District Attorney Keith Stutes told Lafayette Consolidated Government officials he found no evidence of a crime in questioned payments between Lafayette Utilities System and LUS Fiber after he reviewed records they provided.
Stutes' memos outlining his conclusions, however, show a limited investigation by his staff, which cites only one witness interviewed by his office.
Instead, Stutes based his findings about actions by former LUS Director Terry Huval and other employees on documents and other materials provided by the city-parish, and he criticized Lafayette officials who asked him to investigate how more than $8 million from ratepayers was handled for not providing specific evidence of a crime.
"Strong rhetoric and advocacy do not supply the necessary proof to warrant criminal charges which must be established beyond a reasonable doubt," Stutes wrote. "While awaiting the results of your continuing investigation for such proof, you continue as well to publicly proclaim your conclusions."
Stutes said the matter of payments between the sister utilities was better suited for state regulators.
Lafayette officials asked Stutes to investigate the circumstances around the payments that a forensic audit concluded violated state law. That audit states Huval improperly channeled money from LUS to LUS Fiber to prop up Fiber, knowing the payments were for services not used, needed or provided.
Those payments included money for a power outage monitoring system of questioned utility, which former Mayor-President Joel Robideaux reported to the Public Service Commission in December as a possible violation of state laws prohibiting improper subsidies between the sister utilities under city-parish control.
Stutes argues in memos first obtained by The Current that without more clear guidance from the city-parish of illegal acts, there is not sufficient evidence of a crime. He states there is reasonable doubt about intent by Huval and others, and malfeasance charges require clear intent to violate the law.
“There has not been presented sufficient proof of the criminal intent required to establish malfeasance in office,” Stutes wrote. “There certainly might be some suggestion of inadvertence or negligence on the part of many; inadvertence, negligence, or even ethical violations and criminal negligence is insufficient to establish the crime of malfeasance In office.”
Additionally, he argued that because the actions occurred in 2011, the statute of limitations for malfeasance charges over the payments elapsed in 2015.
Requests for comment from Stutes and Huval were not returned Thursday.
Stutes based his determination on evidence received through multiple requests to Lafayette Consolidated Government for documents, records and internal findings, including interviews of LUS employees conducted by city-parish attorneys.
In a pair of letters to Lafayette Mayor-President Josh Guillory and City-Parish Attorney Greg Logan, Stutes reports issuing several requests for documents to city-parish officials. He also said he requested documents that were delivered to the forensic auditors hired by the city-parish to investigate payments between the sister utilities and those documents were released publicly before his own requests were satisfied.
Stutes rebuked Guillory and Logan over repeated claims that Huval and others had committed malfeasance, misappropriation and destruction of public records, writing that the evidence provided by the city-parish suggests no crimes were committed.
"It is clear from the evidence submitted thus far that there is insufficient proof beyond a reasonable doubt as to the offenses that form the basis of your complaint," he wrote.
Stutes insisted in an Aug. 10 memo that allegations of improper subsidies between the two utilities are civil matters, not criminal. He said such matters are not the responsibility of his office and fall under "the exclusive primary jurisdiction of the Louisiana Public Service Commission."
State law prohibits a taxpayer funded utility from unfairly subsidizing a sister utility.
In citing the basis of his findings, Stutes' memos cite one witness interview. The memos do not cite evidence obtained through subpoena or from witnesses interviewed, or other material.
His August memo does not include independent interviews of the LUS employees or others involved in the allegations who may have been able to shed light on the acts and intentions of leaders and employees whose behavior has been questioned.
A Sept. 8 letter references just one interview he conducted with third-party auditor Burton Kolder, whose review of the questioned payments was criticized as inadequate by forensic auditors in the August report on transactions between the two utilities.
MORE: Forensic audit of LUS, Fiber finds Huval ordered millions in unlawful subsidies
Forensic auditors with Carr, Riggs and Ingram of Metairie found that Huval ordered millions in illegal payments from LUS to Fiber to help bolster the struggling telecom's revenue that likely violated the rules of the Public Service Commission and the Fair Competition Act.
Although Huval claimed payments made for sewage lift stations that weren't working were presented as an oversight, auditors determined Huval knew that LUS could not use the services that he ordered LUS to pay Fiber for at the lift stations.
“Given that the conversion of the lift stations was driven by Huval’s arbitrary decision to increase LUS-Fiber’s revenue and did not appear to be based on an identified need, these transactions appear to represent cross-subsidies of LUS-Fiber by LUS, in violation of the (Fair Competition Act)," they wrote.
They reached the same conclusion about the $8 million paid for Fiber's outage monitoring system as another violation of laws and rules prohibiting LUS from over-paying Fiber for services to prop up the telecom.
Guillory asked Stutes to investigate the payments in February and he claimed thousands of Huval’s emails from 2011 had been deleted. However, Logan later revealed in a July City Council meeting that the emails were found in a separate LUS storage archive shortly after Guillory said they were deleted.
MORE: Lafayette councils seek answers on LUS email investigation, consider early voting changes
Stutes said there was no evidence of records destruction regarding the emails. On the larger matter of how ratepayer money was used, Stutes said misappropriation is not a specific crime in Louisiana law. Instead, he referred to the statute for theft, which he determined based on a review of city-parish materials submitted did not apply to any actions taken by Huval and other employees.
The district attorney argued that ambiguity over the legal requirements for how Fiber could charge LUS for the outage monitoring system meant that allegations of malfeasance did not show the required element of intent.
He determined that Huval and others could not be charged with malfeasance because they did not have direct guidance from the Public Service Commission on how exactly Fiber should calculate the cost it charged LUS for the outage system.
MORE: Emails: 'Significant LUS Fiber revenue source' came from LUS duplicate service payments
MORE: State audit raises concerns about self-dealing between LUS and Fiber, unnecessary payments
Robideaux's July 2019 announcement of the questioned outage monitoring system payments came just a month after Louisiana's Public Service Commission released an audit in June that focused on about $1.75 million in payments from LUS to Fiber for services that LUS never used at dozens of sewage lift stations.
Public Service Commission staff wrote in that audit that "there is the appearance of self-dealing that clearly benefited the Fiber utility, calling the payments "a form of subsidy" to Fiber.
MORE: Former LUS head Terry Huval defends $8M in questioned payments to LUS Fiber
Huval defended the payments for the power monitoring system in November, saying the cost of the outage system was less than it would have been under the required method and had been cleared by auditors. But the forensic auditors disputed that it had been properly vetted in their report.
Emails later showed Huval prioritized LUS’s payments for the outage system as “a significant LUS Fiber revenue source” despite being warned by a city-parish accountant that the pricing of the system may have violated the commission’s rules against improper subsidies.
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