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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

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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Stephen LaRoque’s brother took the stand Tuesday in a federal criminal trial in Greenville, where the former lawmaker is facing a dozen charges accusing him of stealing $300,000 from his federally-funded non-profits.

LaRoque’s brother Walter LaRoque, a real estate agent, served on the board of directors for the two economic development groups founded by Stephen LaRoque, a Kinston Republican who stepped down from his seat at the state legislature after his July indictment.

East Carolina Development Company and Piedmont Development Company received $8 million from the U.S. Department of Agriculture for a rural lending program that was supposed to offer loans to small businesses in struggling areas. But federal prosecutors believe LaRoque, over the years, used the non-profits bank accounts to buy lavish jewelry presents for his wife and other luxuries by taking 3 percent of the groups’ entire assets, including large stockpiles of cash.

The trial is being held in Greenville, and is expected to last through the week, and possibly into next week. Read More

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. Read More