Policy Watch: Federal probe into Rep. LaRoque's business practices

KINSTON, N.C. (WNCT)- A watchdog group says a federal investigation is targeting the way a state lawmaker from the east does business.

It started with the group, North Carolina Policy Watch, charges that claim Rep. Stephen LaRoque has been taking more than his fair share from two non-profit companies he runs out of Kinston.

Now the group claims the U.S. Dept. of Agriculture is stepping in.

North Carolina Policy Watch has been described as a left-leaning partisan group.  It's been conducting its own investigation into Rep. Stephen LaRoque's business dealings since last summer.

That's when it questioned how much money LaRoque was making as director of those non-profits.

It pays $195,000 to be director of two economic development non-profits, according to the group North Carolina Policy Watch.  And in august Stephen LaRoque didn't deny it.

"It is an entrepreneurial,” said LaRoque on Aug. 16, 2011.  “If assets increase, profitability increases.  Do I make more money?  Absolutely.  But this is America and I don't think profit is a crime."

Rep. LaRoque has been defending his salary at his two non-profits, East Carolina Development Company and Piedmont Development Company, since Policy Watch released its report last summer. 

"I think the public has a right to see how much of their money either went to pay him directly or in this case it was the proceeds basically from investing money where it went to and I think the public has a right to have a clear transparent view of that and I still don't think we have that transparent view,” Sarah Ovaska, NC Policy Watch Reporter told WNCT back in August.

LaRoque's non-profits have been borrowing money from Uncle Sam through the U.A. Dept. of Agriculture's Federal Intermediary Relending Program, and lending it out to struggling small businesses in rural areas across the state.

But Policy Watch says LaRoque took out a $200,000 no-interest loan from the non-profit to support his own for-profit business, LaRoque Management Group.

"I get a percentage of the profit,” LaRoque said in August.  “Ten percent of the profit of the corporation.  If it don't make any profit, I don't get any extra money.  And I use part of that, or actually, half of that to pay the fellow that works for me."

Policy Watch says the USDA has now stepped in, opening its own investigation into LaRoque's business practices.

WNCT’s Andrea Blanford talked with Rep. LaRoque by phone Monday, but he said to contact his lawyer.  We tried to get up with his attorney Joe Cheshire in Raleigh but have not heard back.  And of course, because Monday is a federal holiday, we were unable to confirm the USDA’s investigation because the offices are closed.