The gist: When his initial defense of an ethically questionable loan to one of his top aides fell short, Mayor-President Joel Robideaux turned to the city’s legal department to produce a report exonerating both his administration and the assistant. The report does neither.
Get up to speed, quickly: Two weeks ago, The Acadiana Advocate’s Ben Myers reported that Marcus Bruno, Robideaux’s assistant for governmental affairs, received a $35,000 loan from the Lafayette Neighborhoods Economic Development Corporation (LNEDC) for LA Consultants, a company he owns with his wife, Traci. The main question Myers raised is whether Bruno’s 2016 loan ran afoul of conflict of interest regulations given his role with Lafayette Consolidated Government.
The report doesn’t stand up to scrutiny. Robideaux assigned a narrow focus to assistant city-parish attorney Steve Oats, who drafted the report: Answer whether LNEDC’s loan to Bruno violates federal conflict of interest regulations. Oats concluded that it didn’t. But there’s so much more to this story that needs to be considered for anyone to be exonerated.
What are the rules? The funds LNEDC used to make this loan come from the federal government, specifically the U.S. Department of Housing and Urban Development, through community development block grants (CBDGs). The reason there’s a potential conflict of interest is that CBDGs are routed through LCG, where Bruno works. The potential conflict comes into play if Bruno has any responsibilities for managing this funding, makes any decisions about who gets loans, or has access to inside information that would give him an unfair advantage.
Since LCG hasn’t given money to LNEDC since 2001, they’re all in the clear, the Robideaux report suggests. The basic argument in Bruno’s favor is that he’s never worked for LNEDC or served on its board, and even though he worked for LCG in 2001, his position had no role in granting or managing these funds. Therefore, the conclusion goes, there can be no conflict of interest.
But the report ignores key facts about Bruno’s access to insider information. For starters, the report claims that Bruno’s pursuit of LNEDC grant funding for his small business started when he downloaded an application from its website in June 2016. But The Advocate has already reported that a month before that, he requested a report on LNEDC from LCG’s director of community development, Shanea Nelson.
The report leaves out that LCG’s Community Development Department has oversight authority for LNEDC’s loans. Explicitly noted in LNEDC’s loan agreement with LA Consultants is that both its staff and LCG’s Community Development Department have the authority to audit whether LNEDC’s loans are living up to the public purpose they were granted to achieve. So even though LCG’s Community Development Department may not be involved in selecting who gets approved for each individual loan, it certainly has the ability to exert significant influence over the process.
The report also omits that Robideaux assigned Bruno to reestablish relations with LNEDC. As reported by The Advocate, at the same time Bruno sought a loan, he was engaging in a dialogue with LNEDC’s board members as a representative of the mayor-president. Those discussions led to LNEDC receiving $150,000 from LCG for its loan program three months after Bruno secured his loan from LNEDC. Public records obtained by The Advocate reveal that it also resulted in Bruno having influence over LNEDC’s new board members and bylaws.
Here’s an abbreviated version of what the actual law on insider information is: “The general rule is that no persons … who are in a position to … gain inside information … may obtain a financial interest or benefit from a [community development block grant]-assisted activity … either for themselves or those with whom they have business or immediate family ties.”
What about the ethics of Robideaux’s response to Bruno’s actions? The only focus of this report was if Bruno did anything that violated ethics rules. It doesn’t touch on any potential violations from Robideaux in how he handled this situation. As soon as he learned about Bruno’s loan, he should have immediately requested an independent review and, if necessary, a waiver for it from HUD and the state ethics board. Instead, he refused to reply to Myers’ requests for comment for his Advocate article for weeks and then initiated an expensive internal legal review that produced this report — which he initially tried to keep hidden from the media behind attorney-client privilege. So it appears Robideaux’s only engagement with this issue was to react to a story to provide his administration cover rather than proactively manage the situation to ensure the public’s interests were being protected.
Ironically, Robideaux’s report might unintentionally throw Bruno under the bus. While this report’s intent was to exonerate Bruno and Robideaux, it instead puts Bruno, already a controversial figure, in a bit of a bind. Included in this report is Bruno’s loan application and lots of unanswered questions.
Was it legal to use the proceeds to supplement Traci’s pay? The loans are intended to help low- or moderate-income people. In Lafayette, by HUD’s definition, that means a family income of less than $56,000. But Marcus’ LCG salary alone was $85,000 at that time. And his wife Traci, who works as LA Consultants’ office manager, is listed as having a salary of $46,000. That means as a family, the Brunos were earning at least $131,000 when they applied to LNEDC for funding.
There are financial discrepancies all over the document. The Brunos say they bought the home they mortgaged for the loan for $170,000 in 1997, yet the parish tax assessor lists only a donation from Marcus to Traci that year. The assessor’s records show that the Brunos purchased this property in 1996 for $10,500. Meanwhile, the Brunos, who borrowed $191,000 for the home in 2005, listed its value on the loan application in 2016 at $390,000, while the assessor pegs the market value at $210,000. There is no appraisal attached to the application that might shed light on that gap. Court documents show the appraisal was waived by the borrower.
The Bruno loan may not be living up to its promises. Included in the approval letter from LNEDC’s chairman at the time, Joseph Dennis, are itemized terms and conditions. One of these was the expectation that LA Consultants would hire at least two full-time low- to moderate-income people in its first two years. Yet the company’s initial business plan only accounts for the creation of one job, listed as “Own/Op,” which appears to be a reference to the title, owner/operators, that the Brunos gave themselves earlier in the document. Does LNEDC consider owners to be employees? And even if owners do qualify, LNEDC’s rules require that new jobs must be made available to low- to moderate-income people without degrees. Did the Brunos really let anyone apply to be the owner-operator of their business?
These issues warrant further scrutiny. LNEDC and/or LCG’s Community Development Department should exercise oversight authority to conduct an audit of the Brunos’ truthfulness in their loan application and determine whether the use of the loan’s proceeds achieves the program’s public benefit requirements. Both groups have the authority to call back the loan and force the Brunos to pay the principal on an accelerated basis if they’re failing to live up to their end of the bargain.
This situation also suggests an audit is needed for LNEDC’s loan approval process. Arguably a much-needed organization with the ability to help low-income business owners, LNEDC needs to be trusted with the public money it loans out through its revolving loan fund. More work is needed to improve how it analyzes and approves these loan applications.
What to watch for. More investigations. Robideaux’s report won’t be the last word. He realized vindication claims weren’t working and finally sent this matter on for review to HUD and the Louisiana Board of Ethics. The HUD and Ethics investigations will take time, meaning the affair could drag out even longer. Additional scrutiny may come by way of a council probe, still a very real possibility. Meanwhile, we’ll be reporting on more discrepancies in the loan application and other LA Consultants’ claims. Whatever the result, the affair will likely hang a dark cloud over Robideaux’s re-election bid — quite literally as his campaign office is right next door to LA Consultants on Jefferson Boulevard. — Additional reporting by Geoff Daily