Two Baton Rouge brothers attempted to pay off a $25 million laon from a New York financial institution by using the assets of several banks and insurance companies, the federal government charged yesterday.
In a complaint filed at Dallas federal court, the Securities and Exchange Commission claimed the brothers were aided by the Louisiana governor, who collected a $25,000 profit on one of their real estate deals without making any personal investment.
The SEC also said that Gov. Edwin Edwards intervened with the state insurance commissioner on the brothers' behalf. "Following such communiation, the Louisiana insurance Department deferred regulatory action," the SEC said.
The SEC complaint named Jules B. LeBlanc III and his brother, Roger J. SEC did not name Gov. Edwards as a LeBlanc, along with several of their partners and corporate ventures. The SEC did not name Gov. Edwards as a defendant.
Simultaneously with the filing of the SEC suit in Dallas, the brothers and other defendants consented to the complaint without admitting or denying the allegations.
The financial and legal troubles of the LeBlancs, who are both in their early 30s, was described in The Washington Post, on Aug. 29 and in subsequent articles.
The brothers are also under federal criminal indictment for misapplication of $3 million from several rural Louisiana banks they controlled.
In the early 1970s, the LeBlancs got more than $25 million in Joans on their own guarantees from Chase Manhattan Mortgage and Realty Trust (CMART), the SEC said. By the end of 1974, the loans were in default.
The money was to finance an ambitious commercial real estate development in Baton Rouge called Corporate Square.
In an attempt "to service debt owed CMART," the SEC said, Roger LeBlanc acquired control of a Texas insurance holding company. American Commonwealth Fiancial Corp. (ACFC) in February 1975.
"The funds for such acquisition were entirely borrowed from banks through nominee corporations," the SEC alleged.
In June and July, Roger "caused" the insurance holding company to sell him 505,050 of its shares valued at $2 million. According to the SEC, $1 millionof the purchase money had been borrowed by Roger and the other $1 million was paid in property, which the LeBlanc family had acquired only three years earlier for $400,000.
The SEC described several complex transactions in which the LeBlanc formed an insurance company called First Republic Life Insurance Co. This company was capitalized in part by purchasing marketable securities from ACFC, the SEC said, which were subsequently liquidated.
An payment for these securities, Roger LeBlanc gave ACFC only his LeBlanc-controlled companies.
The SEC said that "if the State of Louisiana does not perform a full-personal note," the SEC alleged.
The SEC further said that LeBlanc's First Republic was used to acquire insurance companies in mississippi and Oklahoma. In connection, with these acquisitions, the suit charged that false and misleading information was filed with the commission.
In settling the suit, Roger LeBlanc agreed to dispose of his ACFC stock within nine months.
The SEC also showed its impatience with the Louisiana Insurance Department, which has been slow to regulate scale audit" on First Republic within indepedent auditor to go over its book.