Five years after his ethical dilemma was first exposed by The Independent, four years after he was charged with ethics violations and approximately $125,000 in legal fees later, Lafayette developer Greg Gachassin had his day in court this week. A public hearing in the case involving multiple ethics violations was held Monday and Tuesday in Baton Rouge at the Ethics Adjudicatory Board’s office.
The Louisiana Board of Ethics’ 2012 charges against Gachassin, 44, and his company, The Cartesian Company, stem from its investigation and findings that the local developer received lucrative work from the Lafayette Public Trust Financing Authority while he was serving as an appointed member of its board of trustees from November 2003 to November 2009 and after leaving the board. The Louisiana Code of Ethics prohibits 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.
The Ethics Board is seeking the maximum penalty for Gachassin’s and his company’s alleged violations.
The charges involve 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 provided the bulk of the projects’ funding.
The Ethics Board is seeking to recover what it says were Gachassin and The Cartesian Company’s ill-gotten gains, plus one-half, for a total of $1.5 million. The Ethics Board also says it’s entitled to seek $10,000 for each time Gachassin violated the code — an amount that could climb into the hundreds of thousands. The 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 LPTFA (inexplicably, testimony this week did not indicate the board is seeking to do so).
Should the state recover anything close to the amount it is requesting, 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.
Among those called to testify before the three-member panel of administrative law judges this week were LPTFA Chairman John Arceneaux, who replaced Gachassin when he resigned from the board of trustees in November 2009, and the entity’s longtime attorney, Richard Becker.
Throughout much of the hearing, Gachassin and his attorneys — his lead attorney is Gray Sexton, who served 40 years as the Ethics Board's chief administrator — insisted that after Hurricane Katrina the state was so flush with money for low-income housing projects that Gachassin could have found work anywhere. It was an attempt to establish that he did not need to use his connections with LPTFA to secure the lucrative consulting contracts.
Ethics attorney Suzanne Mooney shot back that the local projects were “low-hanging fruit,” insisting that Gachassin had an inside track to the work and ignored his ethical obligations when he, then the chairman of the LPTFA, signed the consulting agreements.
Despite documents showing that Gachassin entered into the project consulting agreements on Nov. 1, 2009, before his resignation from the board on Nov. 17, 2009, he and his attorneys insisted that the agreements were not signed until December or January (though no one offered a specific date). This was a strategic attempt by his legal counsel to establish that Gachassin did not violate the ethics code while he was still on the board. The Ethics Board consistently countered that Gachassin signed both consulting agreements as president of The Cartesian Co. while he was still chairman of the LPTFA (and before The Cartesian Co. even incorporated and listed Gachassin as president and director). The Secretary of State’s records show that the company registered Nov. 10, the same day the Ethics Board says Cartesian received payments for consulting services on Villa Gardens.
Gachassin, who referred to himself as a "financier" and real estate developer, testified that his Cartesian Company has worked on projects valued at more than $70 million since 2009.
Mooney was able to establish that Gachassin repeatedly referenced the Nov. 1 date in his invoices for payment, at least 10 of which included the line: “I am submitting this pursuant to my contract [dated] Nov. 1, 2009.”
In his closing arguments, Sexton said Gachassin’s transactions with Villa Gardens and Cypress Trails were all “arms-length” because the consulting agreements were with the partnerships on the developments rather than LPTFA itself. He said there was never any effort to conceal the arrangements or avoid the light of public scrutiny “until newspapers complained ... that’s when it all came unglued.” Sexton insisted the projects were all audited by government officials and by certified public accountants.
Mooney, however, pointed out that the LPTFA was the general partner that managed every aspect of the Cypress Trails project. “You’ll see that they basically turned all of their duties over to Mr. Gachassin,” she said. “He’s approving his own invoices.”
The three-judge panel gave the Ethics Board until April 28 to file its brief, Gachassin’s attorneys have until May 5 to file their responsive brief, and the board has until May 10 to file a reply. The judges will then take the matter under advisement and render a decision.