Attorneys haggle over restitution owed by Stephen LaRoque
By Beth Velliquette
The Daily Reflector
Tuesday, September 26, 2017
Former N.C. Rep. Stephen LaRoque was back in U.S. District Court Tuesday as his attorneys argued that he should not have to pay the full amount of restitution he owes.
LaRoque, a former state representative from Kinston, was sentenced on July 8, 2015, to two years in prison and ordered to pay $300,000 in restitution and a $5,000 fine after he pleaded guilty to using grant money, which was slated for rural development, to help pay for an ice skating rink in Greenville for his wife and stepdaughter and to purchase a house for another stepdaughter, among other things.
LaRoque served his sentence, but he was in court Tuesday about the restitution he has not yet paid. So far, he’s paid about $177,000 of the $300,000, meaning he still owes about $123,000. His attorneys want the judge to credit $67,000 he is owed from the Eastern Carolina Development Company (ECDC), where he worked, and credit for $98,000 for three houses that he was forced to sell by auction that sold below their value.
The first issue involves money that LaRoque earned when he worked for ECDC, a nonprofit he organized to manage loans from the U.S. Department of Agriculture for rural development in eastern North Carolina.
After he pleaded guilty in federal court, LaRoque obtained a judgment against ECDC in N.C. Superior Court for unpaid wages totaling $67,000 he said he earned while working for the nonprofit. That judgment has not been paid, and LaRoque claims that amount should be deducted from the $123,000 he still owes in restitution.
Senior U.S. District Judge Malcolm J. Howard heard arguments Tuesday from LaRoque’s attorneys Elliot Abrams and Keith Williams, as well as U.S. Attorney Josh Royster about who the victim was and to whom the payments would go. The victim, according to Abrams, is ECDC. Therefore, he said, LaRoque, who won a judgment for $67,000 for work he did for the ECDC, should get credit for that $67,000.
Royster, however, argued that the victim is the U.S. Department of Agriculture and that LaRoque owes restitution to the U.S. government. ECDC no longer exists except on paper and has no assets, he said. If LaRoque receives the $67,000 he is owed, then that would put LaRoque ahead of the United States in terms of who gets paid first from the ECDC, which owes hundreds of thousands of dollars to the U.S. government.
The second issue that was argued in court was whether three properties, which LaRoque owned and was supposed to sell for restitution, were sold at their true value.
The contract that LaRoque signed was that he had 120 days to sell the properties himself, and if he did not, then the properties would be auctioned off. LaRoque did not sell the three properties within the 120 days, so a real estate company out of Mt. Airy, Rogers Realty and Auction, put the properties up for auction. The properties were worth at least $219,000 total, but they only sold for $120,000, Williams argued.
Williams said that Rogers Realty and Auction, which the government assigned to do the auction, did not properly advertise the sale as required by law, plus a real estate company in Mt. Airy wouldn’t know anything about the Kinston real estate market. Therefore, Williams said, LaRoque should be given credit for the $98,000 he should have received if the properties had been properly marketed and sold at their proper value.
Royster argued against giving LaRoque credit for the properties, saying that LaRoque had 120 days to try to sell the properties himself but did nothing or very little of anything to market them.
Royster said he and another prosecutor from the U.S. Attorneys Office of the Eastern District of North Carolina suggested Rogers Realty because it has experience all over the country in selling property for restitution. Though they made that suggestion, Royster said LaRoque could have made arrangements with any auction company to sell his properties.
“The government is not a party to that sale,” he said.
Royster also said that the appraisal of $219,000 was done several years ago, and that the properties were in “terrible shape” when they were sold at auction, plus one of them was sold to LaRoque’s stepdaughter.
“For Defendant to claim the property was sold in an unreasonable manner is completely absurd,” Royster wrote in the written response to LaRoque’s motion regarding restitution. “Aside from the fact he agreed to the manner in which the property was sold, one of the properties was purchased by his stepdaughter with his money, fraudulently transferred to her by his wife from the joint bank account in which his wife had fraudulently concealed it from the government.”
Williams countered in court saying that if LaRoque had not signed the contract to sell the properties through Rogers Reality, he would have gone to jail.
Although they did not argue all of LaRoque’s claims in court, Williams said the motion includes seven other claims that should be considered. Those claims include that property that is listed as co-owned by Mr. and Mrs. LaRoque is actually owned by Mrs. LaRoque.
The government in its written response said that prior to his sentencing, LaRoque’s net worth was listed as $598,000, and his assets were valued at $711,000. That included an IRA worth $47,000, a coin collection valued at $25,000 and jewelry valued at $50,000.
In August 2016, the government attempted to collect the remaining restitution balance, including garnishing the IRA, but it learned that there was only about $60 left in that account.
Government officials learned that LaRoque’s wife, Susan LaRoque, had transferred $40,000 from the IRA to a joint checking account, and over the next month or so, she wrote checks to herself, to her business, to her daughter Julia Eatmon, to another bank and to a credit card company. She also transferred money from another IRA valued at about $62,700 to the checking account and wrote checks to the same people, including herself and her daughter, with that money, prosecutors claim.
“In sum, $47,500 was fraudulently transferred from Defendant’s IRA account to his wife, who fraudulent (sic) transferred a portion of those funds, ($8,700) to Defendant’s stepdaughter,” Royster claimed in the written response. “Some of those funds were apparently used to purchase one of the restrained real properties, which Defendant now boldly claims was sold unreasonably.”
In April, government officials learned LaRoque and his wife insured 44 pieces of jewelry they owned for about $135,000 through their homeowner’s account. On July 27 of this year, U.S. Marshals went to the defendant’s home to seize the jewelry, but they found only one of the 44 pieces.
At the conclusion of the arguments, Judge Howard said he would study the issues and some other cases, then issue a decision within two weeks.
Contact Beth Velliquette at email@example.com or at 252-329-9566.