Mayor Ray Nagin unwilling to bail out the DA in race discrimination suit

Mayor Ray Nagin told City Council members Friday to brace themselves for an unprecedented event: a possible state takeover of embattled District Attorney Eddie Jordan's office that could come as soon as Monday.

The City Attorney had previously informed the City Council that the cash-strapped city government had no legal obligation to pay the debt as Jordan has requested. Council members went on record this week as being against any bailout for Jordan.

Attorneys for the plaintiffs in the discrimination case said this week they are prepared to seize assets of the district attorney's office -- including payroll accounts -- if Jordan's office does not pay up. Jordan's aides say if any accounts are seized, prosecutors will quit en masse and the office will shut down.

Speaking from an armchair with six of the council's seven members gathered around him, Nagin said he was ready to work with the city's legislative branch to craft what he called a "Plan B" that he hopes will "get to a better place in the operation" of the district attorney's office.

'Whatever it takes'

Under what he called a "worst case scenario," Nagin said state Attorney General Charles Foti is prepared to step in on a moment's notice and assume management of Jordan's office.

With the council's support, Nagin said he is prepared to appropriate the money necessary to give "key" members of Jordan's staff "comfort that they're going to continue to get a paycheck."

Once some level of stability is assured, Nagin said, he hopes that the district attorney's staff will be assisted by personnel from Foti's office and possibly other district attorneys from around the state.

After his meeting with the council, Nagin said he discussed the situation with the attorney general this week and said Foti assured him he would do "whatever it takes" to ensure that the prosecution of crimes would continue in New Orleans.

"He said 'I can't pre-determine this, but I give you my word, if this goes to the worst-case scenario, I am ready to come in and help get this to a better place very quickly,'¤" Nagin said.

Based on his conversation with Foti, Nagin said he is convinced that a state takeover would not be "as catastrophic as some are suggesting."

Nagin said he met with Jordan on Friday afternoon and informed him that the city would not be offering any financial aid.

Nagin said Jordan "was a little disappointed. Then we started talking about other ways to solve this."

No solutions were offered, and Nagin said he doesn't predict a happy ending.

"I don't see how the city is going to come to the DA's rescue before this kind of gets to the point where the plaintiffs do what they have to do and this thing gets escalated to a higher level," he said.

Support questioned

Nagin was noncommittal about Jordan's chances of surviving as the city's chief prosecutor if Foti steps in.

"It depends on how the attorney general handles it," Nagin said. "At that point in time, the attorney general is going to have a lot to say about whether he stays or doesn't."

Nagin stopped short of calling for Jordan's resignation, which City Councilwoman Shelley Midura did several months ago.

"I just want to see a new structure in that office, that we have some higher levels of accountability and people get more comfortable that we're moving forward," Nagin said.

The mayor acknowledged that while "a certain segment of the population would love to see" Jordan step down, "there's another population that has sympathy for him, especially when they perceive he's being beat on."

He also acknowledged that the recent revelation that a young man who was an acquaintance of Jordan's girlfriend stopped by the district attorney's Algiers house briefly after allegedly committing an armed robbery has not helped Jordan in the court of public opinion.

"I think support for him among the public is not very high right now," Nagin said.

Legal opinion

The legal opinion prepared by City Attorney Penya Moses-Fields at the City Council's request said that a "review of the federal and state statutes" revealed that the city "has never been required to fund any judgments rendered against the Orleans Parish district attorney or any other state official."

Moses-Fields also noted that the city originally was named as a defendant in the suit against Jordan, but was later voluntarily dismissed by the plaintiffs.

During his meeting with the council, Nagin said that even if the city were in a position to assist Jordan, he would oppose the move because of the dangerous precedent it would set if similar discrimination cases are ever filed against other government agencies.

Council members have urged Jordan to search for other options, including scrubbing his own budget, seeking aid from the state or taking out a loan.

On Wednesday the federal court removed the two-year hold it had placed on the judgment to allow for Jordan's appeals, making the jury verdict of May 29, 2005, finally enforceable.

After that ruling, a spokesman for the legal team representing the plaintiffs said they were willing to work with the city up to a point.

"Do they want to have a DA's office?" attorney Richard Leefe asked. "We have no alternative but to virtually take the assets away. We're reticent. We don't want to do that. But if the city isn't going to take any action, what's our choice?"

A jury decided that Jordan, the city's first black district attorney, violated employment discrimination laws when after taking office he ordered the wholesale firing of white employees and replaced them with black workers. Jordan was sued as district attorney, not personally, meaning the judgment lands on the office and not the man at the helm.

During the meeting with Nagin, City Councilman James Carter, a lawyer, said he had met with the plaintiffs' attorneys and fears they are poised to act.

"They want to hear some comforting words," Carter said. "And they want to see some cash."

Councilwoman Stacy Head, who also is a lawyer, said she is ready to "play chicken" with the attorneys.

In the end, Nagin and the council agreed to take a united stand against paying the judgment, while continuing to urge Jordan to pursue other options.

Moyo Indicted in moneylaundering case linked to Senator Derrick Shepherd

A twice-convicted bond broker -- who federal authorities say hired state Sen. Derrick Shepherd to launder money she obtained illegally -- was indicted by a grand jury yesterday on 15 counts of selling insurance despite being barred from the practice.

Gwendolyn Joseph Moyo, 52, could face up as many as 9 years in federal prison under sentencing guidelines if she is convicted, according to court testimony Tuesday.

The indictment lists 15 projects for which Moyo allegedly provided phony performance bonds, all of them during 2006. Moyo was prohibited by federal law from engaging in the insurance business because of her two prior convictions on federal charges "involving dishonesty and a breach of trust."

In 13 of the 15 cases listed in the indictment, the "purported insurer" was First Nations Insurance Group, a company based on Ontario, Canada, according to an FBI affidavit. Smith said that Moyo had at one time had a business relationship with FNIG, but in December 2005, the company revoked her appointment.

Company officials could not be reached for comment.

In one of the cases, a bond provided by Moyo was purportedly underwritten by United Assurance Co. Limited, based in Grenada. That company is not licensed to do business in Louisiana.

The state Department of Insurance received a complaint about a bond for which Moyo served as agent last year and began an investigation. In November, the department secured an order allowing its agents to seize records and bank accounts from her business, AA Communications.

After that action, Moyo was unable to cash checks from her bond sales that were made out to AA Communications, Special Agent Peter Smith testified at a detention hearing for Moyo on Monday.

She signed a series of checks for bond fees totaling $140,686 over to Shepherd in early December, Smith testified. Shortly thereafter, Shepherd wrote out checks totaling about $75,000 to Moyo personally.

On the memo line of each check, Shepherd wrote "settlement proceeds," Smith's affidavit notes. Shepherd is called "Mr. A" throughout the affidavit, but in court, Smith used the senator's name.

Senator Shepherd tries to discredit the feds investigation by shifting blame

During his desperate news conference yesterday, Senator Derrick Shepherd tried to discredit the federal investigation, into his alleged wrongdoings.

Shepherd's attempt to throw the spotlight off himself and onto Carter, Jefferson and Nagin did not change the government's message that the unfolding case that appears to have ensnared Shepherd is very much alive.

Jim Bernazzani, special agent in charge of the FBI's New Orleans office, dismissed the notion of a witch hunt and suggested that the government is far from through with Shepherd.

"The investigation centering around the events in federal court on Monday, which have been highly publicized, was based upon facts surfaced by the FBI," Bernazzani said.

"If Mr. Shepherd chooses to hold a press conference to assert his position, he is entirely within his prerogative," he said. "As this investigation continues, Mr. Shepherd will have ample opportunity to assert again if he so chooses."

Trio respond

Shepherd's attempt to turn attention to Nagin, Jefferson and Carter caught those politicians by surprise and drew stinging rebukes.

Nagin issued a statement late Wednesday saying he was "disappointed by the reckless allegations made today by Sen. Shepherd in an apparent effort to deflect attention from his own legal problems."

Nagin added: "I am not now, nor have I ever been, the subject of any investigation of wrongdoing. I have a proven track record of transparency and have been a champion of ethics and anti-corruption during my tenure as mayor of New Orleans."

Earlier, Nagin spokeswoman Ceeon Quiett said she was not sure whether Nagin had spoken with the FBI since Shepherd's news conference. But she noted that the mayor has "a very good relationship with them, an ongoing relationship with them."

Carter, D-New Orleans, who is in Boston attending a Harvard University seminar, released a five-paragraph statement denying any business dealings with Jefferson, Moyo or Shepherd. She confirmed, however, that investigators approached her for information about topics that she would not disclose.

"I have been asked by the federal government to be a fact witness," she said in the statement. "Federal law enforcement has stated that I am not a subject of any government investigation.

"This type of investigation is normally nonpublic. General commentary is rarely warranted. However, innuendo, whether intentional or inadvertent, has forced me to provide this clarification to my constituents and to the residents of Louisiana."

Jefferson, D-New Orleans, who is awaiting trial on 16 federal charges of bribery and corruption that were filed after his re-election, declined to comment about Shepherd's statement, said Chris Garrett, a spokesman.

Unanswered questions

It's unclear how much contact Shepherd has had with federal agents or prosecutors.

Roby said his client received a subpoena for documentation of the work, and Shepherd gave the government a contract, time sheets and research he did on Moyo's case. But Roby did not answer whether prosecutors have asked Shepherd to testify before a grand jury.

After reading his statement, Shepherd deflected all questions to his attorney, who did not respond directly to the core discrepancies between his client's version of events and the government's account.

Roby did not shed light on the unusual financial arrangement alleged by FBI Special Agent Peter Smith, who testified in the Moyo case that Shepherd deposited checks made out to Moyo's business, then returned about half the money to her. Moyo couldn't access the money herself because the business, AA Communications, had its bank accounts seized by the state Department of Insurance.

"At this time, I think it would be inappropriate for Mr. Shepherd to discuss those things which might be considered attorney-client privilege," Roby said.

Smith also testified that the contract Shepherd gave the government raised his suspicions, as it lacked Moyo's signature. Shepherd maintained in the statement that he negotiated a legal, binding contract with Moyo and gave proof to the agent.

When asked about Smith's testimony that the contract wasn't signed by both parties, Roby deflected the question again.

"I'm not going to do the government's work here," he said, repeating that Moyo retained Shepherd's services and paid for the work in an aboveboard manner.

Referral undisclosed

Another unanswered question to emerge from Moyo's detention hearing is how she came to hire Shepherd for the legal work, after first consulting with several other attorneys, including Rep. Jalila Jefferson-Bullock, D-New Orleans, and Danny Davallier of Phelps Dunbar. Jalila Jefferson-Bullock is William Jefferson's daughter.

Roby wouldn't divulge the answer.

"I'm sure the government's aware of who made the referral to Mr. Shepherd," he said, adding that it has nothing to do with whether Shepherd provided legitimate services.

Both Shepherd and Roby lashed out at the way the government made the investigation public, during a hearing in open court but without warning to either of the men.

"The public scrutiny has all but convicted this man," Roby said, "and his reputation has been soiled."

Federal Prosecutors Still Believe Sen. Derrick Shepherd Is Guilty

Federal prosecutors made clear at a hearing Tuesday morning that state Sen. Derrick Shepherd, whom they accused of federal crimes in open court a day earlier, remains in their sights.

A news release, however, indicates that Shepherd intends to rebut the Monday testimony of FBI Special Agent Peter Smith, who told a federal magistrate judge that Shepherd had laundered approximately $141,000.

A day after Smith testified that he views Shepherd's actions as money laundering, Assistant U.S. Attorney Mike Magner on Tuesday introduced two new documents into evidence, one purporting to be a contract for legal services between Shepherd and Moyo. That document was not signed by Moyo, Magner said.

The second item was a "settlement statement," Magner said. It was signed by both Shepherd and Moyo, he said.

Shepherd recently provided the documents to federal authorities, presenting them as evidence that his dealings with Moyo were honest, Magner said.

However, prosecutors regard them with suspicion.

Senator aided fraud, court told

The Times Picayune has reported that an FBI agent testified in open court Monday that state Sen. Derrick Shepherd helped a twice-convicted felon launder nearly $141,000 in fraudulently generated bond fees last year, keeping close to half the money as part of the arrangement.

Shepherd was easily re-elected to the state Senate on Saturday, winning 61 percent of the vote. Last year, he finished a strong third in a 2006 run for Congress and then endorsed the embattled incumbent, U.S. Rep. William Jefferson, helping him secure a ninth term.

Special Agent Peter Smith testified that Shepherd, a lawyer who often handles personal-injury cases, attempted to make his dealings with bond broker Gwendolyn Joseph Moyo appear legitimate by writing the words "settlement proceeds" on the memo lines of the checks.

However, investigators have found no evidence that Shepherd did any legal work for Moyo, Smith said, although he said that Shepherd had delivered a "vague invoice" to a federal grand jury to explain the payments. The document was basically illegible, Smith said.

"To me, it looks like he was trying to disguise it, to make it look like this was for a personal-injury case," Smith said of the notations in the checks' memo lines.

"I suppose the government takes the position that it's money laundering?" Moyo's attorney, Pat Fanning, asked Smith.

"Yes," Smith testified.

In a telephone interview, Shepherd strongly denied committing a crime.

"At no time have I ever testified before a grand jury, nor at any time have I ever committed any crime whatsoever -- state, local or federal -- in my life," Shepherd said.

"To all of the rest of your questions, no comment," he said.

The allegations involving Shepherd burst into public view during what would normally be a low-key proceeding: a detention hearing for Moyo, who investigators say sold a series of bogus construction bonds.

Moyo, 52, who owns a home in the Eastover subdivision of eastern New Orleans, was arrested at the federal courthouse Thursday after she arrived at the grand jury room without any of the documents she was ordered to bring.

Questioned by FBI

While Moyo is at the center of the government's case, it was clear at Monday's hearing that the government is investigating Shepherd's involvement. Smith said Shepherd has already been interviewed by FBI agents in connection with the inquiry.

They still have questions for him, Smith indicated at another point, saying with a grin that Shepherd has "been invited to the grand jury."

Fanning suggested that prosecutors' desire to jail Moyo was partially borne of a desire to pressure her to "flip" on Shepherd. He noted pointedly that Moyo would not agree to "wear a wire" when the FBI first interviewed her in July.

"Do you remember my client being asked to cooperate against Derrick Shepherd?" Fanning asked Smith.

"I don't remember specifically saying that, but I probably did," the agent said.

Moyo has yet to be charged with a crime, but Assistant U.S. Attorney Mike Magner told U.S. Magistrate Judge Alma Chasez that he expects a grand jury will indict her this week. Moyo was arrested based on a complaint filed by Smith last week.

Moyo's first conviction, for issuing false contractor bonds, came in Arizona in 1989.

She won some notoriety in the Washington, D.C., area when she offered the following year to testify against Mayor Marion Barry, a friend of hers, regarding what the Washington Post described as "alleged drug use and contracting irregularities."

But her attorney said that prosecutors couldn't meet her terms, and she never turned state's evidence. The following year, Moyo was convicted of using a fake Social Security number.

After her first conviction, she was banned by law from the insurance business. But she didn't stay away from it for good.

Her problems in Louisiana started last year when she agreed to provide a contractor bond for a project at Pelican Park in St. Tammany Parish.

Contractor bonds are required on most large projects to protect the owner; they are essentially insurance policies that are cashed in if the contractor does not perform.

The company hired to do the St. Tammany work, Great Southern Dredging Inc. of Mandeville, called a bonding agent it had used before, who referred the firm to Moyo. The dredging company paid Moyo $321,555 for a bond that the project engineer soon noted did not conform to state law because the issuer was located offshore.

Moyo refused to refund the money, however, and GSDI had to purchase another bond for $350,000 from a company licensed to do business in Louisiana. The Mandeville company has sued Moyo and her firm, AA Communications, according to testimony Monday.

West Memphis church

Moyo similarly hornswoggled the congregation of a church in West Memphis, Ark., that was attempting to build a new sanctuary at a cost of $2.8 million, Smith said.

The pastor of the Old St. Paul Missionary Baptist Church, Frederick Anthony, testified Monday that the contractor ran into problems and the church had attempted to put him into default.

Moyo, who received $121,000 for that bond, wouldn't do it, he said. According to Smith, the bond was written in the name of First Nation Insurance Group, a company Moyo used to work with. A year earlier, though, she had been barred from further business with the company, according to a letter Smith read in court.

Fanning disputed the letter, saying it had never been sent and might have been backdated.

Anthony, the pastor, said the church has blown through its whole budget for the project. But only two-thirds of the work has been done, he said.

Smith laid out several other cases, including one in Mississippi and another in Tennessee, in which he believes Moyo issued bogus contractor bonds. The Mississippi case involved the same contractor hired to build the church sanctuary in West Memphis, he said.

In some cases, Moyo used two Chinese citizens who are in America on student visas as proxies for some of the schemes, Smith said. The two work for Moyo and have told the FBI in interviews that they do whatever Moyo tells them to, Smith said. Moyo paid some of the visa fees for at least one of them, Magner said.

In investigating the case, the FBI has been working with the state Department of Insurance, which last year sought and received a court order stopping Moyo and companies with which she is affiliated from selling commercial insurance. The order, issued in November, also allowed the department to seize her records and two bank accounts the department knew about.

It was that order that led Moyo to Shepherd, according to Smith. The agent testified that Moyo spoke with a number of lawyers about her problem, which had left her unable to cash checks made out to her firm.

Smith said that Moyo told investigators that it was Shepherd who, a month after the crackdown, hit on the solution: Moyo would sign over her uncashed checks and he would deposit them in an account he controlled.

According to Smith, Moyo signed over five checks totaling $140,686 to Shepherd's account. Two of the checks indicated they were for bond fees.

During the same week, Shepherd moved $55,000 from one of his accounts to another, and then wrote three checks to Moyo, also totaling $55,000, from the second account. Those were the checks labeled "settlement proceeds."

Shepherd also wrote checks to one of the Chinese nationals who works for Moyo and to a Moyo associate named James Taylor who has at least one fraud conviction, Smith said. The foreigner said he "didn't know anything about" Shepherd or the check for $5,000 in his name, Smith said. In all, Smith said, Shepherd kept about $65,000 of Moyo's money and returned the remaining amount, about $75,000.

Jailing decision delayed

After about three hours of testimony and argument, Chasez wound up delaying a ruling on whether to keep Moyo in jail as opposed to a halfway house. She said she would prefer to know how much prison time Moyo, if convicted, would face under sentencing guidelines, before making a decision.

Prosecutors said their desire to keep Moyo in jail stemmed from two main concerns: her unwillingness to cooperate by providing information and documents and a long history of fraud.

Magner referred to her as a serial fraudster and said it is important to stop her before she defrauds anyone else. He noted that she still owes all but about $100,000 of a $1.3 million restitution order imposed after her 1989 fraud case.

Fanning pleaded with Chasez to allow Moyo to stay in a halfway house rather than the federal wing of Orleans Parish Prison. He said Moyo was scarred by prison during her earlier stint, and said she suffers from claustrophobia and other anxiety-related disorders as well as medical problems ranging from diabetes to sleep apnea.

Fanning also argued that Moyo is not a flight risk, noting that she had showed up for her grand jury appearance last week.

Bobby Jindal Pledges to End Corruption in Louisiana

Bobby Jindal pledged to end corruption in Louisiana after winning the governor's race Oct. 20 and becoming the first Indian-American chosen to lead a U.S. state.

Jindal, 36, won the election outright in the primary after gaining 54 percent of the votes, according to results tallied by the Louisiana Secretary of State's office. Four years ago, Jindal won the primary without enough votes to avoid a runoff and lost the general election to Democratic Governor Kathleen Blanco, who declined to run again in the wake of criticism of her handling of the aftermath of Hurricanes Katrina and Rita.

``Our state has been depicted as a haven for incompetence and corruption. We have some of that, just like every state does,'' Jindal said in a victory speech posted on the New Orleans Times Picayune's Web site. ``Those days are now officially over. We are serving notice. Louisiana is very soon going to be on the rise.''

Jindal, a Bush administration supporter in Congress, was the only Republican running for governor in a state where Democrats make up about half the registered voters and outnumber Republicans two-to-one. Since Katrina and Rita in 2005, tens of thousands of New Orleans residents who historically voted Democratic have been dislocated.

The Secretary of State's office reports 56,995 fewer Democratic voters now than when the hurricane hit, and 11,355 fewer black Democrats. Those numbers understate reality because at least two years must elapse before the state purges former residents from voter rolls, office spokesman Jacques Berry said.

Charles Foti Out As Attorney General

Unable to withstand the fallout from two Katrina-related prosecutions, Attorney General Charles Foti narrowly missed a runoff that will leave the former Orleans criminal sheriff out of public life for the first time in three decades.

Foti fell short of second place in a three-man field, with Republican Royal Alexander, a Shreveport lawyer, emerging to face primary leader James "Buddy" Caldwell, a Democrat and longtime district attorney from Tallulah. The two will meet in a battle sure to be vitriolic, judging from the increasingly caustic tone of the campaign leading up to Saturday's vote.