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Former state Rep. Stephen LaRoque told jurors that he made mistakes running two economic-development non-profits, but did not intentionally steal from the federally-funded charities.

“I made a lot of mistakes,” LaRoque told jurors. “I admit that.”

LaRoque, a Kinston Republican who served as a member of N.C. House Speaker Thom Tillis’ leadership team until his 2012 indictment, is facing 12 criminal counts in a federal trial being held at the federal courthouse in Greenville. The federal probe stemmed from an August 2011 N.C. Policy Watch investigation that found LaRoque received generous salaries from the non-profit’s board of directors consisting of his immediate relatives.

Jurors have listened to more than two weeks of evidence about complex and complicated financial transactions and will begin deliberations on LaRoque’s guilt or innocence tomorrow.

He’s accused of using the bank accounts of the Kinston-based non-profits, East Carolina Development Company and Piedmont Development Company, to fund a lavish lifestyle including new cars, a Greenville ice-skating rink, a house, jewelry and replica Faberge eggs. LaRoque says he is innocent of any wrongdoing and any money in question was owed to him through contracts approved by his board of directors (who consisted for many years of himself, his wife and brother).

He faces more than 90 years in prison, if the jury were to convict him on all 12 charges.

On the stand Tuesday, LaRoque said he didn’t report all of his generous terms of his salary to auditors, accountants and the IRS but instead kept that money in East Carolina Development Company’s accounts with the assumption that he could withdraw it whenever he wanted.

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Federal prosecutors finished calling witnesses Monday to testify in the trial against Stephen LaRoque, a former Kinston state representative accused of stealing from two economic development charities he ran.

LaRoque could testify as early as tomorrow, as his defense attorneys begin to make their case.

The 49-year-old Republican that was a co-chair of the powerful House Rules Committee could face more than 90 years in prison if convicted of the dozen criminal charges he faces. Federal prosecutors believe LaRoque used the federally-funded East Carolina Development Company and Piedmont Development Company to buy cars, a rental home, expensive jewelry, replica Faberge eggs and a Greenville ice skating rink. The non-profits had received more than $8 million in funding from a anti-poverty rural lending program run by the U.S. Department of Agriculture, where LaRoque’s non-profits were supposed to be lending out money to needy businesses in rural areas of the state.

LaRoque has plead not guilty to the charges and will likely testify in his own defense today or tomorrow. His attorneys, Joe Cheshire and Elliot Abrams, have argued that LaRoque was owed the $300,000 that prosecutors contend was stolen, and that the USDA had confusing rules about how to handle the publicly-sourced money. Two public accountants LaRoque used have also testified that they felt the state lawmaker had left money owed from his lucrative contract in the non-profit’s bank accounts.

“Basically, you can’t steal your own money,” Abrams said in court Monday. Read More

Former state Rep. Stephen LaRoque will testify next week to defend himself in his federal criminal trial.

He is accused of stealing from the federally-funded economic development non-profits he ran.

Joe Cheshire, the Raleigh criminal defense attorney representing LaRoque, said he plans on calling LaRoque, his wife Susan LaRoque and former state Sen. Debbie Clary when federal prosecutors finish presenting their case in the jury trial behind held at the federal courthouse in Greenville.

Clary had served on the board of Piedmont Development Company and stepped down from the board to take out a business loan for her marketing company.

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Federal prosecutor Dennis Duffy is continuing to call witnesses today.

LaRoque, 49, a former member of N.C. House Speaker Thom Tillis’ leadership team, is facing a dozen charges in the complicated criminal trial where he stands accused of taking $300,000 from an economic development non-profit funded by a U.S. Department of Agriculture rural lending program.

Federal prosecutors, in their lengthy 77-page indictment, accuse LaRoque of using East Carolina Development Company’s money to fund his own lifestyle, including buying cars, jewelry, replica Faberge eggs, a Greenville ice-skating rink and a Zamboni ice resurfacer for the rink.

LaRoque has plead not guilty to the charges, and Cheshire has argued that LaRoque was entitled to the monies in question as part of his compensation. Cheshire has also taken aim at the USDA’s Intermediary Relending Program, saying it had confusing, and conflicting, rules about how the federally-sourced money should be used.

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Stephen LaRoque’s personal attorney testified in federal court this morning, telling jurors he warned LaRoque against filing a defamation lawsuit unless LaRoque was sure there was no truth to the allegations of self-dealing.

“He said he had nothing to hide,” Bert Diener said about LaRoque.

On the stand Thursday, Diener said he was unaware at that time of $300,000 worth of checks that LaRoque had written from his federally-funded non-profit to his own business in the months before filing the defamation lawsuit.

Copies of the checks were shown to jurors, during federal prosecutor Dennis Duffy’s questioning of Diener.LaRoque-PC

Those checks are at the heart of the criminal charges facing LaRoque, 49, a Kinston Republican that stepped down from the N.C. House of Representatives following his indictment last July. Federal prosecutors believe LaRoque, in addition to generous annual salaries of up to $195,000 from the small non-profit, stole $300,000 from federally-funded economic development non-profits, East Carolina Development Company and Piedmont Development Company. He’s accused of using the bank accounts of the non-profits to support a lavish lifestyle, including buying cars, expensive jewelry and replica jewel-encrusted Faberge eggs for his wife and a Greenville ice-skating rink.

LaRoque, who has pleaded not guilty, faces more than 90 years in prison if convicted of all 12 charges he faces.

The non-profits had received more than the U.S. Department of Agriculture as part of a rural lending program that was supposed to combat poverty by offering loans to small businesses that traditional banks had shunned.

LaRoque’s indictment followed an August 2011 N.C. Policy Watch investigation (click here to read) that questioned LaRoque’s high salaries, as well as the non-profit’s board consisting of LaRoque’s immediate family members. The investigation also found that USDA had fallen down in its own lax requirements of supervising the non-profit, skipping several years of site visits to the non-profits.

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A federal judge denied former state lawmaker Stephen LaRoque’s requests this week to dismiss charges related to $300,000 that federal prosecutors believe he stole from two federally-funded non-profits.

The orders issued Monday and Wednesday by Senior United States District Court Judge Malcolm J. Howard clear the path for LaRoque’s May 20th trial at the federal courthouse in Greenville, where a jury will decide his guilt or innocence on the allegations.

LaRoque-PCLaRoque, a Kinston Republican who resigned his legislative seat following his 2012 indictment, faces possible prison time, if jurors elect to convict him.

N.C. Policy Watch first raised questions about LaRoque’s excessive compensation from the non-profits in an August 2011 investigation, “Public benefits, personal gains,” and a federal grand jury began its own probe a month later by issuing subpoenas to LaRoque for records. The two non-profits were part of a U.S. Department of Agriculture program seeking to combat poverty by creating a mechanism to offer loans to small business owners that traditional banks shunned. Instead, the investigation found LaRoque received generous salaries from a board of directors that consisted of his immediate family members while close associates of LaRoque’s received loans.

Howard’s orders to uphold the charges were filed on Tuesday and Wednesday, and let 10 of the 12 charges LaRoque faces stand. He also ordered that witnesses for both the defense and prosecutions except for the two FBI case agents be sequestered during the trial, meaning they can’t talk be in the courtroom during testimony nor share their own testimony.

Howard has not yet ruled on a final motion from LaRoque to dismiss two additional counts of falsifying tax reports. Read More