Weekly Briefing

Scandal? What scandal?

House Speaker has done nothing about his corrupt lieutenant for nearly a full year

As just about anyone who pays attention toNorth Carolinapolitics became aware in the last 24 hours, federal prosecutors slapped State Representative Stephen LaRoque of Lenoir Countywith an eight count, 72 page indictment yesterday.  The indictment alleges that LaRoque, the Co-chair of the powerful House Rules Committee and a member of House Speaker Thom Tillis’ leadership team, misappropriated federal funding from nonprofits that he runs.

As reported by WRAL.com reporter Cullen Browder:

“LaRoque, R-Lenoir, is charged with four counts of converting U.S. Department of Agriculture loans to East Carolina Development Co. to his own use and four counts of laundering money by using federal funds to purchase an interest in aGreenvilleice rink and a house that he then rented to one of his stepdaughters….

The 72-page indictment details years of alleged insider dealings, noting that LaRoque, his brother and his wife sat on the nonprofits’ boards and that they routinely approved without comment loans LaRoque had already made. One of the loans was to a carpet business owned by the woman who would later become his wife at an interest rate about half that charged to other borrowers, according to the indictment.

LaRoque has paid himself close to $2 million since 1998 for running the nonprofits, along with another $133,000 in reimbursed expenses, according to the indictment.

He routed ECDC money through his management company to purchase vehicles, jewelry and other goods, the indictment alleges.”

All in all, the indictment tells the sad and distressingly familiar tale of a full-of-himself politician who lost (or aggressively discarded) his moral compass and embraced a personal and professional lifestyle in which he thought himself above the law (or, at least, too clever to get entangled in it).

Not a new story

Of course, the LaRoque indictment hardly comes as a surprise. Many, if not most, of the key elements of the sordid story were uncovered and laid out in grisly detail more than eleven months ago by N.C. Policy Watch reporter Sarah Ovaska in her lengthy and carefully researched investigative series, “Public money, personal gains.”

It was August 3 of last year when Ovaska reported that:

“A two-month N.C. Policy Watch investigation uncovered questionable management and financial dealings over the last decade at LaRoque’s federally-funded public charities. Both of the non-profits are now housed and run under a for-profit company, the LaRoque Management Group in Kinston, that LaRoque and his brother Walter run, according to the website of the company.

Among the investigation’s findings are:

  • LaRoque received $100,000 to $195,000 a year in compensation as the sole employee of the small non-profit—much more than what others running similar organizations made.
  • He stacked the board of directors for his non-profits with immediate family members, a move that runs afoul of both IRS and USDA guidelines.
  • He used the non-profits to loan federal money to close associates, including loans of $100,000 to $300,000 to a board member, the private law firm he uses for political lawsuits, his wife and two fellow GOP legislators.
  • The USDA admonished LaRoque in 2010 for making loans above a $250,000 cap on loans, including $2 million a single developer received.”

The August 3 story received significant coverage in the mainstream news media and several follow-up stories and editorials soon appeared – both here at N.C. Policy Watch and elsewhere.

Two weeks after Ovaska broke the story (eleven months ago today) she reported on House Speaker Thom Tillis’ reaction to the firestorm that was brewing around his lieutenant. At the time, Tillis (who was sharing a stage with LaRoque at a political function inKinston) told Ovaska that he was closely examining the allegations contained in her series.

“What I’m trying to do is get my facts straight beginning with confirmation of your information, talking with the federal agencies that are involved, and we’ll continue that process.”

In other words, there can be no mistake that, in August of 2011, Tillis knew about the controversy swirling around LaRoque and that he promised to take further steps to learn even more about LaRoque’s highly questionable business dealings – dealings that had at times involved other GOP legislators to whom theKinston lawmaker has directed business loans.

Deafening silence

Now, here is what Tillis has done with all of that information in the way of public action to punish LaRoque and/or distance himself and the Republican Caucus he leads from the controversial lawmaker:

Nothing. Zip. Zilch. Nada.

To this day, LaRoque remains co-chair of the powerful House Rules Committee and also continues to serve as the chair of two other select committees and as vice-chair of an important Appropriations subcommittee. During the legislative “short session” that adjourned earlier this month, LaRoque succeeded in winning GOP Caucus support for (and thereby passing) multiple significant bills of which he was the chief sponsor.

And virtually every day that the House was in session, Tillis would call on LaRoque in his capacity as Rules Committee co-chair to offer various administrative motions that would help lead the House through its daily routines – whether it was a motion to approve the daily journal or a motion to adjourn. Indeed, for a visitor to the North Carolina House during the spring and summer of 2012, Stephen LaRoque was quite evidently one of the House of Representatives’ most visible and important members.

Why the inaction?

So what gives? Why would a new and ambitious House Speaker who came to power trumpeting promises of openness, honesty and transparency – especially after years in which a previous Speaker had landed in jail and a previous Governor had narrowly avoided it – fall so remarkably silent when confronted with such overwhelmingly damning evidence about one of his key team members?

No one is saying that LaRoque wasn’t and isn’t entitled to due process and a presumption of innocence in the criminal justice system, but Tillis wasn’t dealing with criminal justice – he was dealing with politics and the good name of the House of Representatives (a place already badly tarnished by corruption). How could he simply let it slide without doing anything?

Even without instituting a formal public investigation or demanding LaRoque’s resignation – two things that seem as if they certainly would have been warranted – Tillis could have sent an important message by taking more subtle steps. He could have relieved LaRoque of his committee chairs – at least temporarily – and/or taken away his right to help lead the House through its daily rituals. As things proceeded during the session, it was if LaRoque was publicly thumbing his nose at the evidence of his malfeasance every day and Tillis was happily enabling him to do it.

So, why? Why the deafening silence? Only two explanations make any sense – neither of them very encouraging.

One was that Tillis simply had his head in the sand – that he knew of the allegations but didn’t really appreciate them or take them seriously. This seems possible, but unlikely. After all, Tillis can read and he talked to LaRoque (formally or informally) virtually every day the General Assembly was in session. How could he simply have ignored such a giant and proverbial elephant in the room?

A second and more likely explanation is that Tillis knew what the score was but that that he made a calculation that he could simply wait for LaRoque to go away and thereby avoid questions about his speakership. This plan probably seemed to make even more sense once LaRoque was defeated in the May Republican primary and while Tillis was busy dealing with scandals amongst his own staff.

Unfortunately for him, as yesterday’s news makes plain, this strategy has now officially failed. As it stands, the Speaker of the House is now revealed to have been, at least in a political sense, sheltering and protecting one very troubled and sketchy politician for nearly a year. It’s hard to imagine that a lot of people – both friends and foes of the Speaker – won’t be demanding an explanation very soon.

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