Peterson pushed Edwards campaign, Democratic Party to work with firms in fraud scheme
The former executive director of the Louisiana Party and Gov. John Bel Edwards' 2019 campaign manager say Karen Carter Peterson pushed for them to provide vendor contracts to two companies that have been linked to a fraud scheme that Peterson has admitted organizing. (Photo by JC Canicosa / Louisiana Illuminator)
NEW ORLEANS – Karen Carter Peterson pushed for the Louisiana Democratic Party to award a contract worth tens of thousands of dollars to a New Orleans political consulting firm just a few weeks before the 2019 primary election for governor. That’s according to the state party’s executive director at the time, who says he questioned Peterson, then the party chair, before learning Gov. John Bel Edwards’ campaign was OK with the deal.
The firm, Exceptional Temporaries Inc. (ETI), was one of two companies FBI investigators focused on in their interview with Stephen Handwerk, the state party’s top staffer from 2012 to 2020. ETI had not previously worked with the state Democratic Party, Handwerk said in an interview with the Illuminator.
Peterson, who was state party chair from 2012 to 2020, resigned from the Louisiana Senate in April and last week signed a plea deal with federal prosecutors. A bill of information federal prosecutors filed last week says Peterson schemed with four individuals and four companies “operated by associates” to receive cash kickbacks from checks issued to the businesses from the Louisiana Democratic Party and her campaign fund.
The court filing says Peterson used the money for personal expenses, including to pay her gambling debts. Peterson acknowledged a gambling addiction when WWL-TV aired a story in March 2019 that revealed she had violated a self-imposed ban at a Baton Rouge casino.
‘Very odd’ late vendor deal
Handwerk said he asked Peterson bluntly about ETI in a text message when he saw the company had been submitted as a vendor in September 2019. FBI agents produced the text exchange when they interviewed Handwerk earlier this year, he said, adding that he has not been subpoenaed in the investigation.
Federal investigators told Handwerk they considered him a witness or victim in the fraud scheme, not an accomplice, he said. The party vetted and chose its vendors for the 2019 governor’s race in the spring, and Handwerk said it was “very odd” for a new firm to be added so close to the election.
“I didn’t understand why we were bringing in a new vendor into the mix when we already, in my mind, had vendors that could handle something like this,” Handwerk said.
Peterson told Handwerk that ETI was needed to provide temporary workers to distribute campaign slate cards door-to-door in New Orleans, he said. Using temp firms for this work was pretty common because it shifted liability and the burden of finding labor to the staffing agency, according to Handwerk.
State business records show ETI’s president is Randall Moore. In 2005, Moore pleaded guilty to skimming money from a city energy efficiency contract during Mayor Marc Morial’s tenure, according to The Times-Picayune.
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Handwerk said he was not aware of Moore’s past when Peterson backed his company as a vendor. Because the contract was issued so close to the election, Handwerk said ETI was not given the full vetting other vendors were put through when the majority of campaign contracts were signed in the spring.
The Edwards campaign agreed the additional workers were needed and approved using ETI, according to Handwerk.
Richard Carbo, Edwards’ campaign manager in 2019, said he also was unfamiliar with Moore’s background when ETI was hired. With the election just days away, he concurred that more people were needed to hand out campaign literature in New Orleans, a voter base critical for the governor’s re-election chances.
“This was one of those instances where it was recommended by Karen or the party that we use ETI for some staffing needs … and we went with that recommendation,” Carbo said.
The money for ETI came from a coordinated campaign account, which allows the candidate to steer the expenditures of a separate organization. In this instance, only the Democratic Party could write checks to vendors.
Campaign finance records show ETI was paid $87,500 in four installments between late September and mid-October 2019, including three payments for “slate card distribution.”
“We were moving very fast at that time, but there was clearly no knowledge something was happening outside of that, otherwise it wouldn’t have been allowed for from our perspective,” Carbo said.
The FBI also considers the Edwards campaign a victim of the fraud scheme, according to Carbo.
‘The chair’s radio buy’
The other company Handwerk said FBI agents discussed with him was The Jaelyn Group, a political consulting firm run by Gralen Banks, brother of former New Orleans City Council member Jay Banks.
Campaign finance records show the Louisiana Democratic Party paid The Jaelyn Group $327,700 between 2015 and 2019, including a $100,000 check in October 2019 for a “radio buy” to support Gov. John Bel Edwards’ reelection campaign.
Carbo said Peterson approached him and Handwerk directly about purchasing broadcast advertising through The Jaelyn Group. Within the campaign, it was identified as “the chair’s radio buy,” referring to Peterson’s role with the state party, Carbo said.
Handwerk said he knows at least some of the radio commercials aired. He speculated that money from the ad buy could have been skimmed and converted to cash for Peterson. The Jaelyn Group had worked with the party before to place campaign ads, Handwerk said.
The FBI declined to answer questions about the Peterson investigation, citing its policy not to confirm or deny such probes.
The Illuminator could not reach Gralen Banks.
The prosecutors’ bill of information does not name The Jaelyn Group, ETI, Moore or Banks. The businesses in the court record are referred to as Company 1, 2, 3 and 4.
The only incident detailed in the court record occurred March 15, 2018, a year before Peterson’s gambling addiction became public knowledge. On that day Peterson wrote a check to “Person 1” for $4,500 from her campaign account for “legislative assistance.”
Peterson’s campaign finance records show $4,500 was paid to Markeith Coleman of Moss Point, Mississippi, on March 15, 2018, for “legislative assistance.”
Coleman did not respond to an attempt to reach him via social media.
Handwerk said federal investigators also asked him about the financial inner workings of the Louisiana Democratic Party and cash control procedures. Peterson was a signer on most of the party’s bank accounts, but Handwerk told the Illuminator she did not have access to checks and didn’t know the account numbers.
“She never engaged with the bank whatsoever,” he said.
The Louisiana Democratic Party has since reviewed its financial procedures. Current state chair Katie Bernhardt issued a statement to reporters last week after Peterson announced her plea deal.
“When I ran for chair two years ago, I heard the call for a complete overhaul of the Louisiana Democratic Party loud and clear from the people, and that’s what we’ve done,” Bernhardt’s statement said in part.
‘I was kept in the dark’
Handwerk said he is disappointed that Peterson has not made an effort to clear the party and its staff in her public statements. After word of her plea deal got out last week, Peterson posted an apology on Twitter.
“I have made full repayment of funds used as a result of my addiction and I will continue to make amends,” Peterson’s post also said.
It wasn’t until an hour before the WWL story aired in March 2019 that Handwerk said he learned that Peterson had a gambling addiction. The report disclosed that State Police issued a misdemeanor summons to Peterson a month earlier when she tried to enter L’Auberge Casino in Baton Rouge.
Peterson issued a statement shortly after the broadcast report, admitting her addiction. Handwerk said he had no involvement in crafting that message.
“Clearly, because she already had her statement written, she already had all of this stuff prepared, right?” he said. “That really had me livid because I was kept in the dark for so long about this.”
Once Peterson’s addiction was revealed, Handwerk said some past interactions with Peterson gained new context. He shared one such instance that he said took place about a year before the WWL story aired when he was in charge of planning a training session for regional Democratic Party staff.
Harrah’s Casino and Hotel in New Orleans had the best response to a bid solicitation to host the event, Handwerk said. When he shared that information with Peterson, he said she became angry and argued that he couldn’t execute a contract with Harrah’s.
“‘You just can’t. That puts me in a really bad position,’” Handwerk said Peterson told him. “I had no idea what position it was putting her in.”
Handwerk went ahead and reached a contract with Harrah’s and said Peterson skipped a scheduled speaking engagement at the event at the last minute.
Peterson’s attorney, Brian Capitelli, did not respond to questions for this report.
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