GREENVILLE — On the stand, Walter LaRoque was scared.
“Did you tell the truth?” defense attorney Joe Cheshire asked.
LaRoque said he did.
“And you’re still scared?” Cheshire asked.
LaRoque said yes, again.
The lengthy testimony of the brother of former state Rep. Stephen LaRoque went directly to the heart of the prosecution’s fraud case against the former lawmaker Tuesday in U.S. District Court.
Walter LaRoque said when he, Stephen LaRoque, Stephen’s wife Susan and Ricky Lanier met on Jan. 22, 2009 and approved a written contract for Stephen LaRoque regarding his position with East Carolina Development Company, Walter LaRoque said he was unaware of the specifics of the contract.
Prosecutors and defense counsel asked him numerous times what he knew of the contract in 2009 and what he knew came before it. Walter LaRoque answered all he knew was that Stephen LaRoque told him it was a reauthorization of a contract from 1999.
Walter LaRoque also said he never saw a contract before 2009, and didn’t know the specifics of the 2009 contract until prosecutors showed him an unsigned document, alleged to be the 2009 contract, in 2012.
“I did not know the full contents — that’s right,” Walter LaRoque said.
The only specific point he knew was of 0.5 percent share of loan origination fees meant to be used as a bonus for B.J. Murphy, who joined the LaRoques’ LaRoque Management Group in January 2009, staying with the company through June of that year.
While questioned by Assistant U.S. Attorney Dennis Duffy, Walter LaRoque confirmed his grand jury testimony in which he said the ECDC Board of Directors acted like a rubber stamp for his brother — that Stephen LaRoque was the force behind ECDC and the other directors followed his lead and trusted his judgment.
Duffy provided board minutes from June 19, 2009 that show that at a meeting of Stephen, Susan and Walter LaRoque, the three agreed to a loan to LMG from ECDC based on income not yet distributed to Stephen LaRoque.
Walter LaRoque said he didn’t see any documents relating to the loan, and said in hindsight all three of them should have recused themselves from voting. But, he said at the time he saw it differently because the motion referred to money owed that was owed that had been left in the business.
Prosecutors displayed several checks that Walter LaRoque confirmed were written from ECDC to LMG. They included a $150,000 check on June 26, 2009, and $50,000 checks on Jan. 29, 2010; March 5, 2010; and May 7, 2010.
Walter LaRoque confirmed he was aware that in grand jury testimony, he said Susan LaRoque wouldn’t have been allowed to have a loan and be on the board at the same time, in the time before she joined. He also said he later learned Lenoir County Economic Development Director Mark Pope left the board in order to secure a loan from ECDC.
In October 2010, Stephen LaRoque held a news conference to deny accusations by Democratic incumbent Van Braxton that he took $200,000 from ECDC. The previous day, Walter LaRoque said, Stephen LaRoque set up a meeting of the ECDC board in which three new people were appointed and his contract renewed, with Stephen, Susan and Walter LaRoque all abstaining.
The defense went back to the center of its case.
“What he told you is he was taking that loan against that money, correct?” Cheshire asked.
Walter LaRoque acknowledged he believed at the time it was money owed to his brother, and read off memo lines from the checks that included statements like, “loan to contractor,” and “loans against earnings.”
Walter LaRoque agreed that he believed what they were doing was “good, honest work.”
Earlier Tuesday, Patrick Scott Brown, litigation coordinator with the Diener Law Firm, confirmed ECDC paid thousands of dollars to the firm for work it did for LaRoque.
That included $17,250 which went straight from the firm to the Lenoir County Clerk of Superior Court to pay off contempt fines related to the defamation suit against Braxton.
When asked by the prosecution, Brown confirmed ECDC was not an official party in the lawsuit.
“Based on the documents and everything else, I believe that to be correct,” Brown said.
Ultimately, about $27,100 went from ECDC to the law firm, according to checks produced by the prosecution. Duffy also displayed checks totaling $12,000 from Stephen LaRoque’s campaign committee that went to pay for legal work.
Court resumes today at 9 a.m.
Wes Wolfe can be reached at 252-559-1075 or wes.wolfe@kinston.com. Follow him on Twitter @WolfeReports.