FBI Public Corruption Task Force Receives Award from the Metropolitan Crime Commission
NEW ORLEANS—On Tuesday, January 24, 2017, during the 2017 Metropolitan Crime Commission’s (MCC) annual awards luncheon, MCC President Rafael Goyeneche and the MCC Board recognized the Walter Reed and Steven Reed investigative and prosecution team for their outstanding work in rooting out public corruption. Today’s award was based on an FBI, IRS, and U.S. Attorney’s Office-Eastern District of Louisiana investigation and prosecution collaborative effort.
In March 2013, the FBI and IRS initiated a joint investigation of Walter P. Reed, then the District Attorney for the 22nd Judicial District of Louisiana and Steven Reed, Walter Reed’s son, following allegations of corruption by the Reeds. Allegations included Reed used his campaign funds for personal use, demanded kickbacks from contractors who provided services to his campaign, and diverted funds intended for the Office of the District Attorney to his own personal use. The investigation obtained evidence, which was subsequently presented at trial, that Walter P. Reed and Steven Reed devised a scheme to defraud the Walter Reed Campaign and contributors to the Walter Reed Campaign by using donations to Walter P. Reed’s campaign to pay for goods and services unrelated to the campaign or to the holding of public office, and in amounts that grossly exceeded the value of the services provided.
Evidence revealed Walter P. Reed caused a series of payments to be made from the Campaign Fund to Steven Reed’s companies in order to pay down a loan on which Walter P. Reed was a cosigner. The payments were for services that were either never provided or whose value was substantially less than the amount paid. For example, Steven Reed’s company, Liquid Bread LLC, received $29,400 from the Campaign Fund account for purportedly providing catering or bar services during a September 2012 campaign event at the Castine Center, which neither Steven Reed, nor the company, actually provided. Walter P. Reed also required a caterer for the September 2012 campaign event to kickback $5,000 of its payment to Steven Reed as a means of funneling campaign monies to Steven. The $29,400 payment and the $5,000 kickback were then used by Steven Reed to pay down the balance of a loan cosigned by Walter P. Reed.
Additionally, evidence demonstrated Walter P. Reed paid for numerous other personal expenses unrelated to his campaign out of his Campaign Fund, including flowers for his close family and a woman he admitted that also contained an anonymous message that stated, “[T]o my rodeo girl from a secret admirer from Camp J,” a $1,885.36 Thanksgiving Day dinner for Reed and approximately ten other members of his family, a $500 gift card for his future personal use, a $2,635.00 dinner at a North shore steakhouse he hosted for “Pentecostal Preachers” in an attempt to solicit client referrals for his private civil legal work, and a $25,000 referral fee he paid one such clergyman who referred him a lucrative civil case. Subsequently, Reed sought, and received, a reimbursement for the same $2,635.00 dinner from the law firm with which he was affiliated. Walter P. Reed did not reimburse his Campaign Fund for the dinner. In total, Walter P. Reed spent over $120,000 from the Walter Reed Campaign Fund bank account on personal expenses to include: recruitment of potential clients for his private legal practice, paying off various expenses incurred by his son, Steven Reed, and paying for private and personal dinners. Reed did not report, or pay taxes on, this ill-gotten money.
Finally, evidence demonstrated Walter P. Reed diverted money paid by St. Tammany Parish Hospital to the Office of the District Attorney to his personal bank account. Specifically, between about 1994 and 2014, St. Tammany Parish Hospital retained the services of the Office of the District Attorney to advise the hospital on various matters and attend monthly meetings, for which it agreed to pay the Office between $25,000 and $30,000 per year. While Walter P. Reed attended some of the monthly meetings, which occurred during business hours, in his capacity as District Attorney, on dozens of occasions he directed Assistant District Attorneys to attend. Notwithstanding Reed’s misuse of Office resources and personnel, as well as his attendance in his official capacity as District Attorney, Walter P. Reed deposited each check provided by St. Tammany Parish Hospital intended for the Office of the District Attorney into his personal bank account. In total, Reed diverted over $550,000 of the Office of the District Attorney’s funds in this manner.
Walter P. Reed and Steven Reed were indicted by the Eastern District of Louisiana (EDLA) in a 19-count indictment on April 23, 2015, for charges of Conspiracy, Mail and Wire Fraud, Money Laundering and filing False Tax Returns. During April and May 2016 evidence was presented at trial which led to the May 2nd conviction of Walter P. Reed for 18 counts and Steven Reed for three counts of the indictment.
United States Attorney Kenneth Polite, Eastern District of Louisiana, stated, “I thank the members of my Office, the MCC, the FBI and, the IRS for their continued commitment to fighting public corruption. Our partnership resulted in bringing justice to DA Walter Reed and his son. We remain steadfast in our collective mission of rooting out fraud, waste, and abuse in Southeast Louisiana.
Special Agent in Charge Jeffrey S. Sallet, FBI New Orleans, stated, “Public Corruption will not be tolerated in Louisiana. The FBI New Orleans Division will utilize every available resource to root out public corruption at all levels. The residents of Louisiana should expect and demand honest government. He further stated, “I congratulate the entire team for the exceptional efforts to promote integrity in government and thank the Metropolitan Crime Commission for their partnership in the fight.”
Special Agent in Charge Jerome R. McDuffie, IRS—Criminal Investigation, stated, “The investigative collaboration that led to the conviction of Walter and Steven Reed is an invaluable law enforcement tool, and one that IRS-CI will continue to pledge it’s resources to support. We are pleased with the outcome of this very significant public corruption case, as these investigations play a major part in our service to the taxpayers of this country. IRS—Criminal Investigation will continue to work diligently with our law enforcement partners to put an end to public corruption."
An anticipated sentencing date is tentatively set for March 8, 2017.
The successful investigation and prosecution of Walter P. Reed and Steven Reed is the direct result of the outstanding dedication and hard work of the Agents, Prosecutors and staff of the FBI, IRS, and U.S. Attorney’s Office, which received assistance from Metropolitan Crime Commission, and represents the tremendous positive impact such collaborative efforts can achieve.