Stephen LaRoque will spend the next two years in a federal prison, punishment for stealing from the federally-funded non-profit he ran.
LaRoque, 51, a former Republican state representative from Kinston was given the 24-month sentence Wednesday morning. He plead guilty earlier this year to a criminal charge related to the embezzlement of $300,000 from the East Carolina Development Company, an economic development non-profit he founded.
Federal prosecutors believe LaRoque, who founded the East Carolina Development Company in 1997, used the non-profit and a sister charity, the Piedmont Development Company, to draw down millions in U.S. Department of Agriculture rural lending money. He then used that money, in part, to pay himself large salaries and buy cars, jewelry, and property.
“This is a massive amount of fraud,” said Dennis Duffy, the federal prosecutor who handled the case. Duffy estimated that taxpayers spent more than $2.7 million on excessive salaries, expenses sought by LaRoque and bad loans approved by LaRoque.
Duffy said in court Wednesday that the USDA officials didn’t have the proper level of oversight, allowing the theft and questionable spending of public money to go on for years.
“They should have caught this,” Duffy said.
LaRoque had hoped to get a probationary sentence, but Senior U.S. District Court Judge Malcom Howard said in court Wednesday that he would not depart from the statutory guideline that called for a 24 to 30 month sentence.
Howard allowed LaRoque to report to prison in the next 30 days, instead of being taken immediately into custody on Wednesday. The self-reporting saves taxpayer money, by avoiding housing inmates at local jails as federal prison officials look for an open bed, Howard said.
LaRoque was also ordered to pay back the $300,000 taken from the non-profit, and pay $5,100 in fines. He will spend two years on supervised release following his prison sentence.
For his part, LaRoque had nothing to say in court Wednesday, and opted not to address the court before sentencing. He left the federal courthouse in Greenville through a back door, presumably to avoid members of the media gathered out front.
From powerful lawmaker, to felon
The federal prison sentence is a dramatic fall from power for LaRoque, who was a member of the Republican House leadership when they took control of N.C. General Assembly in 2011.
LaRoque, known for his outspoken and at times caustic demeanor, had been the co-chair of the powerful House Rules Committee. His lawyer, in asking for leniency, highlighted LaRoque’s legislative successes, noting that LaRoque had been a primary sponsor of the 2005 “Pop the Cap” legislation which allowed for the sale of craft beers with alcohol contents beyond 6 percent in the state.
“It’s fair to say he was an up and comer politically before this case,” said Keith Williams, LaRoque’s defense attorney.
But it was his management of the small federally-funded economic development groups, not his legislative career that ultimately brought both his political and professional career down. Federal investigators, following up a 2011 N.C. Policy Watch investigation into LaRoque’s business dealings, discovered LaRoque had dipped into the bank accounts of the federally-funded East Carolina Development Group to buy cars, jewelry, real estate, a Greenville ice skating rink, a Zamboni ice resurfacer and jewelry and replica Faberge eggs as gifts for his wife.
The non-profits’ boards of directors were governed for several years by a board that consisted entirely of LaRoques – Stephen LaRoque, his wife Susan LaRoque and his brother Walter LaRoque, despite USDA regulations that prohibited such conflicts of interest.
LaRoque was convicted of a dozen charges during a 2013 trial, but those verdicts were set aside after the judge learned a juror had inappropriately conducted his own research for deliberations. LaRoque entered a guilty plea to the charges in January, shortly before a second trial was scheduled to begin.
In court on Wednesday, his attorney urged Howard to sentence LaRoque to probation, saying that LaRoque had suffered enough.
“He’s a broken man here before you today,” Williams said.
He also said LaRoque suffers from diabetes, and has to take up to 10 medications daily, and also cares for his wife, who has medical issues of her own. He went from having a personal net worth of $1 million, to basically nothing, with one house in foreclosure proceedings.
“Stephen LaRoque is the kind of man who has learned his lesson,” Williams said.
Duffy, the federal prosecutor, disagreed with that, pointing out that LaRoque is currently suing the non-profit he admitted stealing from, claiming he wasn’t compensated for time he worked there.
LaRoque took advantage of his public position as the head of the well-funded non-profit, and should be punished accordingly, Duffy said.
“We have a long history of putting people away for public corruption,” Duffy said.
Howard ultimately agreed with Duffy, and decided to stick with the sentencing recommendations to send LaRoque to prison.
Questions? Comments? Reporter Sarah Ovaska-Few can be reached at (919) 861-1463 or [email protected].