Sen. Clary: $100K Loan From Fellow Lawmaker Wasn't Improper

None — State Sen. Debbie Clary says favoritism played no part in a $100,000 business loan she received from a fellow Republican state lawmaker.

Clary applied for a loan from the Piedmont Development Co., a nonprofit economic development group run by state Rep. Stephen LaRoque, R-Lenoir. She received $101,250 for her business, Millennium Marketing Group, in August 2006, according to a deed of trust on file in Cleveland County.

"It was a loan that was available at bank rate," Clary said. "I applied like anyone else would have and received the loan. It has nothing to do with state money. Honestly, it has nothing to do with my friendship with Stephen LaRoque. He would not have made the loan had I not qualified for it."

LaRoque has faced scrutiny since N.C. Policy Watch reported that he earned up to $195,000 per year in salary from the two nonprofit development groups he runs.

The Policy Watch website named Clary and another Republican, state Rep. Mark Hilton, as lawmakers who had received loans from LaRoque's nonprofits.

LaRoque's family members and business associates dominate the groups' boards of directors, N.C. Policy Watch reported.

The Piedmont Development Co. partners with the U.S. Department of Agriculture's rural development program to make loans. There's no outright ban on lending to fellow lawmakers, but USDA rules discourage lending to anyone who holds a "legal or financial interest or influence" over the lender, according to N.C. Policy Watch.

Clary said the loan from LaRoque's nonprofit allowed her to retain two employees who might otherwise have been let go. It also enabled her to buy the building where Millennium Marketing formerly leased space on North Lafayette Street in Shelby.

"It has kept two folks working for us, plus, it helped me buy a building," Clary said. "I became a property owner versus a renter in uptown Shelby, and I think that's a positive thing."

Millennium Marketing has already repaid more than half of the loan, Clary said Wednesday.

Clary said Piedmont Development Co. has about $150,000 in federal funds it will have to return to the government if it doesn't loan the money out by Sept. 1. The group faced a similar deadline in 2006 when Clary applied for her loan, she said.

"The timing was perfect, and it was just like what is happening right now," Clary said.

The Republican who represents Cleveland and Rutherford counties in the state Senate said open and ethical business deals between legislators are a reality of a General Assembly where lawmakers are paid about $20,000 in stipends and most hold full-time jobs.

"There is not a day that goes by that you're in the legislature and you're not also trying to take care of your business at home," Clary said. "We work for a living. This is a working citizen legislature."

In June, Clary announced she would resign from the state Senate this fall and work as a lobbyist in Raleigh.

The report on LaRoque's high salary, alleged nepotism and loans to fellow lawmakers was published Aug. 3 on the N.C. Policy Watch website. The online publication is a project of the N.C. Justice Center, a progressive think tank dedicated to eliminating poverty.

LaRoque called the story a "political hit piece" and pointed out that William Barber, president of the NAACP of North Carolina, serves on the N.C. Justice Center's board of directors. LaRoque famously feuded with Barber on the House floor and has been quoted as calling him a racist.

"Barber and them are really after him," Clary said. "The NAACP is dogging him. That's where this comes from."

Sarah Ovaska, a former Raleigh News & Observer reporter who wrote the LaRoque stories for N.C. Policy Watch, said North Carolina residents should make up their own minds about whether LaRoque has conflicts of interest.

"I think that's a question for the public," Ovaska said. "Does it seem proper?"

WSOC