LaRoque resigns from state House facing criminal charges

Kinston Republican was indicted last week by a federal grand jury

cjarvis@newsobserver.comJuly 25, 2012 

Stephen A. LaRoque

MLEWIS

— Rep. Stephen LaRoque resigned from the General Assembly on Wednesday several hours after House Speaker Thom Tillis said he would launch a special committee to publicly investigate his former lieutenant, a Kinston Republican who was indicted by a federal grand jury last week.

LaRoque, in a letter to Tillis, said it was a difficult decision, but “I do not want my continued presence in the General Assembly to be politicized or to distract from the important work that still needs to be done there.”

LaRoque added that he was proud of the work he did acting as a middle man to lend federal funds to struggling businesses in rural areas, which is the subject of the federal indictment. “I have worked hard to help people,” he wrote, and denied the charges against him.

“I now must devote my time and energies to proving my innocence and protecting my family and all that I have worked for and believe in,” he concluded.

Earlier Wednesday, Tillis disclosed that the Legislative Ethics Committee had reviewed the indictment and referred the matter back to the House. As a result, Tillis said in the next few days he would form a bipartisan committee of LaRoque’s colleagues to look into issues raised in the indictment.

The committee’s proceedings would have been held in public, and the committee would have had the authority to recommend formal action against LaRoque. That investigation will no longer be necessary with LaRoque’s departure.

Wednesday’s developments deflated a week of billowing pressure on LaRoque, 48, who was co-chairman of the important House Rules Committee, to leave. Last week, Tillis advised LaRoque to resign, and other public officials followed suit.

When he didn’t, Tillis said he would remove LaRoque from leadership positions in several committees if the General Assembly reconvenes this year. Legislators are not scheduled to return to Raleigh until January; LaRoque was defeated in the May primary, and his term expires at the end of the year.

Tillis issued a statement after receiving LaRoque’s resignation saying he had made “the right decision.”

“This decision is in the best interests of his family, his constituents and his state,” Tillis said. “I wish Rep. LaRoque and his family well in the trying weeks and months ahead.”

Previous House probe

LaRoque’s departure averts a rare but not unprecedented public probe by a special House committee. The last one was in 2008, when Rep. Thomas Wright, a Democrat from New Hanover County, became the first state lawmaker expelled from office since the 19th century. He was under indictment for fraud at the time, and later convicted and sentenced to as long as eight years in prison for pocketing $150,000 in unreported campaign contributions.

Tillis’ quick action following LaRoque’s indictment has political ramifications for the leader of the House, especially since he had chosen LaRoque to lead several committees when the Republicans took over the General Assembly last year. Some in the Republican caucus grumbled that Tillis should have dealt with LaRoque almost a year ago when media reports questioning his management of federal funds first surfaced.

Tillis has dismissed those complaints, saying the initial reports were little more than issues raised by “a left-leaning Internet blog.” He was referring to stories published online by N.C. Policy Watch, a liberal watchdog group that spent two months investigating LaRoque’s enterprises.

House Minority Leader Joe Hackney, a Chapel Hill Democrat, asked Tillis in November to create a bipartisan committee to look into the matter. Tillis immediately referred the concerns to the joint House and Senate bipartisan ethics committee, which meets in secret. That committee took no action until this week, when it informed Tillis that most of the issues in the indictment were outside its jurisdiction. In a letter to Tillis, though, the committee said some issues related to economic-interest disclosures by officeholders could be worth examining. The ethics committee said it would continue to investigate separately from any action the House might take, Tillis said.

LaRoque’s indictment

LaRoque was indicted on charges of theft from a program that receives federal funds, and money laundering. He set up two nonprofits, run by a for-profit management firm, as intermediaries to lend millions of dollars in federal funds to struggling rural business owners.

The federal indictment says it was a 15-year scheme to enrich himself with nearly $2 million in compensation, buy extravagant gifts for his girlfriend and future wife, and make loans to close associates. For several years, the indictment says, the Board of Directors of his East Carolina Development Co. nonprofit was composed, for all practical purposes, only of himself, his wife and his brother.

The eight counts in the indictment are restricted to financial transactions that occurred within the past three years, apparently because of the statute of limitations. Those charges allege theft of $255,000 and money laundering involving $317,000.

LaRoque is scheduled to make his first appearance in U.S. District Court in Raleigh on Aug. 6.

The N.C. Democratic Party seized on LaRoque’s resignation. Spokesman Walton Robinson said it was a “shame” that it took a federal indictment for Tillis to call for LaRoque to step down.

“Now that he has finally resigned, it is our hope that Thom Tillis will finally realize that he and his colleagues are accountable to the voters – not to their own special interests,” Robinson said in a statement.

Jarvis: 919-829-4576

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