Wednesday is April 15, the traditional deadline for Americans to settle their debts with the federal government.
It’s also a date that the federal authorities building a case against Walter Reed, the longtime former district attorney for St. Tammany and Washington parishes, have likely had circled on their calendars for months.
That’s because one focus of the sweeping probe is whether Reed violated any tax laws, and the most common criminal tax charges — tax evasion and filing a false tax return — carry a six-year statute of limitations.
That means the charge must be filed within six years of the alleged crime, and Wednesday will mark the six-year anniversary of 2009’s tax day. Taxes for the year 2008 were due on that day, and some of Reed’s conduct that is under scrutiny dates to that year.
In particular, Reed’s then-fiancé e, Claire Bradley, has told The New Orleans Advocate that Reed gave her $4,500 that year from his campaign account to help her pay her living expenses. On campaign reports, Reed recorded the payments as being for “event supervision,” but Bradley has said she did “absolutely nothing” to earn it.
If investigators decide that Reed was essentially using his sizable campaign war chest as a personal slush fund, they could potentially charge him with mail or wire fraud. But a tax charge would also be possible, for Reed would have been required to pay federal taxes on any of the campaign money that he treated as income.
Federal authorities are likely looking at Reed’s taxes in every year, of course, not just for 2008, and it’s possible they will decide to let the Wednesday deadline pass without filing charges. It’s also possible that April 15 is not the precise deadline for the six-year statute of limitations: The clock would have begun on the day that Reed actually filed his taxes, not the day they were due.
Reed’s lawyer, Rick Simmons, declined to answer questions Monday, including a query about when Reed filed his 2008 taxes.
Sources with knowledge of the case have said they believe charges against Reed are almost inevitable, and as the probe nears fruition, some courthouse observers have said there are signs that the charges could include Steven Reed, Walter Reed’s son.
Some payments from Walter Reed’s campaign account to two companies controlled by his son have come under scrutiny. The two firms, Liquid Bread and Globop Inc., together received roughly $100,000 from Walter Reed’s campaign over the last seven years.
Nearly a third of that amount was paid in connection with a 2012 fundraiser Walter Reed hosted. Since the payments came to light last year, questions have swirled about whether the payments were too high for the services provided.
Steven Reed, who at the time owned Tugendhaft’s, a bar in downtown Covington that had recently closed, has said he provided no alcohol, just bar “set-ups,” for the $29,400 he was paid. Walter Reed initially said that price tag covered alcohol.
Steven Reed has engaged a defense attorney, W. Glenn Burns. Burns declined to comment Monday.
Bradley, the former fiancé e, said Reed co-signed a bank loan to enable his son to buy Tugendhaft’s. The New Orleans Advocate has not been able to find paperwork substantiating the loan. Simmons has declined to answer questions posed about a loan.
If federal authorities were to file charges against Steven Reed, it wouldn’t be the first time they had drawn a bead on a close relative of their primary target.
To cite one example, in their investigation of corruption in Mayor Ray Nagin’s administration, federal prosecutors in 2009 charged technology vendor Mark St. Pierre, former city Chief Technology Officer Greg Meffert and Meffert’s wife, Linda, in a 63-count bribery indictment. Linda Meffert had a tangential role in that case, but by charging her, the feds increased their leverage on Greg Meffert, who soon cut a deal to testify against St. Pierre and eventually Nagin.
Linda Meffert, meanwhile, was allowed to enter a diversion program.
On the other hand, the feds opted not to charge Nagin’s wife and his two sons, though all three were deeply involved in the family granite business that was at the center of his corruption case.
Former U.S. Attorney Harry Rosenberg said there has been a “litany’’ of cases — not limited to New Orleans — where prosecutors have used the possibility of charges against a relative to encourage their primary target to take a plea deal.
He pointed to former Gov. Edwin Edwards and his son, Stephen Edwards, who were both charged in an extortion case, as one example, and the Mefferts as another.
While the relationships in such scenarios can include spouses, siblings and others, Rosenberg noted that the parental instinct to protect a child is extremely powerful.
Rafael Goyeneche, president of the Metropolitan Crime Commission, said it’s not possible for a prosecutor to know exactly what’s going on inside a family relationship. A prosecutor can bring charges only if he believes the evidence supports them, he noted.
But there is some indication that investigators in the Reed case have tried to gauge the degree of warmth between father and son.
Bradley said an FBI agent asked her specifically about how Steven and Walter Reed got along. She said she described it as a “love/hate relationship,” adding that the younger Reed lived with his father during the duration of her relationship with Walter Reed.
Along with exploring tax charges and possible fraud charges associated with Walter Reed’s campaign spending, federal authorities also are scrutinizing the propriety of arrangements the former DA had with the Causeway Commission and St. Tammany Parish Hospital.
Reed received income from both entities: The hospital paid him $30,000 a year for legal advice, while he received income from the Causeway Commission indirectly, through a law firm engaged by the agency.
It appears the feds are trying to determine what role Reed had in securing the Causeway Commission work for the firm that got it, and whether he performed any work for the money he received on the contract.
On the hospital deal, the feds have been looking into whether Reed was being paid privately for work that was intended to be handled by the DA’s Office as part of its responsibility to the public.
In addition, records show that on some occasions, Reed sent a subordinate drawing a public salary to attend the hospital board’s meetings in his stead — raising questions about whether Reed was profiting privately from work done by a public servant.
Simmons, Reed’s lawyer, has said that happened only rarely, and that Reed personally attended more than 150 meetings of the hospital board over the years. He also has said he can prove with a 1996 document that Reed and the hospital board agreed that Reed would provide the legal advice as a private attorney, not as the DA.
Staff writers Sara Pagones and Faimon A. Roberts III contributed to this story. Follow Gordon Russell on Twitter, @gordonrussell1.