Policy Watch InvestigatesPublic money, personal gains

LaRoque defamation suit gone, non-profit pays $17K in fines

State Rep. Stephen LaRoque’s federally-funded non-profit will pay thousands in contempt of court fines as part of the state lawmaker’s agreement to dismiss a defamation lawsuit against a political opponent.

LaRoque, a Kinston Republican, dismissed a defamation lawsuit Tuesday that he filed a year ago against the state Democratic Party and Van Braxton, the Democratic opponent that LaRoque unseated in the November 2010 elections.

The East Carolina Development Company, the small economic development non-profit founded by LaRoque in 1997, will pay $17,250 to Braxton’s lawyers for failing to turn over key documents in court proceedings, according to court documents.

The lawsuit had been ongoing for a year, and Braxton’s lawyers fought it, contending that statements in a campaign mailer about LaRoque stealing were true.

The dismissal and contempt fine are the most recent blows for LaRoque, a polarizing lawmaker that’s come under scrutiny for the generous annual pay, as high as $195,000, he’s gotten from the non-profit and loans he approved to close associates. The East Carolina Development Company and Piedmont Development Company, both based out of Kinston, have taken in $8 million from the U.S. Department of Agriculture as part of the agency’s Intermediary Relending Program that combats poverty to making business loans available to struggling entrepreneurs in rural areas.

Braxton said he was glad to see the lawsuit dismissed, but that federal authorities should be brought in to determine if any laws were broken by LaRoque’s management.

Just because the lawsuit is over, we’re not stopping what we’re doing,” Braxton said. “We’re hoping to have him held accountable for his actions.”

Braxton added that he doesn’t plan to run for office again.

LaRoque’s attorney Bert Diener did not return calls seeking comment.

LaRoque was the subject of an August investigation by N.C. Policy Watch, “Public money, personal gains” that found the two small economic development non-profits paid him salaries that early board members were unaware of; he later stacked his board of directors with immediate family members; and gave loans to close associates of LaRoque – including his wife (his girlfriend at the time); two fellow GOP legislators and his lawyer.

NC Policy Watch also found that LaRoque’s for-profit company LaRoque Management Group took a $200,000, no interest loan from the non-profit, a potential violation of IRS tax laws that prevent non-profit insiders from personally benefiting from their charities.

LaRoque also failed to report the loan on the non-profit’s most recent tax return, despite questions that specifically asked about personal benefits from the charity’s coffers.

A spokeswoman for the U.S. Attorney’s Office for the Eastern District of North Carolina declined to comment when asked if the federal prosecutors would be taking a closer look at LaRoque.

I can’t confirm or deny any investigation that we may or may not have,” said Robin Zier, a spokeswoman for the federal prosecutor’s office.

Questions? Comments? Reporter Sarah Ovaska can be reached at (919) 861-1463 or sarah@ncpolicywatch.com.