Raleigh, N.C.— A federal grand jury on Tuesday indicted state Rep. Stephen LaRoque on charges that he misappropriated federal funding from nonprofits that he runs.
LaRoque, R-Lenoir, is charged with four counts of converting U.S. Department of Agriculture loans to East Carolina Development Co. to his own use and four counts of laundering money by using federal funds to purchase an interest in a Greenville ice rink and a house that he then rented to one of his stepdaughters.
ECDC and another Kinston-based nonprofit LaRoque oversees, Piedmont Development Co., provide low-interest loans to small businesses in rural areas.
LaRoque couldn't be reached for comment, but Raleigh attorney Joe Cheshire released a statement contending that the lawmaker has done nothing wrong and was "disappointed" by the indictment.
"Rep. LaRoque is proud of what he has accomplished with his nonprofit corporations. The corporations’ work provided monies that led to new business and led to hundreds of jobs for North Carolinians who would otherwise have been unemployed," Cheshire said in the statement.
The 72-page indictment details years of alleged insider dealings, noting that LaRoque, his brother and his wife sat on the nonprofits' boards and that they routinely approved without comment loans LaRoque had already made. One of the loans was to a carpet business owned by the woman who would later become his wife at an interest rate about half that charged to other borrowers, according to the indictment.
LaRoque has paid himself close to $2 million since 1998 for running the nonprofits, along with another $133,000 in reimbursed expenses, according to the indictment.
He routed ECDC money through his management company to purchase vehicles, jewelry and other goods, the indictment alleges.
LaRoque, 48, has previously defended his work at the two agencies against allegations of wrongdoing.
In 2010, he filed a defamation lawsuit against his Democratic opponent, who questioned the nonprofit operations. The indictment alleges that he used federal loan funds to pay his legal fees in the suit.
He then fired back at left-leaning publication NC Policy Watch, which sorted through records of the two nonprofits and alleged conflicts of interest in several stories.
LaRoque served as co-chairman of the powerful House Rules Committee in the recent legislative session, but he lost his re-election bid in the May primary.
Reporter: Cullen Browder