Former New Orleans mayor indicted on federal corruption charges

Former New Orleans mayor indicted on federal corruption charges

Former New Orleans mayor indicted on federal corruption charges

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by David Hammer/ WWL.com

kens5.com

Posted on January 18, 2013 at 4:35 PM

Updated Wednesday, Oct 30 at 9:19 AM

David Hammer / Eyewitness News
Email: dhammer@wwltv.com | Twitter: @davidhammerWWL

Former New Orleans Mayor Ray Nagin has been indicted by a grand jury on 21 federal corruption counts.

The 25-page indictment that came down Friday included charges of conspiracy, money laundering and wire fraud. Nagin, 56, has been issued a summons to appear in court.

Nagin’s sons Jeremy Nagin and Jarin Nagin were not indicted but still face exposure, as does his wife Seletha Nagin because of his the charge involving false tax returns.

The indictment puts a highly anticipated cap on Nagin’s long fall from grace. The former Cox Communications executive was a political novice when he swept into office in 2002 by promising to bring a businessman’s attitude and high-tech savvy to City Hall and root out corruption.

But after ballyhooed crackdowns early in his first term, Nagin’s personal business interests and technology office became vehicles of alleged corruption, rather than the tools of good government.

St. Pierre freebies

Nagin’s image as a crime fighter first started to crumble in 2006 and 2007, when the blog American Zombie and Gordon Russell of The Times-Picayune exposed inside dealing in Nagin’s technology office. The stories and blog posts focused on Nagin’s tech chief (and neighbor) Greg Meffert, who proclaimed himself Nagin’s “deputy mayor” (even though no such title existed) and bragged about giving his boss free yacht parties and vacations.

The reports were the first inkling that technology office vendor Mark St. Pierre was the one who actually provided the yacht, not the blustery Meffert. In March 2009, when I was at The Times-Picayune, I confronted Nagin about a trip he and his family took to Hawaii in December 2004, paid for by St. Pierre’s company NetMethods. Nagin told me it was a personal trip and a vendor had not paid for it. But a week later, a deposition Meffert gave for a civil trial emerged, and Meffert’s testimony confirmed that St. Pierre did indeed pay for the Hawaii trip.

Meffert pleaded guilty to conspiracy in 2010 and testified against St. Pierre. So did the man Meffert and Nagin hand-picked to succeed Meffert as tech chief, Anthony Jones. St. Pierre was then convicted in 2011 on 53 counts of conspiracy, bribery and wire fraud.

Nagin said he thought Meffert had been the sponsor of the trips and didn’t realize St. Pierre was involved. But then I uncovered more documents showing St. Pierre had paid for other trips for the Nagin family and a May 2006 re-election campaign fundraiser in Chicago. The big one was first-class airfare for the whole Nagin family to Jamaica in November 2005. Nagin said the trip was “a blur,” again saying he didn’t realize a vendor was paying.

But during St. Pierre’s corruption trial, the feds alleged that Meffert actually left his NetMethods credit card with Nagin’s secretary to have her purchase the airfare when it was convenient for the mayor. A question at Nagin’s trial could be whether secretary Pat Smith realized who the real owner of the credit card was and if she ever discussed it with the mayor.

The Times-Picayune’s Russell also discovered records showing that St. Pierre had provided Nagin with about $1,500 in free grass-cutting at his house on tony Park Island in Bayou St. John. Testimony at St. Pierre’s trial later confirmed that. Instead of saying he thought Meffert had paid, Nagin insisted that he always paid for his own landscaping services.

Nagin withdraws

In the aftermath of Katrina, Nagin’s behavior began to change dramatically. Once the mayor supported by the Uptown business class and weak in black support, the storm turned him into a racial crusader. His 2006 reelection campaign against then-Lt. Gov. Mitch Landrieu carried heavy racial overtones, particularly in the context of whether New Orleans would remain a majority black city.

Nagin’s Martin Luther King Day speech in January 2006 made race the focal-point of his new image. He infamously vowed to keep New Orleans a “Chocolate City.” He also refused to put “green dots” to mark certain inundated sections of the city for green space, mostly areas where large swaths of black voters wanted the right to return. In the May 2006 election, Nagin’s racial support was almost diametrically opposite of what it had been in 2002 and he eked out the victory.

That’s when Nagin started to get more and more cloistered. His top aides became more secretive and the mayor got more combative. When Lee Zurik, then of WWL-TV, confronted Nagin about a corrupt house gutting program, Nagin lost it on live TV, accusing the reporter of being against the recovery.

When the station, through a public records request, reported on his public schedule from the previous year, the mayor claimed it endangered his family. Nagin then went on the WWL Morning Show and threatened to take on the WWL news director in the station’s parking lot.

After that, with the revelations of tropical vacations and his use of a city credit card to pay for such things as his wedding anniversary dinner, he lashed out at the large media outlets for getting “personal.” He stopped giving interviews to them, limiting his appearances to one black-owned radio station, WBOK-AM.

(See "60 Minutes" profile of Nagin one year after Hurricane Katrina)

Meanwhile, most of his major rebuilding and recovery initiatives flopped. Most spectacular among them was recovery czar Ed Blakely, with his 17 target rebuilding zones. I dug up one of the mayor's missing emails in 2009 that showed Nagin had dipped into a charitable fund for hurricane victims to pay the University of Sydney, Australia, $150,000 just for the right to hire Blakely, who was serving as a professor there. The city then paid Blakely another $150,000 a year in salary. At the end of Blakely's two years in New Orleans, the consensus was that the target zones produced little and that his other promises cratered too.

Nagin's crime camera initiative was supposed to make city streets safer, but it was so hamstrung by St. Pierre and Meffert's skullduggery that it produced more convictions for municipal corruption than it did for actual street crimes and had to be scrapped.

Nagin also announced an ambitious $106 million first-time homebuyer’s subsidy with fanfare. The city’s portion of it never happened. Neither did a bridge-loan program for Road Home applicants waiting for their rebuilding funds.

And, perhaps most symbolically, the Armstrong Park renovations and sculpture garden that Nagin unveiled as his last mayoral accomplishment were improperly installed by a company founded by a convicted felon. When the City Council passed an ordinance to prevent corrupt contractors from getting city work, Nagin vetoed it. Shortly after Nagin left office, successor Mitch Landrieu scrapped the original contract and had to start the sculpture project over.

As Nagin circled the wagons in his second term, he was focusing less of his time on running the devastated city and more on his own business interests.

Stone Age

Just half a year into Nagin’s first term, his eldest son Jeremy, then 18, was arrested in New York City and charged with grand larceny and other crimes for using a device to steal people’s credit card data and buy merchandise. He was officially there looking at colleges, but he ended up staying home and attending Dillard.Two years later, with his sons Jeremy and Jarin both living at home, the mayor formed a granite countertop company called Stone Age LLC for them to run.

But the mayor didn’t just turn the firm over to his kids and forget about it. He owned 40 percent of the company and was actively involved in it on a regular basis, even while he was trying to lead a devastated city back from the brink.

Strong leadership and granite countertops were both in high demand in the period after the storm. And for Nagin, the two spheres apparently bled into each other on several occasions.

That happened in 2007, while the mayor was negotiating a deal to bring a Home Depot store to the edge of Central City. The big box retailer wanted tax breaks and the ability to buy a group of city streets for less than their appraised value. Community groups, meanwhile, pushed for a local hiring quota.

In January 2007, a city vendor named Aaron Bennett introduced Nagin to Frank Fradella, a home improvement and construction executive with multiple contracts with Home Depot. Bennett told me in 2011 that he believed Fradella could help the Nagins' company Stone Age get lucrative countertop installation work with Home Depot.

The Times-Picayune's Russell uncovered an email that showed that a week after that first meeting with Fradella, Nagin called Home Depot CEO Frank Blake and offered to "help (Home Depot) with the community groups causing (Home Depot) problems." On Feb. 1, 2007, the mayor met with Home Depot officials at Stone Age’s offices on Earhart Boulevard.

Two months later, the local hiring quota was off the table, Home Depot was fully approved to build the Central City store and Stone Age got a home-improvement license so it could legally do jobs worth more than $7,500. Almost immediately upon getting the license, Nagin’s company won a coveted deal with Home Depot to furnish and install the countertops sold at four of its stores.

Other businesses with years of experience as Home Depot suppliers told me that Home Depot broke from its usual schedule to re-bid its in-store granite installation contracts. The supplier who had the deal for those four stores before Stone Age said he was shocked, given Home Depot’s past practice, to see the job handed to a complete newcomer.

A year later, the Nagins tried to get Stone Age’s contractor’s license renewed, but the state licensing board said the company had trouble providing proof of proper insurance. On April 4, 2008, the license lapsed. That same month, Home Depot ended its one-year contract with Stone Age as suddenly as it began.

In 2009, WWL-TV sued the Nagin administration to get the mayor’s emails, most of which had been illegally destroyed. But one of the few that were recovered showed Nagin using his city email to solicit business for Stone Age from a local furniture store.

The store owner, Michael Singer, told me that Nagin emailed him about buying countertops at the very moment that thousands of citizens were marching on City Hall over the shocking murders of two beloved community leaders, musician Dinerral Shavers and filmmaker Helen Hill.

Frank Fradella

WWL-TV also sued the Nagin administration to get half of the mayor’s 2008 calendar, which City Hall said had been accidentally deleted. When it was first released, the city attorney blacked out several meetings on the schedule. The station fought back, and a judge directed Nagin’s lawyers to show most of those meetings.

It turned out that many of them involved businessman Frank Fradella.

We later found out why. Crooked businessman Bennett told me he introduced Nagin to Fradella in January 2007 during what can only be described as a zany trip to Chicago and Las Vegas. Bennett had recently sold a business to Fradella and, in an attempt to get close to the mayor, he arranged through Fradella to provide a private jet to take Nagin and others to the Saints’ first trip to an NFC Championship Game.

Even though Meffert was six months removed from City Hall, he still pulled the strings there. So, of course, Meffert was invited on the Chicago and Vegas trip too. Still collecting kickbacks from St. Pierre at the time, Meffert told Bennett he could have a no-work gig collecting city money and then paying St. Pierre’s firms for their technology office work.

That way, St. Pierre could keep the city work without having to get a contract with the city.
Fradella’s jet flew Bennett and his third wife, three of their friends, Nagin, Nagin’s wife, Nagin’s bodyguard and Meffert to Chicago for the historic Bears-Saints game.

The first crazy thing that happened was the game tickets Bennett bought for the mayor and his wife turned out to be bogus, causing a minor stir at the gates of Soldier Field. Stadium officials let the Nagins in for free to settle that issue.

Then, after the Saints lost, Bennett caused more upheaval. Meffert’s successor as city tech chief, Mark Kurt, quit in a huff when he met the crew in Chicago and found out that Meffert, who had ordered the hiring of Bennett, was also getting freebies from Bennett.

The friends on the plane told me they laughed nervously about how the escapade was going to end up in The Times-Picayune. Of course, it did, and Nagin hadn’t paid for the trip. After the newspaper article, he paid Bennett more than $1,800 – with city money.

Finally, Bennett flew the mayor on to Las Vegas and introduced him to Fradella. According to Fradella’s plea agreement in June, that’s when the conspiracy to reward Nagin for special treatment for Fradella began.

Fradella and the mayor began meeting frequently, starting in February 2007.

The most crucial fruits of those meetings were laid out in Fradella’s plea deal in June: Fradella’s company, Home Solutions of America, paid $50,000 to a company owned by Home Solutions chairman Michael McGrath, which in turn paid the money to Nagin in June 2008. In exchange, our sources say McGrath, a convicted mortgage fraudster, got bogus documents from Nagin’s company Stone Age, to make it look like he’d purchased an ownership stake.

At the same time, Home Solutions of America racked up a string of lucrative contracts: Repairs for French Quarter sidewalks and French Market stalls, work at Louis Armstrong International Airport, public school renovations and kitchens at the Orleans Parish Prison.

Those were open bid deals, but Fradella admits in his plea agreement that Nagin helped him get “favorable treatment” in relation to his city work.

And the other parts of the alleged payoff involved free granite for Stone Age and consulting work for the former mayor after he left office. The plea agreement says “truckloads of free granite,” but my sources tell me that amounted to hundreds of thousands of dollars worth of inventory.

A Florida partner of Fradella’s, Anthony Leeber Jr., had an inventory of granite. Leeber told me that the granite was taken from him by Fradella and sent to Stone Age.

Fradella also admitted hiring Nagin for consulting work and paying him $10,000 a month until March 2011. Our sources say that deal lasted five or six months, so it amounted to another $50,000-$60,000 for Nagin.

The mayor’s calendar and emails also showed a series of meetings with Fradella and Michael Samuel, the part-owner of the Market Street power plant, a troubled but highly developable property along the river. They talked about getting Fradella a deal running a $650 million renovation project at the property, to turn it into a retail and residential hub as well as a riverfront museum and park. And although it came to nothing, the efforts to get Fradella and Nagin something at the blighted old plant apparently continued for years.

In 2010, after Nagin was out of office, an owner of the power plant property sent an email to a partner telling him that he was on the verge of a deal to sell the monstrosity and that “former Mayor Ray Nagin” would broker the deal. “Nagin of course would get a piece,” he wrote.

The would-be developer in that would-be deal was none other than Michael Samuel. Shortly after the “get a piece” email, Samuel became president of a company called Green Energy Management Solutions, or GEM. A few weeks later, GEM hired Ray Nagin as a consultant, paying him $90,000 worth of GEM stock and a monthly rate of $12,500, according to public securities filings.

Rodney Williams

And finally, there is Williams. He has no connection at all to Fradella, Meffert or the others. And he apparently can offer testimony about a stronger quid pro quo than Fradella can.

The help Fradella said he got was with city contracts that he won in open bidding. But Williams' plea agreement said his company, Three Fold Consultants, got consulting work that the mayor had the power to award. In fact, Nagin implemented special mayoral powers to keep that process a secret, even when the City Council later voted to open it up to public view.

We first broke the story in November. Williams pleaded guilty Dec. 5 to paying an official known to be Nagin more than $72,000, starting in January 2008, as a payoff for hooking up his engineering company with no-bid Katrina recovery contracts.

As with Fradella and McGrath, Williams allegedly got false ownership papers for Stone Age for his purchase, allegedly in an attempt to hide that the payment was a bribe.

Williams and Three Fold went on to get more than $3 million in work from the Nagin administration in just two years, mostly designing and managing repair jobs at playgrounds, city streets and sidewalks.

The first payment of $60,000 came in January 2008, and as soon as it was made, Nagin selected Three Fold as a vendor for public works and capital projects. That's in spite of the fact that Three Fold scored so poorly on a contractor qualifications review that it was deemed unqualified for the work. Nagin chose the company anyway.

Williams also made a $10,000 cash payoff to Nagin's close family members after getting a $1 million deal in 2009 overseeing a large portion of all street work.

That's a strong indication that prosecutors are zeroing in on Nagin's sons to hold the former mayor's feet to the fire and possibly get him to plead guilty. Jeremy and Jarin Nagin testified before the grand jury this fall, but their attorney, Clarence Roby Jr., said prosecutors did not contact him about Williams' payoffs. He declined to say if the sons took a cash payoff, saying it would be improper for him to do so.

Although Nagin is clearly at the top of the totem pole for prosecutors, he may have something to offer the government for other cases if he wants to pursue a plea deal before trial. For example, he could have information about the battle over closing landfills after Hurricane Katrina, something the government might need in their investigation of River Birch landfill owners Fred Heebe and Jim Ward.

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