Witness says mayor asked for money

Prosecution witnesses testified Monday in Baton Rouge that former St. Gabriel Mayor George L. Grace Sr. took control of an $18,200-per-month contract with the federal government after a Houston businessman refused to make Grace a partner in other proposed ventures.

Grace, 68, is in the second week of his trial on federal racketeering, extortion and fraud charges that resulted from an undercover FBI sting known as Operation Blighted Officials.

Luis G. Gonzales, 44, of Houston, told the jury of eight women and four men that he approached Grace shortly after Hurricane Katrina struck New Orleans in August 2005.

Gonzales said he was looking for land to purchase for emergency mobile-home sites to be funded by the Federal Emergency Management Agency.

Grace agreed Gonzales would lease for $3,000 per month some undeveloped land that the mayor or members of his family owned on St. Francis Lane in St. Gabriel.

G3 Housing, a Texas firm of which Gonzales was a partner, was awarded the 18-month lease in November 2005.

After the end of that 18-month period, G3 Housing could continue to lease the property only on a monthly basis, Gonzales testified in response to questions from Assistant U.S. Attorney M. Patricia Jones.

Eleven days after the lease was signed, Gonzales testified, G3 Housing received a FEMA contract that paid the firm $650 per month for each of 28 mobile home pads placed on the acreage, a combined annual total of $218,400.

Grace promised to use St. Gabriel employees and supplies to construct the concrete pads and run water, sewer and power lines to them, Gonzales said. He added G3 paid St. Gabriel $40,745 for that work.

FEMA then placed mobile homes on the site in either May or June 2006, Gonzales recalled. And G3 sent its first $3,000 check to Grace, the businessman testified.

In August 2007, Gonzales told jurors, “I was evicted from the site.”

“By Mayor Grace?” Jones asked.

“Yes, ma’am,” Gonzales replied.

Gonzales testified that plans for a much larger mobile-home site at a nearby location fell through earlier after he refused to grant Grace an ownership interest of at least 20 percent.

Grace made additional demands for money, Gonzales said.

“He (Grace) asked me for $7,000,” as a re-election campaign contribution in early 2006, Gonzales testified.

“I told him I didn’t make campaign contributions,” Gonzales recalled.

Months later, Gonzales said, Grace arrived in Houston with a girlfriend and asked that Gonzales either contribute to his campaign or host a fundraiser for him in that Texas city. Gonzales said he refused both options.

In August 2007, after Grace terminated G3 Housing’s lease on the FEMA trailer site, Gonzales said he asked for the reason behind that action.

“He (Grace) said he was selling the property, and they were moving on,” Gonzales told jurors.

Gonzales quoted Grace as saying the buyer was Omni International of California and the firm had already agreed to pay $200,000 for the site.

FEMA attorney George Cotton then testified Omni International Services LLC replaced G3 Housing as the firm receiving FEMA’s rental payments.

But, while answering questions from Assistant U.S. Attorney Michael J. Jefferson, Cotton added that records filed with the Louisiana secretary of state show Omni International Services was not a California company.

Cotton said state records show Omni International was based in Baton Rouge and was owned by George L. Grace Sr. when Gonzales’ group was evicted from the St. Gabriel property.

Lewis O. Unglesby, one of Grace’s attorneys, did not question Cotton at length.

But Unglesby hammered at Gonzales’ recollections about why his firm lost the lease to the FEMA trailer park on Grace family property.

Unglesby wanted to know whether Gonzales had promised to pay Grace more than $3,000 in monthly rent after G3 Housing recovered its startup expenses. Gonzales denied that was the case.

Unglesby then focused on four rental payments totaling $12,000 withheld from Grace by G3 Housing.

Gonzales said Grace was slow in having sewage and other problems repaired at the trailer site.

What had Gonzales done to cause Grace to demand money from him, Unglesby wanted to know.

“Nothing,” replied Gonzales.

“The lease he charged you was very reasonable, wasn’t it,” Unglesby asked Gonzales, who agreed with that assessment.

“This property deal that you did with George Grace was very good for you?” Unglesby emphasized.

“Yes, sir,” Gonzales agreed.

“Why would you not pay a just debt to George Grace?” Unglesby asked.

“I don’t know why I didn’t pay the (four) make-up payments,” Gonzales replied.

“Where’s that $12,000?” Unglesby demanded. “Did you ever pay him?”

“No,” Gonzales said.

In the FBI sting, undercover agents posed as corrupt businessmen offering bribes to area municipal officials in return for help in gaining government contracts for a proposed garbage-can-cleaning service known as Cifer 5000. Former White Castle Mayor Maurice Brown, former Port Allen Mayor Derek Lewis and former New Roads Mayor Tommy Nelson have been convicted as a result of the FBI investigation.

Testimony in the Grace trial is scheduled to resume Tuesday morning.