Fifth day of Walter Reed trial focuses on hospital contract, meals charged to campaign account _lowres

Advocate staff photo by JOHN McCUSKER -- Former St. Tammany/Washington parish DA Walter Reed arrives at federal court Wednesday where his trial is continuing.

Federal prosecutors zeroed in on Walter Reed’s arrangement to serve as outside legal counsel for St. Tammany Parish Hospital as well as his campaign expenditures on Friday, the fifth day of the former north shore district attorney’s federal corruption trial.

Seesawing between the two topics, prosecutors called more than a dozen witnesses, including hospital executives, restaurateurs and campaign donors as they attempted to prove that Reed pocketed $30,000 annually from the hospital that was meant for the DA’s Office and also routinely skirted campaign finance laws.

Perhaps the day’s most telling testimony came from the general counsel and the board chairman of St. Tammany Parish Hospital, both of whom made clear they thought the hospital’s legal arrangement was with the District Attorney’s Office and not with Walter Reed as a private attorney.

Bill Jones, who has served as the hospital’s general counsel since 1992, testified that he drafted many of the resolutions that authorized the hospital to retain the district attorney’s services.

At some point, Reed began to attend the meetings “religiously,” Jones said.

“Do you have an understanding of what capacity in which he was attending?” Assistant U.S. Attorney Jordan Ginsberg asked Jones.

“As district attorney,” Jones replied.

Ginsberg also had Jones identify letters Reed sent on District Attorney’s Office letterhead on behalf of the hospital.

In 2001, the hospital’s board passed a new resolution, again drafted by Jones with input from then-board member Paul Cordes, Jones said. The purpose was to increase the annual fee for the hospital’s representation by the District Attorney’s Office to $30,000, Jones said.

Again Ginsberg asked Jones whether the hospital thought it was hiring Reed as the DA or as a private attorney.

“District attorney,” Jones replied.

The role of Cordes is important because Reed has claimed he had a conversation with Cordes, who has since died, about changing the arrangement to one with his private law practice.

Jones said he was surprised when, in 2014, Assistant District Attorney Harry Pastuszek sent an email to Jones with an attached resolution from an October 1996 board meeting setting up an arrangement between Reed’s private practice and the hospital.

“I had never seen (the resolution). I had them go back and search, and the answer was that it was not adopted,” Jones said.

Jones’ testimony matched that of John Evans, who has been on the hospital board since 1996 and has been its chairman since 1998. Evans said he was “disappointed” to find that the resolution was unsigned after being told by Reed it had been signed.

Evans, who choked up at times during his testimony, said he had been friends with Reed for three decades and that testifying in court against him was “difficult.”

But, he said, officials searched the hospital “for days and days,” seeking evidence that the arrangement had been with Reed’s private practice, and they found nothing.

The first time he saw the resolution attached to Pastuszek’s email, Evans said, was after media reports about Reed’s finances began to be published in 2014.

Evans also testified he once had said he would “go to his grave believing this was all a big misunderstanding” and that Reed never meant to defraud anyone. But then he conceded that was before he saw all the documents.

Reed faces 19 counts. Of those, five are mail-fraud counts centered on his dealings with St. Tammany Parish Hospital. He also is charged with conspiracy, wire fraud, money laundering, false statements on tax returns and mail fraud. His son Steven, a co-defendant, faces two counts of money laundering and two of conspiracy.

Leo Hemelt, a former assistant district attorney who attended some hospital board meetings in Reed’s stead, is expected to testify next week.

Prosecutors also called a number of prominent St. Tammany restaurateurs to the stand, each of whom verified several instances in which Reed dined in their establishments, often with just one other person, and paid for the dinners with checks from his campaign fund.

Reed also frequently bought hundreds of dollars in gift cards and paid for those with campaign funds as well, the witnesses said.

Those bills frequently ran to more than $800, the records showed, and included meals at Sal & Judy’s in Lacombe, del Porto and the Dakota in Covington, among others.

But Rick Simmons, Reed’s attorney, suggested in cross-examination that even though the meals may have appeared to be personal, Reed was always in campaign mode.

“When Mr. Reed comes to your establishment, does he talk to the customers?” he asked Sal Impastato, proprietor of Sal & Judy’s.

“He was always politic(king),” Impastato replied.

Other witnesses echoed that, saying Reed could be seen talking to other customers. None of them could say that certain dinners were solely personal.

Two other witnesses were political donors to Reed who testified that they expected their donations to be used for TV ads, campaign signs and the like during his campaigns.

A second juror had to be replaced Friday, U.S. District Judge Eldon Fallon said. That leaves only one alternate remaining.

Friday wrapped up the first week of a trial that is expected to last at least through next week. Testimony will resume Monday.

Follow Faimon A. Roberts III on Twitter, @faimon.