Grace denies shakedown
Ex-mayor testifies man owed city
Former St. Gabriel Mayor George Grace Sr. disputed allegations Tuesday by a Houston businessman that he pressured the man for a percentage of his profits from a municipal contract.
That’s an outrageous lie,” Grace said during his trial on federal racketeering, bribery, fraud and extortion charges in Baton Rouge.
The former mayor of 17 years said that denial extends to funds Luis Gonzales received in 2006 and 2007 from the Federal Emergency Management Agency.
Gonzales testified last month FEMA paid his Houston partnership $218,400 per year for emergency mobile home sites he placed on property leased from Grace in the wake of Hurricane Katrina.
Grace, testifying in response to questions from defense attorney Robert Marionneaux, said the money he demanded from Gonzales included more than $40,000 that Gonzales owed St. Gabriel.
That debt was for providing city utilities to the emergency mobile-home site on St. Francis Lane, Grace said.
The former mayor added he feared Gonzales would fail to pay that bill before it would trigger city audit criticism in July 2006.
The former mayor, who lost a bid for re-election last year in the wake of his indictment, said he also pressured Gonzales for $18,000.
Grace said he charged Gonzales rental of $3,000 per month for use of his property and Gonzales had fallen five months behind.
He said he asked Gonzales for an additional $3,000 to ensure the Houston businessman did not again fall behind on his rental payments.
Grace acknowledged he terminated Gonzales’ expired lease in August 2007, but emphasized Gonzales remained delinquent on his rental payments.
Earlier in the trial, FEMA attorney George Cotton testified Grace then took control of Gonzales’ FEMA contract through a company the mayor had established.
Gonzales once offered to buy his property for $100,000, Grace testified. He said, however, Gonzales also wanted him to finance the purchase, which he declined to do.
Marionneaux also asked Grace about prosecution witnesses’ statements the former mayor had a fear of discussing business in telephone conversations or in vehicles.
Grace testified that fear goes back to his former career as director of the Portside Vocational-Technical School in Port Allen.
In the 1980s, Grace was charged with five counts of felony theft of school property. He was acquitted of all charges during a 1987 trial.
Now, Grace told the jury of eight women and four men Tuesday, “I’m hesitant to talk over the phone about business things. I always feel like somebody’s listening.”
Several years ago, FBI agents interviewed Grace about Igor Grushewsky, a man Assistant U.S. Attorney Corey R. Amundson told jurors received $300,000 from St. Gabriel for computer services performed while Grace was mayor.
Grushewsky was indicted in February 2007 in St. Louis, Mo., according to federal court records in that city.
He remains accused of defrauding several individuals in several states of a combined total of $216,000.
Marionneaux asked Grace whether FBI agents told him in 2004 they were investigating Grushewsky.
“That’s correct,” Grace said, but he added he later learned the FBI was investigating him.
Marionneaux asked whether FBI agents told Grace in 2010 they were investigating William Myles and Derrick Johnson.
Grace said that happened, adding Myles and Johnson later turned out to be undercover investigators working for the FBI.
It was their work that led to his indictment, Grace acknowledged.
Grace’s testimony was cut short Tuesday.
Defense attorneys, prosecutors, the presiding judge, U.S. District Judge S. Maurice Hicks Jr., of Shreveport, and Chief U.S. District Judge Brian A. Jackson, of Baton Rouge, huddled in chambers before calling a halt to proceedings shortly before 2 p.m.
Hicks then announced testimony in the trial’s fifth week would resume Wednesday morning.
Grace is the last defendant to be tried on charges that resulted from an FBI sting known as Operation Blighted Officials. Five other area officials have been convicted as a result of the sting.
The operation featured “businessmen” with a garbage-can-cleaning company, Cifer 5000. They offered cash and other gifts in return for official acts designed to gain municipal contracts, federal grants and private investment dollars.
The FBI has alleged Grace accepted $15,000 in cash and other gifts.
Cifer 5000 was a fake firm, and its “businessmen” proved to be Myles, a paid undercover operative for the FBI, and then-undercover FBI Special Agent Darin McAllister.
Former Mayors Maurice Brown, of White Castle; Tommy Nelson, New Roads; Derek Lewis, Port Allen; former Port Allen Police Chief Fred Smith and former Port Allen Councilman Johnny Johnson Sr. have been convicted.
White Castle Police Chief Mario Brown was acquitted on all charges in the same trial that resulted in the conviction of his brother, the former White Castle mayor.