Grace pleads not guilty to 11 federal charges

Deidre Cruse, Governmental Reporter
St. Gabriel Mayor George Grace

St. Gabriel Mayor George L. Grace Sr. pleaded not guilty in U. S. District Court last week to 11 counts federal racketeering, bribery, extortion, obstruction of justice and fraud charges.

A federal grand jury on Wednesday indicted Grace in connection with federal sting operations, including one involving a “conceptual” residential garbage can cleaning product called “Cifer 5000” in which White Castle Mayor Maurice Brown and his brother Police Chief Mario D. Brown were indicted in July. The Browns also pleaded not guilty, and Mario Brown won a second term in office on Saturday.

Grace was arraigned in U. S. District Court in Baton Rouge on Thursday. Like the Browns, he was shackled for his court appearance and released after entering his not guilty plea, a court official said.

The 24-page indictment alleges Grace used his official position as mayor to obtain and to attempt to obtain money and other things of value potentially worth millions of dollars from a Baton Rouge businessman, a Houston businessman and businesspeople associated with Cifer 5000.

Grace said he could not comment on the charges until the appropriate time. He is being defended by state Sen. Rob Marionneaux and Marionneaux's law partner, Lewis Unglesby.

“I pleaded not guilty, so I am innocent,” the mayor said.

Grace, 67, a St. Gabriel founder, has served as mayor since St. Gabriel was incorporated in 1994. His current term in office ends next year. He also served as the president of the National Conference of Black Mayors from 2007-08.

If convicted, he faces up to 180 years in prison and a $2.75 million fine.

Grace was indicted in an ongoing investigation conducted by the Federal Bureau of Investigation and the U. S. Attorney's Office with assistance from the U. S. Department of Homeland Security, the Office of Inspector General and the U. S. Department of Housing and Urban Development.

Count one of the indictment charges Grace with nine violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, including extortion, bribery and obstruction of justice, by using his position to:

– Solicit a significant financial interest in a multi-million dollar project from a Houston businessman in 2005 in exchange for taking official action to advance the project.

The indictment charged three instances of extortion, including an accusation that Grace sought $18,000 from the Houston man in October or November of 2005.

– Attempt to “corruptly persuade” a Baton Rouge businessman to conceal cash payments made to Grace from the FBI.

The indictment quoted Grace as telling the Baton Rouge businessman what he should do when the FBI questioned him about cash payments to Grace: “Doesn't nobody know nothing but me and you...I can promise you, they don't know a [expletive] thing...I swear on my momma's grave ain't nobody never know nothing but me and you...You don't want to tell 'em you gave me no cash...Nobody in the world know it but me, you and God.”

This exchange was cited in Count Five, obstruction of justice, which alleged Grace received a number of payments totaling some $7,500 from the businessman, whose company had sold approximately $450,000 in goods and services to St. Gabriel. In Count Six, false statement, the indictment alleges Grace lied to the FBI about receiving the payments.

– Obtain money and other things of value from men posing as businesspeople representing Cifer 5000 in exchange for using his position to attempt to obtain private funding for the product, to obtain federal funding for it, to promote it to other public officials and to seek contracts for it with St. Gabriel and other governments.

The indictment alleges Grace received $14,500 –  $1,500 in cash in May 2008 from “Businessperson A” in exchange for future official acts related to the purchase of property in St. Gabriel, $2,000 in cash in July 2008 in exchange for causing the rezoning of certain property, $2,000 in October 2008 in exchange for using his position to support Cifer 5000, $8,000 in January 2009 in exchange for writing an official letter in support of the Cifer 5000 representatives' efforts to raise $2 million to $3 million in private funding, and $1,000 in January 2010 for providing a letter to the U.S. Environmental Protection Agency in connection with a request for a $3 million federal grant.

In addition to the indictments, the government also wants Grace to forfeit at least $14,500 in “property constituting and derived from proceeds obtained, directly and indirectly, from racketeering activity.”

In the letter to private investors, Grace said the city was committed to working towards a contract with Cifer 5000 and that each of the City Council members had expressed support when he presented the issue to them, the indictment alleged.

“Contrary to the representations made in the above investor letter, the other members of the City Council had not been presented with the Cifer 5000 produce and had not expressed support for engaging the Cifer 5000 services,” the document said.

Members of the St. Gabriel City Council testified under subpoena before the federal grand jury the day of Grace's indictment.

Indictments two through four allege that, in dealings with the “Houston businessman” in October and/or November of 2005, Grace attempted to obtain at least a 20 percent interest in a multi-million trailer park for displaced victims of Hurricane Katrina on property owned by an oil company, attempted to obtain a significant interest in potential retail outlets, and attempted to obtain some $18,000. The businessman refused all the proposals, the indictment said.

In the case of the two developments, the indictment alleged that Grace suggested hiding his interest by having them in his children's names.

According to the document, during a driving tour of St. Gabriel to identify locations for retail outlets, Grace stopped the vehicle and asked the man outside to talk.

“Once outside the vehicle, Grace explained that he did not want to talk in his vehicle because it might be wired by the FBI,” the indictment said. “Grace then asked the Houston Businessman for  a percentage of the retail project.”

The indictment alleged Grace sought the $18,000 he had taken from St. Gabriel “to invest in a personal business project and needed to replace the money before an upcoming audit.”

Count Seven alleges Grace received solicited or received bribes in connection with a real estate scheme with “Businessperson A,” who was part of the FBI's Cifer 5000 undercover operation.

Grace discussed the possibility of the man's “purchasing property owned by the City of St. Gabriel at a discount on the condition that Businessperson A also purchased property owned by Grace personally,” the indictment alleged. “Specifically, the discussed Businessperson A purchasing Grace's personal property for $10,000 per lot and the St. Gabriel property for $7,000 per lot. During these discussions Grace solicited Businessperson A for $500 purportedly on behalf of one of Grace's associates for a civic event.”

According to the document, Grace received the $500 in May 2008, as well as another $1,000 for future favors. It said Grace also told Businessman A that a Florida company had paid him “$12,000 to introduce the company to the public works director for a city in California. Grace explained that he (Grace) gave the public works director $3,000 of that payment and kept the remainder for himself.”

In June 2008, the indictment alleged, Grace wrote, and backdated, a letter to a bank to help the businessman obtain a loan to purchase the property.

Counts eight through 10 allege mail and wire fraud in connection with the Cifer 5000 scheme.

Count 11 alleges use of an interstate facility in aid of racketeering in connection with Grace's use of a telephone to arrange for the $8,000 payment to be wired to his bank account.

The indictment also alleges Grace was the public official who received $2,000 in cash from Businessperson B in the Cifer 5000 sting and distributed part of it to three other public officials, and that Grace and the officials also accepted tickets to a New Orleans Saints football game and rooms at a luxury hotel valued at $2,293.

Maurice and Mario Brown were indicted this summer in connection with the Cifer 5000 scheme, as were Port Allen Mayor Derek A. Lewis, Port Allen Police Chief Frederick W. Smith and New Roads Mayor Tommy Nelson.

“This office will continue to aggressively pursue public corruption wherever it exists, whether in small towns of big cities,” U. S. Attorney Donald J. Cazayoux Jr. said after the indictment. “Corrupt public officials undermine the integrity of our governments and the ability to conduct fair and honest business. They cannot and will not be tolerated.”