March 16, 2017 03:09 PM

Susan Theall
Photo by Robin May

Susan Theall’s Third Circuit Court of Appeal campaign has been hit with legal and ethical questions relating to the financing of her successful 2011 campaign for a judgeship in 15th Judicial District Court.

Chris Welty of Lafayette NBC affiliate KLAF reported Tuesday night that Theall’s campaign had benefited from personal loans made to her by Lafayette businessman Burton Zaunbrecher. Welty reported that there were two loans totaling $70,000. (Read “Did Susan Theall Break the Law?” here.)

In interviews with The IND in her Downtown Lafayette office this week, Theall confirms the total amount of the loans was actually more than $100,000. She says it was all done after her CPA consulted with the Louisiana Board of Ethics.

Theall’s campaign finance report from 2011 lists $108,254 in loans supposedly made by her to her campaign. The reality was that the money was from Zaunbrecher who, Theall says, “wanted me to become a judge.”

The 2011 Theall campaign finance report listed four loans from her to the campaign. The first was on Sept. 12, 2011, in the amount of $13,254. On Sept. 30, she loaned her campaign $40,000. On Oct. 28, she made another loan to the campaign, this one for $30,000. On Dec. 9, the final loan was for $25,000.

All of that was money Zaunbrecher loaned to Theall, which she then transferred into her campaign account.

In addition to the potential trouble this could spell for Theall with the Ethics Board, arranging the loans for her campaign through Zaunbrecher could be a breach of the Code of Judicial Conduct’s Canon 7, which judicial candidates pledge to observe.

Canon 7, Section A, Part 6 states:
A. A Judge or Judicial Candidate Shall Not, Except to the Extent Permitted By These Canons:
(6) personally solicit or personally accept campaign contributions;

Theall claims the loans from Zaunbrecher “were just that, loans, not contributions.”

However, an Ethics Board case that produced a ruling from the 1st Circuit Court of Appeal calls that assertion into question.

R. Gray Sexton, who for 40 years ran Louisiana’s campaign finance and ethics compliance program as administrator of the Ethics Board, tells The IND that the facts in the Theall campaign closely parallel the facts in a 2002 case involving Corbett L. Ourso Jr., then a candidate for district attorney in the 21st Judicial District Court.

Ourso’s father loaned the candidate a substantial sum of money in that campaign, and the money went from the father to Ourso Jr.’s personal account then quickly into his campaign account.

Sexton, who brought the case before the Ethics Board and then successfully defended it at the 1st Circuit Court of Appeal in 2004, says it was a “fact-specific case, and it was those facts which swayed the court.”

“The first fact was the aspiration of the father — he wanted to help his son get elected,” Sexton says. “The second fact was the proximity of the transfer of the money from the father to the son, then to the son’s campaign account. The third fact was that the amounts deposited matched exactly the sums that the father had given to the son.”

In the Ourso ruling, Sexton says the court ruled that young Ourso had to refund the money his father loaned him. That Ethics Board ruling, which Ourso challenged in the courts, took at least two years to enforce. Ourso was also fined $4,000 for filing incorrect campaign finance reports.

Theall admits in the interview in her office that the intent of the loans was to help her campaign. She says that the money went into her account and she transferred the amount borrowed from her personal account into her campaign account. She says the amounts transferred match the amount borrowed. Those steps appear to match the Ourso case facts and thus make Zaunbrecher's loans to Theall contributions, not loans.

Sexton also says that loans by supporters to campaigns are capped by the same limits as contributions to the office. The campaign contribution limit in the 15th JDC race was $2,500.

Theall maintains that her CPA, Mark Shirley, contacted the Ethics Board in 2011 to ensure that the loans could be made and to learn how to do so in a way that complied with state ethics rules. The IND reached out to Shirley at his Baton Rouge office, but he has not yet responded to our request for comment.

Theall says she was advised that promissory notes would have to accompany the loans and adds that those notes were drawn up and signed. She says she has reported the loan balances on her personal financial statements of candidacy.

“The Ethics Board staff sent us a model promissory note to use, and that’s what we used to draw up the loan papers,” Theall says.

At some point in that 2011 campaign, Theall recalls, Zaunbrecher and others said they needed more signs. “I told them I didn’t have any money,” Theall tells The IND. “So, he made another loan to the campaign so we could buy signs.”

In the KLAF interview, Theall told reporter Welty that she had paid back some of the loan to Zaunbrecher, but she would not specify that amount.
The financial summary page from Theall's updated 2011 campaign finance report, filed on Dec. 22, 2014, shows Theall contributing $122,573 (Line 1), which she says was an accounting maneuver to convert loans to a contribution. The report then shows a $122,669 loan repayment (Line 11) to Theall for the money she had ostensibly loaned the campaign, money she now admits was actually a loan from a local businessman. Click image to enlarge and view additional campaign finance filings.

In a set of transactions on Dec. 22, 2014, involving her 2011 and 2014 campaigns (she was defeated in her re-election bid), Theall says she assumed personal responsibility for the loans that the campaigns technically owed her.

"It was after I lost the 2014 election," Theall says. "I decided I was through with politics. I wanted to close out both [campaign accounts]. So, we used accounting notes to transfer the debts from the two campaigns to me."

On that day, Theall’s 2011 campaign filed a new report showing that she had contributed $122,573 to her campaign. The report lists the money under “Candidate’s personal funds” and indicates that those funds (plus another $95.50 on hand in the campaign account) were used to repay Theall for money she had ostensibly loaned her campaign. Those loans, however, were actually the money she had borrowed from Zaunbrecher.

Theall explains that what she did was convert the campaign loans to contributions, thus eliminating the debt from the campaign committee. She says she gave no money to the 2011 committee or her 2014 campaign committee, to which she had loaned $53,649. Theall says the 2014 loans all involved her own money.

"I had rented my office while I served as judge," Theall explains. "I loaned the campaign $15,000 from that account. I loaned the campaign $10,000 of my personal funds, then took an interest free $34,000 cash advance on a credit card and put that in the campaign." Theall made three other small loans to that campaign, which she says were instances where she covered campaign expenses out of her own pocket.

The 2014 reports were merely accounting moves done solely to enable Theall to close those campaign accounts. As a result, she says she assumed $176,222 in debt, at least $108,000 of which she was already personally obligated to pay Zaunbrecher through the promissory notes.

Theall says she will pay back the loans to Zaunbrecher, but she would not tell The IND how much she has thus far paid on those loans.

Theall's campaign issued the following statement to The IND early Friday afternoon:
The 2011 loans in question were not “illegal” and not improper based on advice received from the CPA who prepared the reports in accordance with his staff’s conversations with the Board of Ethics. When a recent question arose about the 2011 reports, the CPA who prepared the reports was immediately contacted and an ethics attorney was retained.

The CPA for the Susan Theall for Judge Campaign Committee is having the 2011 reports reviewed by an independent firm of certified public accountants and has been in contact with the Louisiana State Board of Ethics.

The Campaign Committee is assembling and reviewing all documents, communications and filings required by the Louisiana Board of Ethics.

According to the CPA for the Campaign Committee, he has informed the Board of Ethics that the facts of the Ourso case are dissimilar to facts surrounding the loans made to Susan Theall in 2011.
Current Ethics Board Administrator Kathleen Allen did not immediately respond to The IND's voice message seeking comment on the Theall matter.

Finance reports in Theall’s current Third Circuit Court of Appeal run show the candidate has again loaned her campaign money. Theall’s total loans to her campaign in the current election cycle come to $26,846. Theall says all of that money came through cash advances on credit cards.

The revelations about Theall’s possible ethical and legal woes relating to her 2011 campaign come at a particularly awkward time for her. She trails her opponents, Candyce Gagnard Perret and Vanessa Anseman, in fundraising but has sought to claim the moral and ethical high ground in contrasting her own record against the now well-publicized legal and ethical dilemmas facing her opponents.

Candyce Gagnard Perret’s campaign operates under the cloud of an ongoing federal investigation that initially focused on Louisiana Specialty Institute, a company owned by her husband, Hunter Perret. However, since The IND broke the story on the federal investigation, in which seven local attorneys confirmed anonymously that they had been questioned by the feds, the probe appears to have broadened beyond LSI, according to sources who asked not to be identified. Candyce Perret is partners with Hunter Perret in the Perret Group, a company the couple uses to invest in other businesses.

In an unrelated controversy, candidate Perret was arrested for indecent exposure in Florida in 2004 and, according to the arrest report, claimed to be an assistant district attorney, a position she has never held.

Vanessa Anseman is currently engaged in a legal fight to remain on the ballot in the Third Circuit race after The IND reported that Louisiana State Bar Association records raised questions about her eligibility to run for the seat. The Louisiana Constitution states that candidates for appellate courts must have been admitted to the practice of law for at least 10 years. Anseman walked away from the practice in 2012. In 2013, the LSBA certified her as ineligible to practice law, privileges that she only regained on the final day of qualifying for the seat, Jan. 13.

On Monday, Judge Alonzo Harris of the 27th JDC ruled Anseman did not meet the qualifications to be a candidate, deeming her ineligible. Anseman and the Louisiana Secretary of State have appealed the decision to the Third Circuit Court of Appeal. The Secretary of State says the election code provides only a seven-day window for challenging candidates and that window closed before questions of Anseman’s eligibility arose. Anseman is joining with the state in that portion of the appeal.

Anseman is also appealing the part of Harris’ ruling declaring her an ineligible candidate because she does not meet the 10 years of practice standard.

Briefs in Anseman’s appeal are being filed today. Oral arguments are expected to begin Monday with a decision sometime later in the week. Anseman’s name will remain on the ballot regardless of the outcome of the legal fight. If she prevails, votes cast for her will be counted. If the appellate court upholds Harris’ ruling, her name will remain on the ballot but votes cast for her will not be counted. It remains to be seen if the Louisiana Supreme Court will have time to be petitioned on the matter after the Third Circuit weighs in. (Read more here.)

Politically, revelations of legally and ethically questionable campaign finance practices in 2011 could take the wind out of Theall’s sails, as she could become subject to investigations and potentially face fines and penalties, all of which would come well after the election is decided.

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