NewsCalcasieu Parish


Legislative Auditor: Former DA’s gift card program may have violated state law

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Posted at 5:50 AM, Mar 01, 2021
and last updated 2021-03-01 19:18:29-05

The new Calcasieu District Attorney said he won't be renewing the gift card program, and he's turned over the case to the Attorney General.

"We are aware of the Legislative Auditor’s findings concerning the gift card program implemented under former District Attorney John DeRosier. This program was discontinued prior to District Attorney Stephen Dwight taking office in January 2021. DA Dwight has no plans to renew this program," a statement from Dwight says. "Anything further regarding these findings will be deferred to the Attorney General’s Office."

Earlier today, the Louisiana Legislative auditor weighed in on a program in the Calcasieu Parish District Attorney’s Office that allowed certain defendants to pay their way out of court-ordered community service. The program was the subject of a KATC Investigation “Community $ervice.”

In 2019, KATC uncovered that former DA John DeRosier was allowing defendants to donate gift cards to his non-profit organization in lieu of community service hours. The non-profit would then distribute those gift cards to charities and charitable causes especially around the holidays. We uncovered the program involved hundreds of thousands of dollars worth of gift cards.

The legislative auditor raises six instances in which DeRosier may have violated state law and the state constitution.

1. District Attorney Transferred Funds Received by His Office to a Nonprofit Corporation
According to the audit, the DA transferred $556,598 to his foundation between October 2015 and November 2019. These funds included gift cards or money orders purchased by pre-trial diversion defendants. Auditors say by transferring funds received by his office to a nonprofit corporation, DeRosier may have violated the Louisiana Constitution and state law.

Auditors recommend the district attorney seek legal advice as to the appropriate action on recovery of funds transferred to the foundation.

2. Certain District Attorney Employees Performed Foundation and Campaign Activities During Work Hours
Auditors note that “some” distinct attorney employees performed Foundation activities during work hours, and one employee even performed campaign activities for DeRosier. One employee reports that during the holidays she would spend 15-20% of her work hours shopping for toys to be distributed through the DA’s foundation. Using public funds and resources to perform such tasks would be a violation of the Louisiana Constitution and state law.

3. Funds Used for Personal Benefit
Auditors found that in October, 2016, the DA’s foundation issued $2,815 in checks to a hotel to pay for items DeRosier won during a fundraiser. The items included a $1,450 home security system, a $50 “live, laugh, love” wall hanging, $50 in wine, $50 wall sconces, and a $15 bracelet.

Auditors say DeRosier acknowledged the items should not have been paid for with foundation funds and that he “may have received the camera system, probably used the restaurant give certificate, and probably gave the other items away as gifts from his campaign.”

But auditors observed what appeared to be the same make and model of security system at DeRosier’s residence and confirmed with a vendor that the system paid for by the foundation was installed at his residence. When the auditors brought this to DeRosier’s attention in August, 2020, he reimbursed the foundation $2,815.

4. District Attorney Improperly Modified Court-Ordered Conditions of Misdemeanor Probation by Allowing Defendants to Buyout Community Service Hours

In 2019, KATC reached out to judges in the 14th Judicial District for comment on our investigation. We heard back from one judge, who spoke to us on the condition we wouldn't use his name.

“This is certainly not what we envision at the sentencing phase,” he said. “When we order community service, we order community service period."

Following our report, judges reached out to DeRosier advising him to stop substituting gift cards for court-ordered community service.

Auditors note that according to the Louisiana Code of Criminal Procedure, only the court may modify, change, or discharge the conditions of probation and that DeRosier appears to have improperly done so with the gift-card program.

5. District Attorney Failed to Disclose Relationship with the Foundation
According to the audit, DeRosier failed to disclose his position as foundation officer and board member in financial disclosure statements filed in 2015, 2016, and 2017. Auditors say this is an apparent violation of state ethics laws.

6. Failure to Properly Account for Community Service Buyouts May Have Resulted in Materially Misstated Financial Statements
Auditors believe funds generated from the “buyout” of community service hours were public funds, since community service obligations were either mandated by the 14th JDC or imposed by the DA’s office as part of its pre-trial diversion program. Auditors say by not recording those funds as revenues on the financial statements between 2015-2018, those statements may have been materially misstated.

DA’s attorney responds
Timothy O’Dowd, legal counsel for the Calcasieu Parish District Attorney’s Office, issued a 5-page response to the issues presented in the legislative audit.

O’Dowd claims that DeRosier contacted Legislative Auditor Daryl Purpera by phone in 2015 to “discuss the propriety” of forming a non-profit organization to distribute gift cards collected through the DA’s office.

“[Purpera] expressed no reservations or concerns,” wrote O’Dowd. “This program continued into 2019 without any suggestion by anyone that it might be improper.

O’Dowd claims the program was a “huge success” and provided hundreds of thousands of dollars to 501(c)(3) and other charities.

“There are numerous flaws, innuendos and efforts to sully the Calcasieu Parish District Attorney’s office in the report but picking up every spec is not a prudent use of this paper.”

O’Dowd disputes that funds collected through the gift-card program were public funds since they were earmarked for charity.

“They were no more of the property of the Calcasieu Parish District Attorney's office than a check being processed by a bank,” wrote O’Dowd. “The bank does not take over ownership, control or gain rights. The bank is a holder that passes the funds to the designated recipient. “

Audit does not address limited paper trail pre-2015
DeRosier told auditors that he started allowing pre-trial diversion participants and misdemeanor probation defendants to buy gift cards in lieu of some or all of their community service hours in 2006. As KATC reported in Community $ervice, there is a limited paper trail accounting for these funds before the DA established his non-profit foundation in 2015.

We filed public records requests with the DA’s office going back to 2011. We wanted records of the gift cards that came in and how they were distributed.

In response to our request at the time, the district attorney’s office said that gift card receipts can only be found in each individual defendant’s file, which is not readily available and would be an “overly burdensome” request.

As for disbursement records that detail how the gift cards were distributed, the district attorney’s office cannot find any documents in their possession that would respond to the request.

This portion of our reporting is not mentioned in the investigative audit.

Attorney General’s Opinion Pending
According to the DA’s external auditing firm, the DA’s office has requested an attorney general’s opinion on the propriety of the gift-card program.

Filed January 8, 2021, the request asks the AG to address the following:

  1. Whether gift cards and/or money orders received by the foundation from private individuals / defendants participating in the pre-trial diversion program or on misdemeanor probation in lieu of community service hours / labor earmarked for charitable use were or became public funds?
  2. Whether transmitting gift cards received by the DA's office from private individuals / defendants participating in the pre-trial diversion program or on misdemeanor probation in lieu of community service hours/labor earmarked for charitable use to the foundation constituted a donation or transfer of public funds by the DA's office?
  3. If the gift cards are deemed public funds, does the decision by the private individuals / defendant participating in the pre-trial diversion program or on misdemeanor probation earmark them for use other than by the state, as set forth on the DA's sleigh of toys program flyers, satisfy the exceptions set forth in La. Const. Art. VII, Sec. 9?

Copies of the investigative audit have been provided to the DA’s office, Board of Ethics, and others as required by law.

See the audit below: