Former power plant may be at center of federal case against Nagin

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wwltv.com

Posted on October 2, 2012 at 12:07 PM

Updated Tuesday, Oct 29 at 11:09 PM

David Hammer / Eyewitness News
Email: dhammer@wwltv.com | Twitter: @davidhammerWWL

NEW ORLEANS -- With several witnesses lined up and more on the way, the feds are building their corruption case against former Mayor Ray Nagin around gratuities and payments he allegedly received:

Family vacations to Hawaii and Jamaica, post-storm grass cutting and campaign parties from one city vendor; a $50,000 payment, hundreds of thousands of dollars worth of free granite and a post-mayoral consulting gig from another.

Nagin has not been charged with any crime, and he has always denied that there was a quid-pro-quo attached to any things of value he received.

But emails and documents obtained by 4 Investigates show how Nagin’s failed efforts to revitalize the hulking former Entergy power plant in the Lower Garden District could turn out to be key to backing up the allegation that Nagin at least tried to help his benefactors.

The feds have built up evidence that Nagin helped former technology vendor Mark St. Pierre before St. Pierre paid for the mayor’s vacations, yard work and campaign parties. Nagin signed an executive order in 2004 that paved the way for St. Pierre’s companies to make millions in the city tech office. Nagin has long maintained that he didn’t know the vacations and parties were coming from St. Pierre.

But St. Pierre’s relationship with Nagin’s City Hall ended in early 2007, putting those actions beyond the five-year statute of limitations for fraud charges.

The feds will be able to use the St. Pierre payments to establish a pattern if the case goes to trial, but they can’t be part of specific fraud charges. For that, sources tell us that prosecutors are focusing in on Frank Fradella, who pleaded guilty this summer to paying $50,000 to “Public Official A,” otherwise known to be Nagin.

Fradella also signaled he would testify to delivering truckloads of expensive granite for Nagin’s family countertop business and paying Nagin tens of thousands of dollars under a post-mayoral consulting agreement.

Fradella signed a plea deal stating that Public Official A “used his public office and official capacity to benefit (Fradella’s) business interests.” But the feds lay out no details about what Nagin might have done for the contractor.

Nagin declined to comment for this story through his defense lawyer, Robert Jenkins.

Fradella’s attorney, Randy Smith, said Nagin made sure his client got several key post-Katrina contracts. But Fradella’s firm Home Solutions of America won the restoration projects -- including for French Quarter sidewalks and French Market stalls -- through public bids.

Rather than the public contracts, the feds’ case could focus on Nagin’s role in a private rebuilding project that Fradella was seeking.

Fradella thought he was part of a $650 million project restoring the hulking former Entergy power plant on Market Street and turning it into a riverfront tourism and shopping attraction. One explosive email came out in the bankruptcy case of the project’s developer, Market EntStreet Properties.

A person involved in the project, Stuart “Neil” Fisher, sent an email to a business partner in May 2010 encouraging him to finalize a deal to sell the property to Chinese investors. Fisher’s wife, Tamara “T.J.” Fisher, owned half of Market Street Properties.

Neil Fisher’s email notes that another team of developers who controlled the other half of the property was “putting pressure on former Mayor Ray Nagin to talk to (Fisher) about structuring a deal with their company.”

Then the kicker:

Nagin, of course, would get a piece,” Fisher wrote.

Reached by phone in Florida, Fisher said he never met with Nagin and the comment was “innocuous” and “a poor choice of words.” All he meant, he said, was that the deal would be good for the city, not for Nagin personally.

But Fisher’s email specifically refers to Nagin as the “former mayor” and notes that a new mayor is eager to see the plant project get off the ground.

T.J. Fisher’s initial partner in Market Street Properties was Miami Beach developer Michael Samuel, who in 2004 won high praise for building a large residential development in Midtown Miami. Not long after they bought the property from Entergy in 2007, the two half-owners began to fight over the redevelopment plans.

Now, WWL-TV has obtained additional emails showing that Samuel and Fradella were working together on a project that would have turned the plant into an Entergy museum, mixed-use development and riverfront park and festival grounds.

Fradella and Nagin met in Las Vegas in January 2007, and the mayor’s calendar showed they were meeting and discussing projects back in New Orleans within weeks. In May of that year, Fradella emailed his executive team about “Michael Samuel’s visit with Ray for Wednesday, June 6 at 10:15 a.m.”

A potential road block came up in July 2007 when Samuel complained to Nagin that Sean Cummings, Nagin’s appointed head of the quasi-public New Orleans Building Corp., was planning to build at least three towers in the alluvial plain between the power plant and the river. It was just a few days before the riverfront plans would be unveiled to the public, and Cummings emailed Nagin to state his case for developing on that site as a part of the mayor’s Reinventing the Crescent initiative.

Nagin turned around and sent the whole conversation on to Fradella, marked “FYI” – for your information.

Fradella apparently thought the issue was settled because less than a month later, he told his executive team that he would be meeting with Samuel and Nagin “to negotiate approval of our $650 million Entergy Project on August 23rd. It is (the) final leg of approvals that we need to receive the contract award as early as September 1.

“These emails are perhaps part of a case the government is building against Mr. Nagin, with Mr. Fradella’s help, that could suggest a quid pro quo, that the mayor was going to get something in return for his help with this project,” said Dane Ciolino, a professor at Loyola University Law School.

As with so many other attempts to restore the power plant, the project didn’t move forward as Fradella had hoped. But more letters and meetings indicate the process continued for years. In 2008, Baltimore developer The Cordish Co. told Nagin that Samuel had hired them to develop the project.

Nagin went to Baltimore to visit with Cordish. But that also failed to get off the ground.

“It doesn’t matter if anything of value was ever received, if any project ever came to fruition,” Ciolino said. “What matters was whether there was conspiratorial intent, whether there was this agreement among Mr. Fradella, the mayor and perhaps others that the mayor would get something in exchange for work performed in his capacity as mayor.”

Fradella is not the only one in the deal who went on to pay Nagin after the former mayor left office. On August 20, 2010, Samuel became chairman, president and CEO of a public company called Green Energy Management Services, or GEM.

Ten days later GEM paid Nagin’s consulting company, CRN Initiatives, $90,000 worth of stock and also agreed to pay him a consulting fee of $12,500 a month, according to public securities filings.

GEM’s stock is now worthless.

And Samuel and Fradella also remained linked in recent years. Peter Barrios, who serves as chief financial officer of GEM and ran a Louisiana affiliate of Samuel’s development firm, is also a partner in some of Fradella’s companies and the official point of contact for Fradella’s irrevocable trust.

Samuel and his wife Deborah, who owns the affiliated company GEM Lighting, did not return calls and emails seeking comment.

Market Street Properties, Samuel and T.J. Fisher’s joint venture that originally took over the power plant from Entergy, went bankrupt in 2009 and remains in federal bankruptcy court. But a new ownership group got both Samuel and Fisher removed from the case and an Oct. 16 hearing is set that could end the bankruptcy.

With or without Nagin, the Market Street project was probably doomed with the Fishers and Samuel at the helm.

The Fishers came into the Market Street project shortly after selling the Katrina-damaged Plaza Tower on Howard Avenue, which they had owned along with former Baltimore Raven linebacker Michael McCrary and another partner. A court in Maryland found that the Fishers and partner Ed Giannesca tricked McCrary out of millions of dollars in Katrina insurance proceeds and used $5 million of it to buy their half of Market Street.

A forensic audit later found that the Fishers' money to buy Market Street came from a loan and not the Plaza Tower insurance payments. But following years of appeals that went all the way to the U.S. Supreme Court, a judge in Baltimore directed the Fishers and others to pay $20 million to McCrary.

The trial judge in Baltimore called it the most “egregious and blatant display of fraud” he had seen in more than 50 years on the bench.

And Samuel has had his own troubles. His Midtown Miami project foundered during the recession, forcing him to declare personal bankruptcy earlier this year.

The pressure is on the feds to untangle the whole web because they are running out of time to file charges against Nagin on certain alleged overt acts.

The alleged $50,000 payment from Fradella to Nagin didn’t happen until June 2008, so the five-year statute of limitations runs out on that next summer. More immediately, sources tell us that the granite deliveries referenced in Fradella’s plea deal happened in 2007, meaning the feds might not be able to file specific charges related to those gratuities if they don’t do so in the next few months.


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