NOLA
written by Gordon Russell
January 13, 2014
A federal grand jury on Friday indicted former Mayor Ray Nagin with 21 counts of corruption, alleging that while in office, Nagin took cash bribes and gifts from three city contractors and used his power as mayor to leverage a granite installation contract from Home Depot as the retailer was building a store in Central City. Despite New Orleans' reputation for political shenanigans, Nagin is the first mayor in the city's history to be indicted by a grand jury on corruption charges.
Ironically, Nagin, 56, a Democrat, was elected in 2002 largely on the strength of his promise to reform a City Hall that was widely perceived as a den of cronyism under Nagin's predecessor, Marc Morial. His administration began with denunciations of municipal corruption and a crackdown on the beleaguered city's Taxicab Bureau, including arrests of numerous cabbies -- one of them the mayor's cousin -- and the head of that department.
But the taxi cases fizzled for lack of evidence. And Nagin's reform image lost considerable luster during his second term, when, in the wake of Hurricane Katrina, several patronage scandals surfaced, one of which led to the guilty plea of Greg Meffert, the city's first-ever chief technology officer and one of Nagin's most trusted aides.
Meffert will likely be called as a witness for the prosecution should Nagin's case go to trial.
The indictment against Nagin includes six counts of bribery, one count of conspiracy, one count of money laundering, nine counts of wire fraud and four counts of filing false tax returns.
Nagin is due in federal court Jan. 31 to be arraigned by U.S. Magistrate Judge Daniel Knowles. It will be up to Knowles to set his bond; white-collar defendants are almost always allowed to remain free on bond before trial.
If he's convicted of all charges, Nagin will likely face a prison sentence of at least 15 years, according to Loyola Law School professor Dane Ciolino, and perhaps between 20 and 25 years.
Mayor Mitch Landrieu, who lost a runoff to Nagin in 2006, called it "a sad day for the city of New Orleans.''
Nagin's long-expected indictment came more than two and a half years after he left City Hall -- his once sky-high popularity largely dissipated -- and relocated to the Dallas area. A five-year statute of limitations on some of his alleged misdeeds was looming.
But the investigation had been going on since well before he left office: According to the indictment, he was interviewed by FBI agents in March 2009, when 14 months were left in his term. At that interview, Nagin "concealed his receipt of bribery/kickback payoffs" from city contractors but acknowledged that city officials were barred from accepting payments or gifts from vendors.
According to the indictment, the bribery conspiracy began in June 2004, when Nagin signed an executive order exempting technology contracts from city bidding rules. Five years later, Nagin issued a second executive order that suspended review panels designed to make the awarding of contracts more fair and transparent.
In brief, the former mayor is charged with:
- Accepting $50,000 and "numerous truckloads" of free granite from Frank Fradella, the former chief executive of Home Solutions of America, a now-defunct firm that specialized in disaster recovery. The cash bribe was routed through Michael McGrath, a Home Solutions board member, to disguise it, the indictment says. McGrath is now serving a 14-year prison term for bank fraud. Home Solutions received numerous contracts from the city and other local government entities after Hurricane Katrina; Fradella had been angling for a much bigger redevelopment deal, but he never got it. The indictment charges that Nagin "met with investors" from HSOA's board and "pledged his support for Fradella's business interests" with the city. In addition to the $50,000 bribe, Fradella also made nine monthly payments of $12,500 to Nagin, totaling $112,500, after Nagin left office, the indictment says. The document lists each of those payments as a count of wire fraud.
- Accepting $72,500 in bribes, paid by cash and check, from Rodney Williams, the founder of Three Fold Consultants, a local engineering firm. To give the bribes a veneer of legitimacy, Williams formed a sham company, BRT Investments, that was granted a 4.5-percent stake in the Nagin family's granite firm, the document says. Three Fold -- which has severed its affiliation with Williams -- received numerous no-bid design and engineering contracts from the city during Nagin's last few years in office.
- Using his political stroke to help kill a "community benefits agreement" that would have required Home Depot to hire a certain number of residents from the surrounding neighborhood, and pay them above-market rates, at the retailer's new Central City store. The indictment charges that in return for mayor's help, the Nagin family's granite firm -- Stone Age LLC -- received a "coveted" contract to be the exclusive granite installer for four Home Depot stores in the New Orleans area. The indictment does not name Home Depot, referring to the company as "major retail corporation."
- Allowing technology vendor Mark St. Pierre, who had a substantial no-bid contract with the city, to pay for the Nagin family's lodging and other expenses on a trip to Hawaii in December 2004 and January 2005, and then to cover first-class airfare for a family trip to Jamaica in October 2005. After the Hawaii trip, St. Pierre began paying for cell phones for members of the Nagin family, the indictment says. In 2006, St. Pierre hosted a campaign fund-raiser in Chicago at which Nagin received "concealed and direct" contributions.
- Helping the owner of a movie theater in eastern New Orleans, listed in the document as "Businessman A," get out of delinquent tax and loan payments to the city. The amount of the debt is not specified. In return, the businessman spent $23,500 to send the Nagin family to New York City by private jet and limousine, the indictment says. The money was routed through a third party to hide the source, prosecutors allege.
- Releasing misleading or false public records on at least three occasions. The indictment says Nagin in February 2009 released a version of his public calendar that hid "his relationship with co-conspirators," including Fradella. In addition, it says he filed at least two sworn affidavits with the state Board of Ethics that did not dlsclose anyone outside the Nagin family had a stake in Stone Age, and also did not disclose Stone Age's dealings with Williams, Fradella and McGrath.
- Failing to report the income he received from bribes in the calendar years 2005-2008.
Williams and Fradella have both already pleaded guilty to bribing Nagin; the two are expected to testify against the former mayor. St. Pierre, meanwhile, was convicted on 53 bribery counts at trial in 2011 and sentenced to more than 17 years in prison. He has been trying to negotiate a reduction in his prison term in exchange for testifying against Nagin.
While most of the facts charged in the indictment are familiar to those following the Nagin case, the scheme involving "Businessman A" had not surfaced publicly until the charges were filed Friday.
It's not clear who the businessman is. But the theater appears to be the troubled Grand theater, which opened in 2002. Its owners included Liberty Bank president Alden McDonald, movie theater owner George Solomon, and First NBC Bank president Ashton Ryan, as well as businessmen Ronnie Burns and Gowri Kailas, according to state records. Documents show that developer Joseph Canizaro was also an original member of the company, although he appears to have pulled out at some point.
McDonald, Solomon and Burns did not return calls for comment. Canizaro said through a spokeswoman that he had no comment on the indictment. Ryan's assistant referred calls to attorney and businessman Cesar Burgos, who did not return a call for comment. Kailas could not be reached.
Flooded after Katrina, the Grand rarely operated in the black even before the storm, Solomon said in late 2005. At that point, Solomon said the theater owed the city more than $5 million. The city itself had borrowed money to make the loan to the company through the U.S. Department of Housing and Urban Development, according to a 2009 Bureau of Governmental Research report.
In 2009, the Nagin administration pushed a "tax increment financing" subsidy to redevelop the entire site. BGR criticized the proposal, characterizing it as benefiting the indebted businessmen without sufficient guarantees the mall would actually be redeveloped or the city's investment would be repaid. Although the financing arrangement was approved by the City Council, the renewal project never got off the ground.
Ciolino predicted a stiff sentence if Nagin is to be convicted of all charges, noting the 17-plus years meted out to St. Pierre -- a vendor rather than a public official.
"If he pushes this to trial and gets convicted, it's gonna be ugly for him," Ciolino said. "He's probably not someone they're looking at to cooperate. He is the last fish swimming. And as the last fish swimming, he doesn't really have much to offer."
Nagin did not immediately respond to an email message. His lawyer, Robert Jenkins, did not immediately return a call seeking comment. WDSU-TV reported that Jenkins was "surprised" by Friday's indictment, and that Jenkins had been told plea deal talks would continue.
The indictment does not charge Nagin's two adult sons, Jeremy and Jarin, with any crimes. The two partnered with their father in Stone Age, and sources have said they picked up $10,000 of the bribe money Williams allegedly paid. Prosecutors had reportedly threatened to indict the pair as a result -- and promised not to do so if Nagin agreed to a plea deal.
The fact that the Nagin sons are not charged in the indictment does not necessarily mean they are in the clear; they allegedly collected the money from Williams on July 21, 2009, meaning the five-year statute of limitations doesn't expire for 17 months. It's not uncommon for prosecutors to add new charges or defendants after an initial indictment, as a means of pressuring a defendant to cut a deal.
When Nagin took office in 2002, federal authorities were beginning a sprawling probe into contracts let by his predecessor, Morial. Nagin portrayed himself in direct contrast to Morial, and several of his top aides -- notably Meffert -- were deeply critical of certain deals they inherited, especially the Johnson Controls energy-efficiency contract, which led to convictions of several close Morial associates.
"It's just very sad, we had the greatest opportunity missed," Beth James, Nagin's top economic development aide from 2002 to 2004, said Friday. "When Ray was first elected there was so much momentum, and it felt like the community was really behind him to help right the ship, to get New Orleans seen in a positive light."
Lawrence Powell, an author and history professor at Tulane, said he figures most big-city mayors get too cozy with the contractors they deal with. But Nagin's dealings seem particularly "amateurish," he said.
Michael Mizell-Nelson, an associate professor of history at UNO, said Nagin wasn't the first mayor to portray himself as a dragonslayer, only to later disappoint. Delesseps "Chep" Morrison, who overthrew the dominant political machine in the city, only to establish his own, was similar, he noted.
"Nagin emerged under the image of a reformer, but it is difficult to imagine that a 'business' candidate whose job had been managing a monopoly tied deeply into city politics could serve as a positive change agent," Mizell-Nelson said. "Juxtaposed against the Marc Morial administration, that image seemed more believable. He was going to be cleaning up New Orleans and end corruption in City Hall."
No comments:
Post a Comment