Did a town alderwoman commit public-contract fraud by placing town money in a bank where she was a branch manager?

Plain-English summary

Maringouin's mayor asked about an alderwoman who was also a bank branch manager and had placed public money with that bank in a certificate of deposit. In Opinion 03-0358, the AG described Louisiana's public-contract-fraud statutes but concluded the conduct as described did not fall within their purpose. The CD principal was still available for withdrawal, so the opinion found no expenditure of funds, and the alderwoman had received no commission.

The AG treated any ethics violation as a separate question. It forwarded the mayor's request to the Board of Ethics for Elected Officials and did not clear the conduct under ethics rules.

Currency note

The full issue date is not legible in the available official extract. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant at issuance

Municipal officials

LA. R.S. 14:140 addressed a public officer's use of power to secure public-fund expenditures for the officer or a business in which the officer had specified interests. The AG said it would require more analysis to classify the alderwoman's bank position under those categories, but found the described CD had not produced an expenditure or commission.

Ethics officials

LA. R.S. 14:141 addressed contracts made by a public officer for personal value and described a disclosure exception. The AG saw no value gained on these facts, but expressly left ethics issues to the Board of Ethics.

Common questions

Did the AG find that putting a town deposit in the bank was public-contract fraud?

No. It said the statutes did not apply as described because there had been no expenditure of the principal and no commission to the alderwoman.

Did that mean the deposit was ethically approved?

No. The AG referred ethical questions to the Board of Ethics and said the handling of funds might raise them.

Would an official's personal gain matter under these statutes?

Yes. The opinion identified an actual expenditure or a benefit such as fees or commissions as relevant to the statutory analysis.

Background and statutory framework

LA. R.S. 14:140 defined public-contract fraud involving public-fund expenditures. LA. R.S. 14:141 concerned a public officer contracting on behalf of the state for a personal benefit. LA. R.S. 14:2(9) defined a public officer for the opinion's purposes. The AG compared an older opinion involving an alderman's actual receipt of commissions.

Citations and references

• LA. R.S. 14:140: public-contract fraud.
• LA. R.S. 14:141: public officer's beneficial contract.
• LA. R.S. 14:2(9): public-officer definition.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/03-0358

Original opinion text

ol
One American Place
DEPARTMENT OF JUSTICE
301 Main Street, Suite 600
crvII DIVISION
P.O. Box 94005
BATON ROUGE
TEL.: (225) 342-7013
FAX: (225) 342-2090
RICHARD P. IEYOUB
70804-9005
ATTORNEY GENERAL

0Cl 1 o 2oo3
OPINION NUMBER 03-0358

61-B
LAWS - Code of Ethics
90-A
POLITICAL SUBDIVISIONS - Officers,
Agents & Employees
90-A-l-(b) PUBLIC FUNDS & CONTRACTS -
Honorable John F. Overton, Sr., Mayor
Professional Services
Town of Maringouin
Public officers or employees of the State of Louisiana, including
P. O. Box 10
officers of a political subdivision, cannot use their power, nor State
Maringouin, LA. 70757
funds, to contract for personal gain.

Dear Mayor Overton:

The opinion you requested by your August 18, 2003 letter deals primarily with ethical issues that should be directed towards the Board of Ethics for Elected Officials.
Although we have forwarded your letter to Mr. R. Gray Sexton for such purpose, this office would like to take the time to inform you of a certain revised statute and a previous Attorney General Opinion that may answer your questions.

The third portion of your first question inquires into a situation whereby a public official is using public funds for personal gain, also statutorily defined as public contract fraud.
This particular type of fraud is committed:

(1) When any public officer or public employee shall use his power or position as such officer or employee to secure any expenditure of public funds to himself, or to any partnership of which he is a member, or to any corporation of which he is an officer, stockholder, or director; or

(2) When any member of any public board, body, or commission charged with the custody, control, or expenditure of any public funds votes for or uses his influence to secure any expenditure of such funds to himself, or to any partnership of which he is a member, or to any corporation of which he is an officer, director, or stockholder. LA. R.S. 14:140.

The term public officer is any position of authority of the State of Louisiana, or of any parish, municipality, district, or other political subdivision. LA. R.S. 14:2(9). There is no question that Alderwoman Cherise Gougisha is a public official. The appropriate analysis should be whether Ms. Gougisha, as Bank Branch Manger, would be considered an "officer, stockholder, or director," in the context of LA. R.S. 14:140.
Furthermore, an in depth analysis would be required to determine whether an expenditure of funds has taken place. In this situation, there has been no expenditure

Page 2

Opinion No. 03-0358
Hon. John F. Overton, Sr., Mayor
Page: - 2-

of funds since the principle amount of money, held in a certificate of deposit, is still available for withdrawal.

LA. R.S. 14:141 prohibits a public officer from entering into a contract on behalf of the State of Louisiana, when the public officer would benefit from fees, commissions, or anything of apparent present or prospective value. The exception to LA. R.S. 14:141 is full disclosure of such a contract by filing it with the Secretary of State at least 10 days prior to the deal. The Secretary of State would release the proposed contract to the media during the ten days pri(~r to the execution of the contract. In applying LA. R.S. 14:140 and 14:141, it is important to look at what Alderwoman Gougisha may have gained in putting the state funds with Iberville Bank. If nothing of value has been gained, then LA. R.S. 14:141 is also inapplicable.

Application of these statutes would be an extreme result considering the factual situation you described in your August 18, 2003 letter. Although these statutes have been included in this opinion to answer your questions regarding public officer conduct, it is the opinion of this office that Alderwoman Gougisha’s conduct would not fall under the purpose of LA. R.S. 14:140 and 14:141. A good factually analogous example of LA. R.S. 14:140 has been addressed by our office under Atty. Gen. Op. 1946-48, p.490. The difference is that under the 1946 opinion there was an actual receipt of commissions by the Alderman, whereas in your situation there lacks an actual expenditure of funds and receipt of commissions by Alderwoman Gougisha.

It is important to note that although the handling of these funds may be a violation of proper ethical conduct, those questions will be better addressed by the Board of Ethic’s opinion. The purpose of our opinion is to provide you with a general answer, with respect to State laws, to your questions from your August 18, 2003 opinion request. Should you need any further assistance, please contact our office.

Very truly yours,

RICHARD P. IEYOUB
ATTORNEY GENERAL

CHARLES H. BRAUD, JR.~
Assistant Attorney General

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