Two business owners involved with a 2012 fundraising event for then-22nd Judicial District Attorney Walter Reed testified in federal court Wednesday that they paid Reed’s son, Steven, $5,000 each at the behest of his father.
Cayman Sinclair, a caterer, and events producer Edward White took the stand on the corruption trial’s third day. Both said they were approached by Walter Reed himself on behalf of his son.
Their testimony is critical in both the conspiracy charge that is lodged against father and son and two counts of money laundering, with the government saying the elder Reed used the event to funnel money from his campaign fund to his son.
In all, the elder Reed faces 19 counts.
Wednesday’s testimony dealt in large part with the fundraiser at the Castine Center where guests paid $150 a ticket for food, drink and entertainment.
Sinclair, who owns the Lake House, said Walter Reed first approached him at a kickoff breakfast that he catered for Reed’s re-election campaign, a meeting designed to drum up excitement about the fundraiser and get people motivated to sell tickets.
Sinclair, who also was to provide the food for the Castine Center event, said he originally was to be paid $35,000 to provide food for 2,500 people. But Walter Reed told him that he wanted to direct $5,000 of that money to the cost of alcohol, Sinclair said.
The caterer said such changes are not unusual when dealing with a political event, and he agreed on a new total of $30,000.
He was paid $17,500 from the campaign fund prior to the Sept. 22 event, he testified. He contacted the campaign’s treasurer, Ron Garrity, for the remainder of his pay and got a check for another $17,500 on Sept. 24, he said.
Walter Reed called him and “asked me why I forgot about the $5,000 because I’d forgotten to refund it,” Sinclair said. He said Reed instructed him to send the money to him in a cashier’s check made out to Liquid Bread, one of Steven Reed’s companies.
White, the owner of White Oak Productions, testified that Reed asked him to hire his son. White said he had another event in Florida the same day and was concerned that Reed would be unhappy if he couldn’t be personally on hand for the fundraiser, so he was planning to hire a production assistant.
Reed suggested he hire his son and also named the price: $5,000.
“It was suggested by the client, so I did it,” White said. He said the amount was more than he would normally pay.
“When a client tells you to do something, you do it,” White said.
He sent a check to Globop Inc., Steven Reed’s film production company, he said.
Richard Simmons, the attorney for Walter Reed, pointed out that White used the term “suggest” in testifying before a grand jury about his conversation with Reed, not “demand.”
Simmons also asked White what his profit was out of the $32,350 that the Reed campaign fund paid White Oak. He said it was $7,500, which was within the normal range.
Campaign money paid to Steven Reed for the event, including nearly $30,000 for bar services, was the focus of testimony by Jill Zeringue, a forensic accountant with the FBI who was on the stand for much of the morning.
Zeringue said Steven Reed paid down a commercial loan with Gulf Coast Bank and Trust the same day that $34,000 was deposited into a checking account for Liquid Bread.
Walter Reed was the guarantor for a $60,000 loan that Steven Reed had taken out to launch a neighborhood bar called Tugendhaft’s Tavern in 2010, she testified. A guarantor is expected by the bank to make payments if the person who took out the loan does not, she told the jury.
Tugendhaft’s had closed the month before the fundraiser, Zeringue testified, a timeline that was confirmed by two former bartenders. Both said they had not been paid for some weeks prior to the closing.
There was a balance of $7,370 in the Liquid Bread account a few weeks after the fundraiser, Zeringue testified. Steven Reed owed $50,401 on the loan and had missed his September payment.
But when he deposited the $29,400 from the Reed campaign and the $5,000 cashier’s check from the Lake House, he paid down the loan, leaving it with a balance of $16,000.
Simmons questioned Zeringue closely about her testimony regarding the number of tickets sold to the event, which she said she calculated based on donations made that matched the individual ticket prices or the price of purchasing a table, along with what Reed declared to the state on his campaign finance forms.
The number of people at the event has been a constant source of friction between the government and defense. An invoice from Liquid Bread introduced into evidence lists bar service, including beverages and liquor, for 2,450 people at $12 a head.
But Sinclair testified that he believes the attendance was more like 1,500 to 1,800, in part because there was a lot of food left over.
During a recess, Simmons asked the judge to declare a mistrial or to strike the entire testimony of Zeringue. He objected to the government using her testimony to introduce Facebook conversations between a nola.com reporter and Steven Reed concerning what services he actually provided. The younger Reed told reporter Heather Nolan several times that he did not provide alcohol — an account that differs from his father.
Simmons said he can’t cross-examine a piece of paper and said the government should have subpoenaed the reporter. But Judge Eldon Fallon denied both motions.
Two restaurant owners also took the stand Wednesday afternoon in a line of questioning concerning Walter Reed’s dining out on his campaign fund.
Pat Gallagher, of Gallagher’s Grill, described Reed as a good customer and longtime friend who had a house account that enabled him essentially to run a tab. He said Reed frequently had dinner at his establishment, often with one or two other people, including his brother and Claire Bradley, then Reed’s girlfriend.
Prosecutors presented a list of receipts from the restaurant and checks written on Reed’s campaign fund to cover them. They included a $717.45 charge in 2011 that included dinner for two, a gratuity and a $500 gift card. The prosecution then showed Reed’s campaign finance report, which listed the dinner as a campaign event.
Assistant U.S. Attorney Brian Klebba asked Gallagher if Reed explained why he was using the campaign fund to pay for dinner. He said no.
“Has he ever had a campaign event at Gallagher’s?” Klebba asked.
“No, sir,” Gallagher replied.
On cross-examination, Simmons asked if Reed talked to other people in the restaurant, presumably including voters and his constituents. Gallagher said he did.
Follow Sara Pagones on Twitter, @spagonesadvocat.