Policy Watch Investigates

LaRoque to talk to select press on Tuesday

N.C. Rep. Stephen LaRoque is ready to respond to a recent investigation that uncovered questionable financial and management practices at his two federally-funded non-profits.

But, NC Policy Watch won’t be allowed at the Tuesday press conference that LaRoque said he plans on holding.LaRoque would not say where the press conference would be held.

You’re not going to be invited,” LaRoque said. He later added, “Only legitimate news organizations.”

LaRoque, a conservative Republican state representative from Kinston, was the subject of a recent NC Policy Watch investigation that found he reported receiving $100,000 to $195,000 in annual compensation as executive director of the two non-profits. Since 1997, East Carolina Development Company and Piedmont Development Company have received $8 million in federal funds as part of a USDA economic development program for rural parts of the state.

LaRoque spoke by phone to an NC Policy Watch reporter Thursday afternoon, but refused to go into specifics about the investigation’s findings. But he said he’ll discuss his issues with the investigation at length on Tuesday at the press conference, but reiterated that N.C. Policy Watch was not allowed to attend. LaRoque also said he had no qualms about having immediate family members on the board of his non-profit that determines how much compensation he’ll receive. He added that it wasn’t illegal.

In another development, the only remaining non-family board member of state Rep. Stephen LaRoque’s federally-funded non-profit said he’ll be calling for management changes.

These things need to be looked into, these questions need to be asked,” said Robert Masters, a Kinston-based board member of the East Carolina Development Company. “I told Stephen, ‘At the next board meeting, I will be prepared to (discuss) the entire issue of compensation for you and anyone else.’”

No date has been set for that board meeting.

Masters, who said he’s been on the board of East Carolina Development Company for nine months, said he wasn’t aware of LaRoque’s six-figure compensation until last week. On Aug. 3, NC Policy Watch released its investigation “Public money, personal gains” into two economic development non-profits that LaRoque runs and have received $8 million in federal funding for economic development programs targeted at rural areas.

Among the findings of the NC Policy Watch investigation were that LaRoque received high levels of compensation, often without the knowledge of board members; the board of directors for the two federally-funded non-profits included immediate family members; and some of the federally-backed loans went to close associates of LaRoque’s, including two GOP state legislators.

Masters said LaRoque defended the annual $100,000 to $195,000 compensation by saying LaRoque used some of the money to pay employees of his for-profit company, LaRoque Management Group, which LaRoque hired to manage the non-profits loans while he was in the state legislature.

LaRoque, a conservative GOP state representative from Kinston, turned down several requests to speak with an NC Policy Watch reporter before the stories were published on Aug. 3. When reached by phone Thursday, he refused to go into detail about his compensation agreement. He also declined a request to provide the contract he has with his non-profit, as well as copies of board minutes for his non-profits.

He’s told other media outlets, including the Kinston Free-Press, that the money he’s paid by the non-profit comes from interest and fees that borrowers pay back, and maintains that he doesn’t personally receive any taxpayer money.

No federal money has gone to pay any of my compensation,” LaRoque told the Kinston paper.

Masters, who also worked with LaRoque in the mid 1990s, said he wants to see the non-profit be more transparent. He’s already announced he wants to get off the board and is only staying on until he can find a replacement.

Until I see it all laid out in front of me, it’s too convoluted right now to say I’m completely satisfied,” Masters said about LaRoque’s explanation. “We need to put it all out there.”

Mark Pope, a former board member who was on the board until 2005 and the current economic development director for Lenoir County, said LaRoque was always the face and only significant employee doing work for East Carolina Development Company.

He said he recalled LaRoque having one or two employees over the last decade, but that those employees never performed a substantial amount of work for the non-profit, according to Pope.

There was nothing there about him paying anyone else, it was him,” Pope said.

Publicly available tax forms for the non-profit consistently listed LaRoque as the only employee of East Carolina Development Company, and show that the non-profit paid the company’s telephones, marketing, accounting and legal expenses. (To see the IRS tax forms, click here.)

Another topic at Tuesday’s press conference will be the Rev. William Barber, the president of the state NAACP, LaRoque said. Barber is one of the 15 board members of the N.C. Justice Center, the parent organization of NC Policy Watch, and was not consulted prior to nor since the investigation’s publication.

LaRoque created waves earlier this year when he called Barber a “racist,” and has since called the NAACP a “racist organization.”

Questions? Comments? NC Policy Watch reporter Sarah Ovaska can be reached at (919) 861-1463.