District E Councilman Jon Johnson this morning pleaded guilty to one count of conspiracy to commit theft of government funds and submit false documents to a federal department.
According to court documents, between 2006 and 2008, Johnson routed thousands of dollars in FEMA disaster funds through two charities — the Ninth Ward Housing Development Corporation and the New Orleans Health Clinic — and converted them for use in his failed 2007 bid for State Senate. Johnson also submitted false invoices to the Small Business Administration justifying a low interest loan for work done on his home to repair flood damage.
Johnson, who faces up to five years in prison, submitted a letter of resignation to City Council today, said his attorney Julian Murray following today's hearing hearing before U.S. District Court Judge Lance Africk. Murray said the resignation will take effect Monday, giving Johnson time to replace the city-owned car he now drives. (The Clerk of Council's office could not confirm that the letter has yet been received.) Update: Johnson's resignation took effect immediately.
Johnson declined to comment to reporters outside the courtroom but released a statement, admitting guilt but claiming he believed at the time that he had done nothing wrong.
"I am hopeful that when all the facts are known, it will be found that my positive efforts to help these two charitable organizations, my many civic activities and my years of honest service to my city and state outweigh my transgressions. The actions in question took place during the years I was a private citizen and not serving in any public office or as an elected official," Johnson said.
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"I don't think it's ever a great idea for individuals who plead guilty to gild the lily," by retroactively claiming they didn't know their actions were wrong, said U.S. Attorney Jim Letten in a press conference after today's hearing.
Letten said there are still some "ambiguities" to the case, namely how much Johnson stole (though Johnson's statement indicates he believes it was about $13,000). The government does know that, during the period in question, the Ninth Ward Housing Development Corp., which was controlled by Johnson received FEMA reimbursement grants totaling nearly $140,000 for the renovation and repairs to the flood-damaged T.J. Semmes Elementary building. (The Lens reported on Johnson's connection to the building last year.) The group also received nearly $20,000 in grants from the U.S. Department of Housing and Urban Development in 2007-2008.
While Letten couldn't say how much was converted for use in Johnson's campaign, his office has also charged Asif Gufar, who worked for the campaign, with one count of structuring a financial transaction to evade campaign contribution reporting laws. According to the bill of information, in September 2007 Johnson gave Gufar an $8,000 check and instructed him to "ensure that the money was contributed" to the campaign. Gufar allegedly cashed the check, converted it into nine money orders, which he then gave to the campaign in the names of a number of his other clients — unidentified in the bill of information — and one $900 money order from himself.
Roy Lewis, who worked for the Ninth Ward organization, has also been charged with misprision of a felony.
Also unclear is why Johnson submitted false invoices to the Small Business Administration, even though he did, in fact, have extensive repair work done to his home.
"I have to admit, there's still some ambiguities as to whether he would have been entitled to that SBA loan," Letten said.
Murray, Johnson's attorney, declined to comment.
"We will provide all these details at the time of sentencing," Murray said.
Johnson's sentencing is set for October 25. He's out on a $25,000 bond, under the conditions that he turn in his passport to federal authorities, remain inside the continental United States and remain within the state of Louisiana unless granted permission.
Meanwhile, District E is minus a Council representative, with an election still four months away. Danielle Viguerie, a spokeswoman for Councilwoman at-Large Stacy Head, tells Gambit that City Council will release a statement with details on the appointment process for an interim District E Council member — who will serve until the November election — sometime today.
Update: Statement from City Council, which will be holding a special meeting today.
It is with great sadness that we have accepted the news today about Councilmember Jon Johnson. We want to assure the people of New Orleans East, the Ninth Ward and all of District E that the district office will remain open and will continue to serve them with any necessary assistance from the rest of the council and administration.
To the people of New Orleans, the City Council will keep moving forward together.
This afternoon at 4 p.m. the City Council will meet in special session to declare a vacancy on the Council and call a special election for November 6th to fill the Council vacancy.