fellow Republican lawmakers, state Rep. Mark Hilton and state Sen. Debbie Clary. Both have since left the legislature, opting not to seek reelection.
He faced a range of two to two and a half years in prison, or could have been sentenced to probation, as he and his lawyers had asked for.
Several people have written character letters on LaRoque’s behalf asking the judge for leniency, including Kinston Mayor B.J. Murphy (who once worked for LaRoque at the non-profit); former state Sen. Debbie Clary, who received a business loan from one of LaRoque’s non-profits; long-time state lobbyist T. Jerry Williams; and G. Phillip Batten, a deputy director at the N.C. Division of Veterans Affairs.
In court documents, LaRoque’s attorneys included articles on the United States’ incarceration rate, arguing that sending LaRoque to prison for a white-collar crime would add to the country’s often-criticized high rates of incarceration, which tend to disproportionately affect African-American men and low-income individuals.
“One way to begin solving the problem [of mass incarceration] is fashioning sentencing for nonviolent offenders that do not include incarceration,” Williams wrote. “The nature and circumstances of Stephen’s offense encompass paper and money, not guns and drugs. His case is appropriate for a sentence of probation.”
But Duffy, the federal prosecutor, asked Howard in court documents instead to sentence LaRoque to the full 30 months in prison, saying that LaRoque violated the public’s trust and could have avoided the entire situation by not stealing in the first place.
“The Defendant also argues that a probationary sentence is somehow warranted because he had to endure the expense and embarrassment cause by a criminal prosecution,” Duffy wrote. “Any argument that the Defendant is somehow a victim in this case ignores the indisputable fact that the Defendant could have avoided such expense and embarrassment by simply not committing the crime.”