New Orleans Times-Picayune| Thursday, February 03, 2005 | Martha Carr and Gordon Russell
Ray Reggie, a businessman and Democratic operative with close ties to prominent politicians ranging from former President Clinton and U.S. Sen. Ted Kennedy to former New Orleans Mayor Marc Morial, was charged by federal prosecutors Wednesday with attempting to defraud three banks of millions of dollars.
Reggie, 43, known for his web of political contacts at all levels of government, is a member of one of Louisiana's pre-eminent political families, and until 2002 ran one of the largest advertising-placement firms in the state.
That company, Media Direct LLC, is at the heart of the charges filed Wednesday in parallel bills of information in New Orleans and Baton Rouge.
While the charges appear to have no direct tie to the ongoing probe of contracts awarded during Morial's administration, sources close to the City Hall probe said prosecutors, aware of Reggie's links to Morial's inner circle, have been prodding him to provide information about members of the group.
Reached at his home, Reggie said Wednesday that on the advice of his attorney, Mike Ellis, he had no comment.
"But I will be commenting shortly," he said.
Media Direct shut its doors abruptly in April 2002 amid speculation that its financial problems were dire. The company employed about 40 people, and at its peak in 2000 posted about $60 million in annual revenue.
At the time, Reggie said he was shutting down for personal reasons and declined to discuss the company's finances. But lawsuits from creditors and clients soon followed, thrusting Media Direct's debts at least partially into the public spotlight.
The most significant lawsuit was brought by Hibernia National Bank, claiming that Reggie had defaulted on a $6 million loan. That loan, and a second loan from a Baton Rouge bank, play a central role in the bills of information filed Wednesday.
Prosecutors allege that between June and October 1999, Reggie engaged in a check-kiting scheme using Media Direct accounts at Union Planters Bank in Baton Rouge and Whitney National Bank in New Orleans. The bill of information, filed by U.S. Attorney David Dugas in Baton Rouge, said Reggie moved money from one account to the other to make it appear there was a substantial amount of money in both accounts, when, according to prosecutors, the balances in both accounts were insufficient.
The bank loans
Then in December 1999, Reggie applied for a $4.3 million loan at Union Planters to cover losses at that same bank that had resulted from the check-kiting scheme, according to the charges.
As collateral, Reggie pledged $2.1 million in accounts receivable by Media Direct, money prosecutors claim he knew was not owed to the company.
A year later, in December 2000, Reggie applied for a $6 million loan from Hibernia to pay off $2 million in debts to Union Planters and $1.5 million owed to a second commercial lender, Biz Capital, according to a second bill of information filed by acting U.S. Attorney Jim Letten in New Orleans. As collateral for that loan, Reggie pledged Media Direct's interest in an $18.5 million contract he claimed to have won with the U.S. Census Bureau, the bill states.
That contract was fabricated, prosecutors allege. And to make the problem worse, prosecutors claim, Reggie went to great lengths to make it appear that the Census Bureau signed off on Media Direct's use of the contract as collateral.
Reggie leased a mailbox at Mail Boxes Etc. to receive mail postmarked to an address in Washington, D.C., the bill states. He also had one of his employees impersonate a census bureau contracting officer, using the alias Michelle A. Dinkins, prosecutors say.
That employee, who is not named in the bill of information, altered a copy of her driver's license at Reggie's direction and signed bank papers seeking approval from the Census Bureau for the loan to be used as collateral, prosecutors allege.
Census Bureau spokesman Mark Tolbert said neither Reggie nor Media Direct have had a contract with the bureau. Officials from all three banks declined to comment, citing client privacy.
Deal suspected
Legal observers say it's significant that prosecutors decided to file bills of information in this case. That's because felony charges can be prosecuted in federal court by a bill of information only if a defendant waives his constitutional right to a grand jury indictment.
"Generally speaking, the government only files a bill of information on a felony charge if they've already reached a plea agreement with a defendant," former federal prosecutor Shaun Clarke said.
"There are times when the person may be cooperating in other matters," Clarke said of someone charged in a bill of information. "It may also simply mean he wants to resolve the case.
"If you think the government can prove its case against you, you're better off pleading guilty, irrespective of whether you're cooperating with any other investigation."
If convicted, Reggie faces up to 35 years in prison and a $1.25 million fine on the bank fraud and conspiracy charges. Loyola Law School professor and defense attorney Dane Ciolino said the penalties are likely to be considerably less than that, depending upon the extent of the financial losses.
Family, friends
Reggie is a native of Crowley, an Acadiana hamlet that has produced an improbable number of Louisiana's best-known political figures, among them former Gov. Edwin Edwards, former U.S. Sen. John Breaux, former U.S. Rep. Chris John and New Orleans lawyer William Broadhurst.
Reggie has lived in New Orleans for years. His father, Edmund Reggie, is a former Crowley city judge, a close pal of Edwards and a friend of the Massachusetts-based Kennedys going back to the 1950s. In 1992, Ray Reggie's sister Victoria married U.S. Sen. Ted Kennedy, cementing the already close bonds between the two families.
Like Edwards, Edmund Reggie was a longtime target of federal prosecutors. In 1993, he was fined $30,000 and sentenced to four months of home confinement after he was convicted on one count and pleaded no contest to another count of misusing bank funds.
As a political consultant, Ray Reggie has worked on the campaigns of several well-known Democrats, among them Clinton and U.S. Sen. Hillary Clinton, as well as the presidential campaign of former Vice President Al Gore. Locally, he worked on the mayoral campaigns of Morial and former New Orleans Police Superintendent Richard Pennington.
Reggie has served in a variety of campaign roles, helping to coordinate fund-raisers, working on strategy and placing advertising.
While Edmund Reggie is the only member of the family to have held political office, both he and Ray Reggie have acquired reputations as talented political fixers.
Two years ago, for instance, the Kennedy family asked Edmund Reggie to broker an agreement between warring political factions so that green space resulting from the Big Dig project in Boston could be dedicated to a park honoring the Kennedy matriarch, Rose Fitzgerald Kennedy. The senior Reggie took an apartment in the city and got the deal done.
Ray Reggie will not be arrested, according to papers filed in the federal courts. Instead, a summons will be issued requiring him to show up for an arraignment, where bond will be decided. According to court records, the case has been assigned to U.S. District Court Judge Carl Barbier. As of midday Wednesday, no arraignment date had been set.
It is not known which judge in the Middle District, which handles Baton Rouge, will handle the companion charge or when Reggie will be arraigned there.
Jan Mann, Letten's first assistant, said federal rules allow for the merging of parallel cases only if the defendant agrees to plead guilty and asks for the cases to be combined. She is prosecuting the New Orleans case, which involves the lesser charge of conspiracy to commit bank fraud, along with her husband, Jim Mann.
In Baton Rouge, prosecutor Frederick Menner is heading the government's case against Reggie.