Former state Rep. Stephen LaRoque of Kinston will go on trial in federal court in Greenville on Monday on charges that he enriched himself with U.S. Department of Agriculture money that he was supposed to loan to struggling rural business owners.
The trial is expected to be protracted because it involves complex financial transactions that the government contends amounted to theft and money laundering. LaRoque, who is represented by Raleigh attorneys Joseph Cheshire V and Elliot Abrams, says prosecutors are trying to call legitimate transactions theft.
Assistant U.S. Attorney Dennis Duffy, in recent briefs he has filed, says LaRoques defense will try to portray the alleged crimes as mere ethical lapses that dont constitute crimes. Duffy says the case comes down to the theft of $300,000 in federal funds, and charges related to LaRoques alleged attempts to conceal the theft and avoid taxes through sham loans.
Duffy filed a notice earlier this month outlining evidence that might be introduced in the trial. That includes allegations that LaRoque:
• Tried to cover up his activities after learning he was under investigation.
• Failed to report on state ethics forms his financial dealings.
• Hid from the N.C. Board of Elections that he had diverted loan money to his campaign.
• Increased his compensation in order to pay for expensive jewelry and cars.
• Was engaged in self-dealing, used money from his nonprofit re-lending firm to replace a Zamboni ice machine at an ice rink he bought for his wife, and made loans and paid legal fees to his attorney with his nonprofts money.
The government might also go into the 2010 defamation lawsuit LaRoque brought against a political opponent who accused him of using federal loans to finance his businesses, the brief says. After suing, LaRoque then refused to turn over records in the lawsuit that would have shown that he had, in fact, loaned his for-profit business $300,000 from his nonprofit re-lending entity, the brief says.
LaRoque resigned from the General Assembly under pressure last year after he was indicted. He was a Republican representative in Lenoir, Greene and Wayne counties.
Defense attorneys also claim, in court filings, that the prosecution was politically motivated, having begun after a series of investigative reports published online by N.C. Policy Watch, a left-leaning organization.