Former lawmaker LaRoque indicted on four new counts in money-laundering scheme

Authorities allege former GOP lawmaker filed false tax returns

jfrank@newsobserver.comDecember 26, 2012 

Stephen A. LaRoque

MLEWIS

A former top Republican lawmaker faces new federal charges, including tax evasion, in connection with an alleged scheme to launder money from a government loan program to enrich himself and close associates.

An indictment filed earlier this month against Stephen LaRoque adds four new charges to the eight counts of theft and money laundering that federal prosecutors leveled in July against the former Kinston legislator and chairman of the powerful state House Rules Committee.

Federal prosecutors accuse LaRoque of knowingly filing false tax returns for 2009 and 2010 by underestimating his income. Two other additional charges relate to making false statements in tax documents and trying to conceal the scheme to divert federal loan money for his personal use.

Joseph Cheshire, LaRoque’s attorney, issued a statement Wednesday saying the new charges were expected and “don’t change the dynamic of the case.”

The indictments are linked to LaRoque’s management of two nonprofits that were designed to lend federal money to new or expanding small businesses in rural communities that could not get bank loans.

According to court papers, federal investigators detailed a series of financial transactions in which the federal loan money was transferred through various accounts to pay for thousands of dollars of Faberge eggs and other jewelry for his wife’s birthday and anniversary presents, the purchase of an ice rink in Greenville for his wife – along with a new ice resurfacing machine – and buying a home to rent to a stepdaughter.

LaRoque’s nonprofits also provided loans to two members of the General Assembly, funneled money to his campaigns and provided him a six-figure income.

In the Dec. 20 indictment, prosecutors offered more details into the former three-term lawmaker’s efforts to cover his tracks after federal subpoenas were issued in September 2011. Within days of the subpoenas, LaRoque cashed about $100,000 in investment bonds inherited from his parents to repay some of the money he siphoned from one of his nonprofits, the East Carolina Development Company, according to the indictment.

He also enlisted the help of a Kinston certified public accountant, a close associate he added to the nonprofit’s board of directors, to file new tax returns.

The indictment also suggests LaRoque violated state law and ethics rules in executing the alleged scheme.

Cheshire said his client plans to defends himself against the charges in court but he would not comment on the content in the new indictment. An arraignment hearing is set for February.

Frank: 919-829-4698

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