[UPDATE: Court documents filed by Gachassin and obtained Friday by The IND clearly indicate that settlement negotiations are under way: "If the parties do not reach a settlement, Greg Gachassin and The Cartesian Company, Inc. intend to seek supervisory review of this Panel’s May 7, 2014 Order." Ethics Administrator Kathleen Allen would neither confirm nor deny settlement talks, telling The IND in an emailed response: "Our office has no comment as to settlement negotiations or pending litigation."]
About a week after a three-member panel of the Ethics Adjudicatory Board shot down Lafayette developer Greg Gachassin’s efforts to have the case against him dismissed, he notified the EAB of his intentions to negotiate a settlement with the Louisiana Board of Ethics.
|Photo by Robin May|
|Lafayette attorney Nick Gachassin Jr. accompanied his son, developer Greg Gachassin, to a March 13 hearing before a three-member panel of the Ethics Adjudicatory Board.|
The EAB’s May 7 decision means the case, in which Gachassin and his Cartesian Company are charged with multiple violations of the state’s Code of Ethics while he was chairman of the Lafayette Public Trust Financing Authority, appeared headed to an administrative hearing (which generally works like a trial in court). “The panel will likely schedule a telephone status conference to determine a hearing date,” Monika Wright, an attorney with the Division of Administrative Law, told The IND at that time.
But The IND learned Thursday, via an emailed response from Cynthia G. Eyre, general counsel for the Division of Administrative Law, that on May 15 Gachassin’s Baton Rouge attorneys, Gray Sexton and Jennifer Jackson, filed a motion to stay the proceedings along with a Notice of Intention to Seek Supervisory Writs. “In the motion to stay, they alleged that they intended to attempt to settle the matter with the La. Board of Ethics, and that the Louisiana Board of Ethics had no objection to the stay,” Eyre wrote in an emailed response to The IND’s questions about the status of the case. The EAB agreed to the stay on May 16, and on that same date granted an extension until Aug. 5 for Gachassin to file for supervisory writs to the First Circuit Court of Appeal, according to Eyre.
The IND put in a public records request with the EAB for the legal filings earlier Thursday, but they were not immediately made available.
The state's case centers on its claim that the local developer laid the foundation for lucrative work with the LPTFA while he was serving as an appointed member of its board of trustees from November 2003 to November 2009. State ethics laws prohibit an appointed board member from doing business with an entity under its jurisdiction, a prohibition that extends such dealings for two years after the board member leaves the public board.
Gachassin’s alleged violations involved Villa Gardens, a single-family development on Patterson Street, and Cypress Trails, an apartment complex on Sophie Street in north Lafayette that serves the elderly population. In both cases, Gachassin’s Cartesian Company signed $500,000 consulting contracts with partnerships associated with those projects, which were backed financially and/or initiated by the LPTFA, a public trust organized in 1979 under the laws of the state that holds millions for the benefit of the city of Lafayette. Low-income housing tax credits awarded by the Louisiana Housing Corporation (formerly the Louisiana Housing Finance Agency) provided the bulk of the projects’ funding.
Any potential settlement with the Ethics Board would likely be a substantial financial hit to the local developer, as the Ethics Board is seeking to recover the maximum penalty for Gachassin’s and his company’s alleged violations.
“[Gachassin] drove the bus and made sure there was plenty of room in the back to put the cash,” Board of Ethics attorney Michael Dupree told the trio of administrative law judges at a hearing on the motions March 13. That cash amounted to $1 million, which the Ethics Board is seeking to recover in penalties, plus one-half, for a total of $1.5 million. In court filings the board also says it’s entitled to seek $10,000 each time Gachassin violated the code — an amount that could climb into the hundreds of thousands. The Ethics Board also has the authority to impose restrictions on Gachassin to prohibit him from entering into business relationships with his former agency, which in this case is the Lafayette Public Trust Financing Agency (inexplicably, the court documents do not indicate the board is seeking to do so).
Should the state recover anything close to that amount, the case would be precedent-setting. Ethics records show that the largest fine ever handed down, $650,000, was in 2001 against attorneys involved in tobacco litigation.
Ethics Administrator Kathleen Allen did not immediately respond to an email sent Thursday asking whether the May 15 motion to stay had indeed led to settlement talks.
Gachassin's attorney, Gray Sexton, who is the Ethics Board's former longtime administrator, would not answer definitively whether settlement talks are ongoing but was willing to discuss the option of appealing the EAB's May 7 decision to the First Circuit Court of Appeal. Sexton is adamant that his client was improperly charged because only seven of the Ethics Board's 11 members voted to charge him. He maintains that nine members should have been present.
Sexton also claims that the LPTFA is a private trust not subject to the state's Code of Ethics.
Ethics Board attorney Dupree, however, counters that the trust was created in 1979 by a city of Lafayette ordinance and that its original documents state that it is subject to public records laws, open-meetings laws and the Code of Ethics. Dupree also pointed to numerous instances in which the word “public” is used in the original documents (its Trust Indenture authorizes it to pursue a wide variety of purposes deemed “to be essential public functions conducted in the public interest”) and noted that it also is governed by Louisiana’s Public Trust Law (Title 9).
The EAB sided with the Ethics Board on both matters in its May 7 ruling.