After six days of testimony aimed at showing former north shore District Attorney Walter Reed pocketed public money and used campaign funds to entertain family, woo private law clients and financially prop up his son and co-defendant Steven Reed, federal prosecutors rested their case Tuesday afternoon.
The public corruption trial, which began April 18, will resume Wednesday morning when the defense calls its first witness in U.S. District Judge Eldon Fallon’s courtroom.
Assistant U.S. Attorney Jordan Ginsberg and his team presented 55 witnesses, including restaurateurs and other business owners whom Reed patronized, women he entertained, family members he feted, Pentecostal preachers, people who worked under him in the District Attorney’s Office and officials at St. Tammany Parish Hospital.
The final witness, IRS special agent Tim Moore, laid out the final portion of the government’s case against Walter Reed: that he lied on his tax returns from 2009 to 2012, understating his income by about $155,000.
Walter Reed faces 19 counts in all, while his son is charged with four counts. Both face one count of conspiracy to funnel campaign donations to the younger Reed through payments for services that the government says were overstated or invented.
Moore, who also was a witness in the corruption case against former New Orleans Mayor Ray Nagin two years ago, acknowledged under cross-examination that the former top prosecutor in the 22nd Judicial District paid more than $500,000 in taxes for the four years — far more than the $40,709 he allegedly did not pay.
But Assistant U.S. Attorney Brian Klebba came back to the witness, asking, “Who failed to declare $155,000?”
“Walter Reed,” Moore replied.
“Who filed false tax returns?” Klebba asked.
“Walter Reed,” Moore said.
Using charts, the IRS agent told the jury that he included in his calculations of Reed’s income campaign money that Reed diverted to personal use, although he said he gave Reed the benefit of the doubt. For example, he didn’t count money spent on dinners at restaurants unless it was for a birthday party for a friend or relative or a Thanksgiving dinner for family. But Moore said he did count the gift cards that Reed frequently tacked on to his bills when dining out, in some cases for $500 or $600.
He also counted money spent on flowers for Reed’s family sent on birthdays and other occasions, including a flurry of floral tributes on Mother’s Day in 2009, when he spent $628 with Flowers N Fancies, including bouquets to both of his ex-wives, signed by their respective children.
Reed listed the flowers on his campaign finance report as being for “promotional” purposes, Moore testified.
The IRS agent said he also counted reimbursements that Reed received from the District Attorney’s Office for medical co-payments and prescriptions, a benefit that Moore said Reed gave to himself and 10 others that amounted to additional compensation.
He said other income included payments Reed made to his son’s companies, including for a housewarming party and an anti-drug video. Moore said he subtracted $2,500 from the $14,300 paid for the video based on testimony from the prosecution’s expert witness on what it was actually worth.
The $29,400 that Reed paid to Liquid Bread, one of his son’s companies, for services at a large 2012 fundraiser also was counted as income by Moore, along with a $5,000 payment that a caterer at the event directed to Liquid Bread at Walter Reed’s direction.
During Moore’s testimony, it also came to light that Walter Reed understated the amount of money he was paid by attorney James Marchand for a legal referral.
He declared $18,000 on his return, but the attorney actually paid him $48,000, Moore said.
Reed’s work as a private lawyer took up most of the morning’s testimony, when a second Pentecostal preacher and a partner in the law firm with which Reed was affiliated took the stand.
Joel Holmes, pastor of First Pentecostal Church in Little Rock, Arkansas, testified that Reed attended his camp meeting in August 2012 and paid about half the total cost of a prime-rib dinner that the church dished out for pastors and their wives, a crowd of about 300.
Ginsberg asked if anyone outside Holmes’ church had ever paid for a camp dinner before — or made such a large donation. He said no.
Richard Simmons, Reed’s attorney, asked if government officials tried to get the support of Pentecostals. “They all come to church when the election is going on. They even give contributions,” Holmes said, eliciting some chuckles.
The prosecution maintains that Reed wooed Pentecostals to drum up personal-injury clients for his private legal business, and Michael Sistrunk, of the firm McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch, testified that Reed had come to him in 2005 to suggest a relationship. Reed became “of counsel” with the firm and got half the money from cases that he referred, Sistrunk said.
The lawyer said Reed worked for his share, describing him as the person who “held the hand” of clients and was available at all times to answer questions.
But Sistrunk said he did not know that Reed had paid a $2,635 bill for a Pentecostal camp dinner with campaign money and then submitted the bill to the firm as an expense, which was paid. He said Reed seldom asked for anything.
Sistrunk said he knew that Jerry Wayne Cox, pastor of Faith Tabernacle in Franklinton, was a friend of Reed and the source of some good cases. Reed received $400,000 from one case that came to the firm through his Pentecostal connections, Sistrunk testified.
But when Cox came unannounced to Sistrunk’s Covington office to ask for a building fund donation, the lawyer said he made it clear he wasn’t going to give him any money.
“I said, ‘Rev. Cox, that can’t happen. ... What you are asking me to do is illegal and unethical; that would be fee-splitting with a non-attorney,’ ” said Sistrunk.
He said he immediately called Reed, who said he would talk to Cox.
Cox, who testified Monday, said Reed offered to help and a year later made a $25,000 contribution to the fund.
Editor’s note: This story was changed April 27 to correct the name of the prosecutor who questioned IRS special agent Tim Moore.
Follow Sara Pagones on Twitter, @spagonesadvocat.