Former state Sen. Heulette “Clo” Fontenot, R-Livingston, had charges tossed by a federal judge, that said he hid a $100,000 debt from two federally insured lenders.
Fontenot’s May indictment alleged he solicited and received a $100,000 cash campaign loan from two unnamed businessmen in 1999. Fontenot, 48, did not mention the unpaid debt to Chase Manhattan Bank or Flagstar Bank when he obtained home loans in 2001 and 2004, the indictment alleged. U.S. District Judge James J. Brady concluded on the eve of trial that the large cash campaign loan was no more than a misdemeanor violation of state campaign finance laws on Fontenot’s part.
Under revisions to state campaign finance reporting laws effective since Jan. 1, 2009, a candidate’s willful failure to report such loans and contributions remains a misdemeanor offense.
Louisiana Revised Statute 18:1505.6 states that the penalty is “not more than six months in a parish jail,” or “a fine of not more than $500,” or both.
Brady said case law, established in disputes unrelated to Fontenot’s and involving other individuals, shows that unreported campaign loans cannot be considered legitimate debts.
“Because the loan never existed, the defendant never made a false statement,” the judge concluded.
Brady also quoted the state’s civil code as saying that a financial “obligation cannot exist without a lawful cause.”
Outside the courtroom, Fontenot and defense attorneys Lewis O. Unglesby, Michael S. Walsh and Lance Unglesby were grateful for the decision.
“There wasn’t any loss here, ever,” Lewis Unglesby said on behalf of the group. “There is no victim.
“It was the correct decision,” Lewis Unglesby added. “I said we were going to win.”
U.S. Attorney Donald J. Cazayoux Jr., however, would not say that the case ended with the judge’s pretrial decision. “While I respect Judge Brady’s decision, I do not agree with his decision,” Cazayoux said in a written statement. “My office will review his reasoning in detail and decide whether or not to appeal” to the 5th U.S. Circuit Court of Appeals in New Orleans.
Brady’s decision occurred before a jury heard a word of testimony, so prosecutors have the option of continuing their pursuit of the 12-year legislator, who left office in January 2008.
At the hearing Tuesday, Assistant U.S. Attorney M. Patricia Jones argued that federal and state laws are not crystal clear as to the enforceability of debts resulting from secret cash campaign loans.
Jones urged Brady to consider a hypothetical situation in which a bookie is owed $100,000 by a gambler who is applying for a bank loan. Bank officials would want to know about that debt, she said. She added that the bookie could threaten the gambler into paying his off-the-books debt before focusing on his obligation to the bank.
“The bank and the mortgage company were deprived of true information,” from Fontenot, Jones said.
“This is not a lawful debt,” Lewis Unglesby told the judge. “It doesn’t exist.”
After the hearing, Unglesby said the statute of limitations expired years ago for Fontenot’s acceptance of the $100,000 campaign loan.
Unglesby also said Fontenot does not have any issues with the Internal Revenue Service because he spent the entire $100,000 on his election campaign.
The lawyer added that Fontenot wants the public to know: “He’s very gratified by all the kindness and support shown to him and his family in his community during this tough time.