Internal LCG review finds Bruno loan deficient, unusual and likely in default

UPDATE: HUD's Departmental Enforcement Center is in Lafayette this week and in the process of reviewing the Bruno loan. This story has been updated to reflect that new information.
Marcus Bruno

The gist: An internal review of the 2016 loan to mayoral aide Marcus Bruno found it in likely default for lack of compliance with federal requirements and recommends the nonprofit board that awarded it either modify the loan agreement, call in the loan or pursue legal action — including the seizure and sale of the family home Bruno put up as collateral.

Get caught up, quickly. Joel Robideaux’s assistant for governmental affairs received a $35,000 loan from the Lafayette Neighborhoods Economic Development Corporation for LA Consultants, a company he owns with his wife, Traci. The Acadiana Advocate revealed the questionable disbursement of federal monies in early February. The main question reporter Ben Myers’s story raises is whether Bruno’s loan ran afoul of conflict of interest regulations given his role with Lafayette Consolidated Government. As the loan’s grantor agency to LNEDC, LCG’s Community Development Department conducted a monitoring review of the loan on March 11, a course of action and responsibility former Community Development Director Phil Lank suggested more than a month earlier.

The loan should never have been approved because proper procedures weren’t followed, according to Community Development’s report, which The Current obtained by public records request. The review flags several irregularities and notes the loan application “was remarkable for the amount of documentation that was absent,especially when compared with previous LNEDC loans. Among the required documentation missing from the application was a denial letter from a bank or other conventional lender. The review did not consider the potential conflict-of-interest implications of Bruno receiving a loan from an organization over which he had influence.

The review’s findings suggest the Brunos never intended to meet the loan’s obligations. There was no documentation that the loan would provide a “public benefit” as required by the U.S. Department of Housing and Urban Development objectives of job creation or job retention for low- to moderate-income people. (LNEDC receives block grant funds from HUD through LCG.) One condition of the loan agreement spelled out that the company must hire two low- to moderate-income employees or retain at least two full-time employees within the first two years of the loan. At the time of the application, however, LA Consultants had only one employee, Traci Bruno, who was listed as office manager. And the review found no evidence anyone was ever hired.

The Brunos indicated on the 2016 application that they were a low- to moderate-income family of four. At the time that would have limited the family income to $53,000, according to the monitoring review. There was no proof of income, like recent pay stubs or a federal tax return, submitted with the application. According to records from 2016, Marcus Bruno makes at least $85,000 a year from his LCG salary alone, which he failed to disclose, and has other business interests. At least some of the loan proceeds were used to supplement Traci Bruno’s pay, information uncovered when the loan application was disclosed in connection with a narrowly focused review by a member of LCG’s legal team in response to the Advocate story.

Atypically, the $35,000 loan was paid in one lump sum. Among the corrective actions recommended by Community Development are that LNEDC’s board request paid invoices to prove the loan proceeds were used for the applied-for purposes. The review questioned why the loan dollars were disbursed to LA Consultants’ principals rather than on a pro-rata basis supported by appropriate documentation to ensure they were being used solely for authorized purposes — all of which is specifically spelled out in LNEDC’s policies and procedures manual.

It’s thus unclear how the rest of the money was spent. In their business plan on the loan application, the Brunos represent that they provide outpatient assessment and treatment plans for “defendants from local courts who have been mandated to take educational courses as part of their sentencing” and said they needed the funds to expand services and “offer web-based training for clients.” The company claims clients were referred to it by local courts, health clinics and South Louisiana Community College. The loan approval letter (they initially requested $48,000) specified that the proceeds be used for the company “to provide evidence based courses for court ordered sanctions to defendants.” There is no record that the funds went to any of these purposes.

The Current was unable to find any Lafayette-area courts currently using LA Consultants’ services. The exception is Lafayette City Court, although City Judge Doug Saloom says only about a half-dozen defendants completed programs with the company in the past five years. The court maintains a list of providers to which it regularly refers defendants, but LA Consultants is not on that list, he confirms. “While we have no way of locating the case, it was most likely a financial or transportation choice made by the defendant,” he explains. “Under most circumstances the court will accept such a completed program as long as it is compatible in topic and length with our regular programs.”

Representatives from all three entities LA Consultants lists as partners on its website say they have never been affiliated with Marcus Bruno’s company.

LA Consultants claims three partners, each of which say they had no relationship with the company. The company’s website lists three entities it calls partners, the Lafayette Parish School System, SWLA Center for Health Services and SLCC. Officials at all three entities say they do not do business with LA Consultants and never have.

“LPSS has not engaged in any activities with LA Consultants. As such, please note that LPSS will be asking the entity to remove our affiliation with the entity on their website,” Superintendent Don Aguillard says in a Monday email.

“We do not have a partnership; that is false information,” Dr. Suzanne Foster, chief health officer for SWLA Center for Health Services, told me in late February. “We will have our legal counsel contact them.”

Foster was not in her office Monday morning for a follow-up; we’ll update this story when we hear back from her.

SLCC spokeswoman Christine Payton said in February the community college had no arrangement with LA Consultants and attempted to contact the company to have SLCC’s logo removed. SLCC has been unable to reach the Brunos, Payton says in a Monday email.

“Our Administration and Finance Division mailed letters to LA Consultants. Both were returned with a note that the property was vacant and unable to forward,” she writes. Payton says two letters were sent to 618 Jefferson Blvd. with different zip codes, the one on the website, 70507, and the one for the actual location, 70501. “Email messages were also sent with no response,” she adds.

As of this writing, all three are still listed as partners on LA Consultants’ website.

A letter to the district attorney was included in the loan application. The DA says he never received it. The Brunos submitted a January 2015 letter Marcus wrote to District Attorney Keith Stutes outlining the company’s credentials. “I didn’t contract with him to provide any services,” Stutes told me in February. “I do not recall receiving that letter. I’ve searched my files.” The letter to Stutes is not considered in Community Development’s report.

Marcus Bruno did not return a mid-March emailed request for comment with specific questions about missing documentation in the loan application, how the loan proceeds were used and why his website has false information about business partnerships.

LCG spokeswoman Cydra Wingerter and Community Development Director Shaneá Nelson did not respond to an emailed request for comment on the internal review Monday.

LNEDC’s new loan fund administrator says he isn’t surprised by the findings. He had already identified the deficiencies it points out. A former banker, Nathan Thornton was on the LNEDC board in the late 1980s and served as its loan fund administrator while working as director of UL’s Small Business Development Center from 1999 to 2013. In February LNEDC asked him to return to the nonprofit organization to conduct a comprehensive examination of its loan portfolio, much-needed scrutiny in light of the problems Community Development found with the approval process and monitoring failures on the Bruno loan. Thornton will make a recommendation about the loan to the board at its May 8 meeting. If LA Consultants cannot prove it achieved the “public benefit” of job creation or retention within the required time frame and is thus in default, Thornton will recommend the board take one of three steps: modify the loan, call in the loan — which could force the company to repay the loan on an accelerated time frame and/or increase the interest rate — or pursue legal action to seize the house and property at 102 Marsh Drive that the couple pledged as collateral. Thornton would not say how he is leaning.

Joel Robideaux’s campaign office was at one time next door to Bruno’s LA Consultants on Jefferson Boulevard.

Too close for comfort? It’s clear from the original Advocate story that Marcus Bruno helped LNEDC secure federal funds. The nonprofit receives federal Community Development Block Grant funds from LCG for its small business loan program. In 2001, LCG provided $80,000 in loan funds to LNEDC, and in 2018 another $150,000 was awarded to the nonprofit, additional funding it obtained with Bruno’s assistance. That Feb. 9 story — which Robideaux attacked in defending the loan to the Brunos after refusing the paper’s repeated attempts to be interviewed — eventually forced Robideaux’s administration to ask HUD and the Louisiana Board of Ethics to look into potential conflict of interest/ethics violations. Both probes are pending.

“To suggest that this is anything other than a properly issued loan is a serious distortion of the facts,” Robideaux said in a statement issued the day after The Advocate story ran. The mayor-president followed up his vigorous defense with an internal report, authored by Assistant City-Parish Attorney Steve Oats, that purported to exonerate Bruno of wrongdoing. After announcing that the internal legal review had cleared Bruno, Robideaux continued to defend the loan: “I think everything that was required was done. It was all above board. It meets all the regulations, all the rules,” the mayor-president said. City-Parish Councilman Jay Castille was not satisfied with attorney Oats’s report and moved to call for a council investigation. He stepped back from that escalation when Robideaux revealed time that he had requested the federal and state inquiries into the loan and promised to communicate the findings to the council.

HUD’s Departmental Enforcement Center representatives are in Lafayette this week for a compliance review of the CDBG funds Community Development awarded to LNEDC, according to a March 28 letter from HUD obtained by The Current. The Bruno loan is among the loans it plans to inspect. (Clarification: LNEDC’s Thornton mistakenly told me last week it was not listed among the group of loans).

“HUD’s March 28, 2019 notification of their on-site review contained the Grant Numbers from which the Bruno Loan was made,” Nelson wrote in an April 23 letter to Councilman Castille, who had also inquired on April 2 as to why the Bruno loan did not appear to be listed on HUD’s letter. Castille followed up with an another email the afternoon of April 23, again asking Nelson for a response. “It has always been our expectation that HUD would review the Marcus Bruno loan,” she wrote 35 minutes later. “In my initial meeting this morning with HUD this expectation was confirmed. I will keep the Council posted with any progress.”

Nelson began the email with an apology for the delayed response.

Why this matters: There is widespread speculation that Robideaux’s decision to not seek re-election was somehow influenced by the clouds surrounding Bruno. While findings in the internal review may not rise to the level of criminality per se, they contradict Robideaux’s initial rebuff that there was anything amiss related to Marcus Bruno’s loan. Robideaux has an unusual relationship with the controversial aide, which was not disclosed in any inquiry initiated by the administration. In other words, Robideaux staked a lot of credibility on Bruno. Whether it would have cost him a second term is now moot.

About the Author

A founding editor of both The Independent and ABiz and senior editor at The Times of Acadiana in the 1990s, Leslie Turk has worked in the newspaper business in Lafayette for almost three decades. Her work has also appeared in The New York Times and The Acadiana Advocate. Email her at leslie@thecurrentla.com.

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