NEW ORLEANS (AP) — A former investment banker serving a 14-year prison sentence for a New Jersey fraud scheme testified Monday that he helped arrange and disguise a $50,000 bribe to former New Orleans Mayor Ray Nagin.
Clad in an orange prison jumpsuit, Michael McGrath told jurors in Nagin’s corruption trial that the bribe in 2008 was funneled through his daughter’s trust account to a company Nagin founded with his sons. McGrath said the bribe was in return for Nagin’s support for projects that a company called Home Solutions hoped to manage, including the redevelopment of an old power plant into a residential and retail space, and a race car track. Neither project ever developed.
McGrath was a Home Solutions board member and his allegations backed up earlier trial testimony from Frank Fradella, the company’s former chief executive. McGrath said Fradella believed the mayor’s support was crucial to showing potential investors that Home Solutions could get work worth millions of dollars.
“The only value he was bringing to these projects was Ray Nagin,” McGrath said of Fradella.
Nagin, a Democrat who was mayor from 2002 to 2010, including the tumultuous period during and after Hurricane Katrina in 2005, was indicted on 21 counts after he left office. He is accused of accepting hundreds of thousands of dollars in bribes in return for helping contractors secure city business. Charges include bribery, money laundering, conspiracy and filing false tax returns.
Nagin’s attorneys challenged the credibility of testimony from Fradella and McGrath and made sure jurors knew the men could receive a reduction in their prison sentences for cooperating with prosecutors in the Nagin case.
McGrath was convicted for his role in a $140 million mortgage theft scheme. His conviction in New Jersey was unrelated to the Nagin case.
In detailing the alleged Nagin bribe, McGrath said the paperwork indicating the $50,000 was for an interest in Nagin’s family company was phony.
Defense lawyer Robert Jenkins said McGrath never heard Nagin ask for a bribe. McGrath said his only discussion with Nagin came after the money was paid to Stone Age LLC, the company Nagin and his sons owned. McGrath said Nagin personally thanked him for the money.
McGrath had only Fradella’s word that the money was a bribe, Jenkins said, adding that there was no other evidence to directly point to the purpose of the payment.
Prosecutor Matthew Coman countered by displaying a picture of the $50,000 check to Stone Age and the allegedly phony document indicating the sale of a nearly 5 percent interest in the company.
“Is there anything ‘alleged’ about this check?” Coman said.
“No,” McGrath responded.
Fradella testified Friday and took the stand again Monday after a weekend break in the trial, which is expected to last into next week.
He told jurors that, in addition to bribes before Nagin left office, he arranged for Nagin to receive monthly payments of more than $12,000 after he left office.
Testifying as part of a plea agreement with federal prosecutors, Fradella detailed an arrangement for consultant work that prosecutors say eventually led to $112,250 going to Nagin in the months after he left City Hall — payments prosecutors said constituted payoffs for favors during his time in office.
Last week, Fradella testified he arranged to get $50,000 to Nagin when the then-mayor said he needed money to support Stone Age. Fradella also said he paid Nagin off with free granite for the business.
Fradella acknowledged a deal with prosecutors and said he had pleaded guilty in an unrelated case involving insider stock trading. It was transferred from Texas to the federal district in New Orleans, Jenkins noted, suggesting that Fradella hoped for leniency in that case, too, as a result of his testimony against Nagin.
Jenkins also noted an email in which Nagin explicitly said to a Fradella associate that the city would not do business with Fradella’s company as long as the company had a business relationship with his sons. Fradella said he eventually dealt with Nagin himself.
Fradella pleaded guilty in June to conspiracy to commit bribery in the Nagin case.