- Posted April 22, 2011 by
New Orleans, Louisiana
St. Bernard Parish Foundation Embroiled in Coruption Controversy
Meraux Charitable Foundation in St. Bernard is embroiled in controversy
Years before her death, Arlene Meraux willed her entire multimillion-dollar fortune to a private foundation she created to "improve the quality of life and standard of living of the residents of St. Bernard Parish, Louisiana."
By the time she died in December 2003, a tangled personal and political saga over who would control Meraux's foundation had already played out in a series of closed-door court hearings presided over by now-disgraced former St. Bernard Parish Judge Wayne Cresap. When the smoke cleared and the new board was seated to run the Arlene and Joseph Meraux Charitable Foundation, some critics predicted the money intended for philanthropic projects would instead line the pockets of a powerful few in St. Bernard.
Years later, while the foundation has donated millions to several worthy causes, foundation records show the board has been paid handsomely, and that in at least two years, their compensation was greater than the amount of money the foundation gave out in charity.
Meanwhile, the U.S. attorney's office appears to have taken an interest in the foundation. In February, it issued a subpoena to the St. Bernard clerk of court and the board requesting documents that led to the naming of the current Meraux Foundation board, a bizarre legal drama in which Cresap declared Meraux, then 79, unable to handle her personal affairs and awarded significant control of the foundation to Sal Gutierrez, who is a political ally of Cresap and St. Bernard Parish Sheriff Jack Stephens.
It's not clear what prompted the federal interest in the foundation, but the subpoena came after Cresap pleaded guilty to taking kickbacks to spring inmates from jail. Cresap's sentencing date has been pushed back by three months, fueling speculation that Cresap might be cooperating with authorities in other matters. Cresap's attorney, Pat Fanning, said Cresap told him that neither the FBI nor federal prosecutors have asked him questions related to the Meraux Foundation, and U.S. Attorney Jim Letten would not say whether federal prosecutors are conducting a probe.
The foundation board now comprises Stephens; Gutierrez, the sheriff's longtime legal adviser; prominent local attorney Sidney Torres III, the father of local garbage executive Sidney Torres IV; and Meraux's niece and her husband, Rita and Floyd Gue, who had come to Louisiana in 2000 to care for Meraux. Under their watch, the foundation has donated about $3.6 million directly to various causes since 2003, according to their most recent tax records. That includes a $1.2 million donation to the St. Bernard School Board for an auditorium and theater at Chalmette High School and nearly $700,000 in scholarships for high school graduates.
Except for Stephens, the board members each received $120,000 salaries in 2008, the most up-to-date foundation records show. Since 2003, the board has been compensated with direct payments by the estate totaling about $2.2 million, the records show. Board members have raised their salaries 100 percent since 2004.
Stephens does not take a salary but has a management interest in the historic Lafitte's Blacksmith Shop bar in the French Quarter, once owned by Meraux and still part of the estate, and a long-term lease to manage property that houses the Breton Sound Marina and offshore oil and gas support equipment on Meraux Foundation land in Hopedale, at the far eastern end of the parish. Interviews and court documents show that friends and relatives of Stephens and the Gues have also been paid through the years with money from the foundation and the estate.
In October, Cresap pleaded guilty, along with two local lawyers, to a kickback scheme that allowed inmates to be released from the parish prison without posting bond. In his plea agreement, he pledged to cooperate with prosecutors or potential grand juries in other cases. The trio's sentencing date was originally scheduled for Jan. 21 but was postponed until April 22.
St. Bernard Clerk of Court Lena Torres, who is Sidney Torres III's mother, said she has turned over the requested court documents but declined to elaborate further.
Sidney Torres III did not respond to repeated phone calls and visits to his office seeking comment during the past month. Gutierrez would not comment on any matters related to the foundation, although at the time of the subpoena he noted, "Everything was done according to the law, and we have no problems with it and no hesitation with it."
Stephens said during a recent interview that he was unsure why the subpoena was issued. Rita Gue, however, wonders whether the government is looking into numerous cases in which Cresap was involved. But she said she is not personally concerned because she and her husband were named to the board in legal documents executed by Meraux before the court battle.
Powerful force in parish
The Meraux Foundation oversees one of the single largest collection of real estate holdings in St. Bernard Parish, prime properties throughout downtown New Orleans and the French Quarter and numerous other businesses connected to the estate, a vast fortune estimated between $50 million and $250 million.
David Grunfeld / The Times-PicayuneA billboard along Judge Perez Drive in Chalmette advertises the good works of the Meraux Charitable Foundation.
By virtue of its extensive land holdings in St. Bernard, the foundation exercises considerable control over the future of the parish and has already figured into many key land use and policy decisions since Hurricane Katrina. Land it owns across from the Chalmette Battlefield and Wal-Mart has been donated to the parish for a yet-to-be-built hospital, a move that could significantly increase the value of the adjacent land. Two parts of that same tract and another piece of land owned by the Meraux Foundation were sold for $1 million each in 2008 to outside investors planning to build mixed-income apartment complexes, a flash point of controversy in the parish that eventually led to a federal court battle over fair housing in St. Bernard.
The foundation does not pay property taxes on land it owns in St. Bernard because of its nonprofit status, parish Assessor Marlene Vinsanau said.
Board meetings are held privately each week, in a conference room at Torres' Chalmette building.
Bylaws allow members to serve for life unless they are voted out by other members. And each board position can be transferred to another person or inherited through a will, enabling generations of the same family to hold on to the lucrative seats.
With so much land and money at its disposal, the foundation remains an important resource.
Doris Voitier, the superintendent of St. Bernard public schools, which received a total of $1.8 million for a new auditorium and numerous grants for arts activities from the foundation, said she appreciates any generosity from outside groups.
"There's been a long-term relationship of their foundation contributing to the education and cultural arts programs for our children, and that's the only thing that I want to have in my capacity as superintendent," she said. "All that other stuff, I'm not really concerned about."
Fortune amassed over years
The roots of the Meraux fortune lie in the distant past. St. Bernard Parish Sheriff Louis A. "Doc" Meraux used his influence as top politician and tax collector to gain control of vast tracts of private land in the parish from the early 1920s until his death in 1938. Meraux's wife, Anita Maumus Meraux, came from an influential family that owned St. Bernard Bank and Trust.
The couple's lone child, Joseph, inherited the land in St. Bernard and numerous real estate holdings in the French Quarter from his mother's side of the family. After his death in 1992, Joseph Meraux's one-page will, never filed in court, bequeathed his entire estate to Arlene Soper, his little-known, longtime companion whose Newcomb Boulevard house shared the backyard of his Audubon Place mansion.
Sidney Torres III represented Arlene Soper in Joseph Meraux's succession case and was able to persuade St. Bernard Parish Judge Melvyn Perez in 1993 to rule that Soper was Meraux's putative spouse, although they were never actually married. Torres then settled the estate tax case with the state Department of Revenue, allowing her to avoid state inheritance taxes. Soper changed her name to Arlene Meraux soon after.
Meraux's vast fortune was naturally the stuff of legend in St. Bernard, so as her health faded more than seven years ago, the feud over her estate in Cresap's court was a drama that gripped the parish.
At the time, several politicians, including then-Parish President Charles Ponstein, expressed concerns about "so many people so closely knit" on the foundation board.
"If I were Judge Cresap, I would have asked the Kiwanis, the chamber, the Tourist Commission to submit nominations with membership so it would include business and legal expertise," Ponstein said at the time.
In a recent interview, Ponstein said he has been pleased with the foundation's donations through the years and relieved that the foundation didn't immediately sell off all the land and disrupt the real estate market. Ponstein said that at the time the board was formed, he believed "there was no money involved for the members, that the decision making involved was enough. To get paid and also have that power is very surprising."
Anthony Radosti, vice president of the Metropolitan Crime Commission, first got involved with the Meraux estate in 2003, when he took issue with Cresap's attempts to limit Meraux's daughter, Cheryl Cannella, from visiting her dying mother in Arabi. The Crime Commission has continued to monitor the foundation, he said.
"Arlene Meraux wanted this money to go to the community of St. Bernard, which she loved. This is not in line with what I think her wishes would have been," Radosti said. "The compensation far exceeds what I would expect from a local foundation, mainly because the average hard-working person in St. Bernard could only dream of making $120,000 for a part-time job."
Gutierrez, whom Cresap gave broad latitude over Meraux's estate during the court fight, was a top contributor to Cresap's judicial campaign. And Stephens, who was soon appointed to the board by Gutierrez, played a key role in Cresap's ascension to state judge by backing him in a hotly contested judicial race in 1999.
A company partially owned by Torres, RLBSDT LLC, logged contributions to Cresap's campaigns.
Board members' pay has increased steadily, moving from $35,000 in 2003 to $60,000 in 2004. It jumped to $85,000 in 2006 and increased again in 2007 to $120,000. In 2003 and 2007, annual compensation for the board outweighed the amount of donations given out.
Becky Cieutat, an attorney who works for Torres' law firm and is listed as an assistant secretary for the board, receives an annual salary from the foundation that has escalated from $20,000 in 2003 to $60,000 in 2008. She did not return phone calls seeking comment.
Rita Gue said most people have no idea how much work goes into keeping up with such a vast estate and that the Meraux Foundation is a private foundation that has discretion over how much to give out in salaries. She added that her aunt was always known for paying her employees well.
"I can tell you that the Meraux Foundation has done only good things for the parish, and it really does sadden me that my aunt's one dream, to set up this foundation to help the people of St. Bernard, gets criticized," she said.
Sheriff holds leases
Stephens said his leases connected to the foundation were signed before Arlene Meraux died, and before he was appointed to the board.
Stephens and Joe Licciardi, a colonel in the St. Bernard Sheriff's Office, are listed by the state as officers of Blacksmith Management Inc., which has a long-term lease with options through 2018 with a corporation, Lafitte's Blacksmith Shop Inc., that is part of the Meraux estate.
Although the lease was executed before Stephens was on the Meraux Foundation board, he has exercised options to extend the lease in 2003, in the midst of the civil feud in Cresap's court, and again in 2008, according to court records.
Although Licciardi is named as an officer of Blacksmith Management, Stephens said Licciardi makes no money as part of the venture. Efforts to contact Licciardi about Blacksmith Management were not successful.
On Stephens' elected official financial disclosure forms filed with the state Ethics Administration Program, he lists his annual income from the Blacksmith Shop as being less than $5,000.
Stephens would not go into detail on the income he derives from the various Meraux properties, saying that it is a personal matter unrelated to his job as sheriff.
Another company, Amigo Enterprises Inc., which Stephens owns with his cousin and former chief deputy, Anthony Fernandez Jr., and longtime friend and business associate, John Despeaux, has the leases for the land housing the marina and offshore support company. Despeaux did not return a call seeking comment. Fernandez said the lease for that property dates back to before Joseph Meraux's death and was renewed again with Arlene Meraux in the mid-1990s.
He said investments by Amigo Enterprises have brought necessary infrastructure such as electricity and water to that end of Hopedale, which in the past had no paved roads. Amigo Enterprises subleases its property to the Breton Sound Marina.
On his disclosure forms, Stephens lists annual income of more than $100,000 from Amigo Enterprises, which, according to court records, has a long-term lease on Meraux land through 2021.
Licciardi's company, Bosco LLC, also has a security contract with the Meraux Foundation. Licciardi confirmed that Bosco has the contract, but he would not say how much it pays.
John Lane, a longtime campaign organizer for Stephens, was also on the foundation's payroll when Gutierrez and Stephens were put on the board, according to court records. Lane died in 2009.
Stephens did not return calls seeking details about the arrangements with Licciardi and Lane. Gutierrez said he couldn't remember the details and would not provide the information.
Rita Gue's sons, Chris and William Haines, are also paid salaries as project managers for J&A Meraux Inc., a corporation that is part of the estate. Gue said they were hired on by her aunt, before the court drama ensued.
The foundation derives annual rental income of more than $1 million from properties across the region, including nearly $600,000 in annual rent from Wal-Mart for the store on West Judge Perez Drive in Chalmette. According to its most recent tax return, the foundation also receives nearly $100,000 in annual rent for a bar at 201 Bourbon St. that is leased to a Mango Mango daiquiri shop, $115,000 from a lease for apartments on Baronne Street in New Orleans and $48,000 for leasing space to a parking lot on South Rampart Street downtown.
Legal tug of war
The current foundation board is the product of an elaborate, twisted court drama that began when Meraux, then 79, did not return from a summer 2002 trip to visit her estranged daughter in suburban Chicago.
Times-Picayune archiveArlene Soper, who later legally changed her name to Meraux, disinherited her daughter and son in September 1994, and asked that all money from her estate go to a charitable foundation when she dies.
Rita Gue, Meraux's caretaker and live-in companion since Christmas 2000, filed for a court interdiction of Meraux in August 2002 after learning that Meraux's daughter, Cheryl Cannella, had taken Meraux to see an Illinois lawyer to switch the power of attorney to Cannella, potentially complicating the will that was in place.
Cresap issued an order of protection asking that Gue be allowed "unfettered access" to her aunt and that Meraux be returned to St. Bernard. Gue paid $13,000 of Meraux's money to hire a private jet to retrieve Meraux. Cresap ordered she be admitted to Chalmette Medical Center, where she was put under strict watch by St. Bernard sheriff's deputies.
In a closed-door hearing at the hospital, Dr. Paul Verrette, who was appointed by Cresap to examine Meraux, testified that she suffered from chronic, advanced dementia. Another psychiatrist, Dr. Balminder Mangat, concurred, leading Cresap to institute the court takeover of Meraux's business and personal affairs.
Cresap had appointed Verrette to make the determination even though Verrette was on criminal probation and had surrendered his state and federal permits to prescribe drugs after pleading guilty to dispensing bogus prescriptions.
After Cresap appointed Gutierrez as curator, Gutierrez made moves to appoint Stephens and other political allies to the board and remove the Gues, who had been named by Meraux a year earlier as the only two foundation officers. The Gues fought the moves by Gutierrez and Cresap, but in April 2003, the sides abruptly settled the case.
Gutierrez and Stephens would remain on the board, along with the Gues, and Torres would be the fifth member. Cresap allowed all attorney's fees to be paid out of the Meraux estate, a sum that he kept sealed but which foundation tax records show was nearly $100,000. Meraux's medical examination records were never unsealed.
Stephens said he thinks the public eventually will grow more comfortable with the foundation as donations such as the hospital land become more routine.
"I think once all those things become permanent, then I think the foundation becomes more institutionalized and I think the past becomes less controversial," he said.
Chris Kirkham can be reached at firstname.lastname@example.org or 504.826.3321.
A MERAUX TIMELINE
October 1938 - St. Bernard Parish Sheriff Louis A. "Doc" Meraux dies after gaining control of vast tracts of land in the parish during his 15 years as top law enforcement officer and tax collector. His estate goes to his wife, Anita Maumus Meraux, whose family owned St. Bernard Bank and Trust.
July 1969 - Anita Maumus Meraux dies, leaving her estate to a lone son, Joseph Meraux.
April 1992 - Joseph Meraux dies and leaves behind a one-page will, giving his entire estate to longtime companion Arlene Soper.
December 1993 - St. Bernard Parish Judge Melvyn Perez rules that Soper legitimately believed that she was married to Joseph Meraux and could be considered his spouse, an unusual move in Louisiana law. A month later, Soper changes her name to Arlene Meraux.
August 1994 - Attorney Sidney Torres III reaches a settlement with the state that allows Perez's ruling to stand, preventing Soper from having to pay state inheritance taxes.
September 1994 - Arlene Meraux disinherits her daughter, Cheryl Cannella, and son, Mark Soper, and asks that all money from her estate go to a charitable foundation when she dies.
1996 - Meraux signs long-term leases of the Lafitte's Blacksmith Shop and hunting and fishing leases in St. Bernard with companies owned in part by St. Bernard Sheriff Jack Stephens.
December 2000 - 2001 - Rita and Floyd Gue, Meraux's niece and her husband, move to Louisiana from Michigan to take care of Meraux. In March, Meraux signs over power of attorney to Rita Gue and appoints the Gues to various corporations owned by the estate.
Aug. 3, 2002 - Rita Gue agrees to let Meraux visit her daughter, Cheryl Cannella, and her family in suburban Chicago. Cannella and her son had come to visit Meraux, whose health was in decline, a month earlier.
Aug 13, 2002 - Meraux does not return to Louisiana as planned. During Meraux's time in suburban Chicago, Cannella gains power of attorney. At the time, Meraux was unable to sign her own name and had to use a thumbprint to execute the document.
Aug. 13, 2002 - Rita Gue files for a court interdiction of Meraux in St. Bernard Parish to prevent complications to the will. Judge Wayne Cresap grants the temporary interdiction.
Aug. 14, 2002 - Cresap issues an order of protection, giving Gue "unfettered access to Ms. Meraux" for the purpose of bringing her back to St. Bernard.
Aug. 20, 2002 - Gue charters a $13,000 private jet to retrieve Meraux from her daughter in Chicago, accompanied by James Pohlmann, a St. Bernard Sheriff's Office deputy who is now chief deputy; Pohlmann's wife, a nurse; and Dr. Paul Verrette, who was appointed by Cresap to examine Meraux. Meraux is then admitted to Chalmette Medical Center and put under strict watch by St. Bernard sheriff's deputies.
Aug. 30, 2002 - After a closed hearing in the hospital, Cresap declares Meraux unfit to handle her affairs and temporarily appoints Rita Gue as curator of the estate. Gue and Cannella say they saw Meraux walk into the hospital on her own, but during the hearing, she was confined to a wheelchair and disoriented.
Oct. 25, 2002 - Cresap appoints Sal Gutierrez, a major contributor to his judicial campaign and close adviser to Sheriff Stephens, as the permanent curator of Meraux's business affairs.
December 2002 - Gutierrez moves to remove Floyd and Rita Gue from the Meraux Foundation board and appoint himself, Stephens and Stephens' chief deputy, Anthony Fernandez Jr., and others to the board.
April 2003 - After a series of court disputes between Gutierrez and Rita Gue, the foundation board issue is abruptly settled. Gutierrez and Stephens remain on the board, along with Floyd and Rita Gue. Sidney Torres is brought on as the fifth member.
Dec. 2, 2003 - Arlene Meraux dies.