NOLA official pleads guilty in Katrina fraud

State News

July 20, 2012

NOLA official pleads guilty in Katrina fraud

Associated Press Associated Press Fri Jul 20, 2012, 10:54 AM CDT

NEW ORLEANS, La. — A New Orleans city councilman pleaded guilty Wednesday to plotting to misuse federal money intended to help a nonprofit organization after Hurricane Katrina by diverting some of the money to one of his political campaigns.

Jon Johnson, 63, faces up to five years in prison and a $250,000 fine. U.S. District Judge Lance Africk set his sentencing for Oct. 25. Johnson also resigned Wednesday, effective immediately. A special election to fill his seat is scheduled for Nov. 6.

Johnson said he decided to plead guilty after meeting with federal officials about his use of Federal Emergency Management Agency money sent to a nonprofit he controlled and documents he provided the Small Business Administration after receiving a loan for repairing his home.

“While they acknowledged the positive contributions which I had made, they were able to show me documentation where on two occasions, I converted federal FEMA funds totaling $13,000 to use in my 2007 Senate campaign and where I had filed a false statement in connection with an SBA loan which I was seeking,” he said in a statement that his lawyer handed out on his way into court.

Johnson added that he hopes his charitable work and civic activities “outweigh my transgressions.” Asked for comment after entering the guilty plea, Johnson said, “Not right now.”

Two other people also were charged Wednesday in the case against Johnson. Asif Gafur, who served as Johnson’s bookkeeper, was charged with structuring financial transactions to evade recording requirements. Roy Lewis, whose connection to the case isn’t disclosed in court papers, was charged with misprision of a felony.

Johnson pleaded guilty to conspiracy to commit theft of government funds and to submit false documents. Prosecutors said he diverted money intended for the Ninth Ward Housing Development Corp., which was based in one of the neighborhoods hardest hit by flooding after the 2005 hurricane.

An eight-page bill of information details Johnson’s control of the nonprofit’s finances as well as those of New Orleans Health Corp., another nonprofit he helped run. The document said Johnson diverted some of the money meant to pay for gutting a storm-damaged building to fund his unsuccessful run for the state Senate in 2007.

The bill outlines more than $140,000 in grant money earmarked for the Ninth Ward nonprofit but does not say exactly how much Johnson stole.

“We’re actually sorting that out for sentencing purposes,” said U.S. Attorney Jim Letten. “It’s fair to say thousands of dollars.”

Johnson wasn’t holding public office when he misused the FEMA money, but Letten said the council member’s guilty plea is a product of his office’s commitment to changing the city’s “culture of corruption.”

“We are determined to build a better city ... and I think we are effectively doing that,” Letten said.

Johnson also pleaded guilty to conspiring with an unidentified contractor to provide the Small Business Administration with fabricated invoices after the agency loaned him $150,000 to repair his home.

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