Lee Zurik Investigation: Feds issue subpoena, open probe of Walter Reed

Published: Jun. 5, 2014 at 10:50 AM CDT
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An exterior image of the Castine Center from the web site of St. Tammany's Recreation District #1
An exterior image of the Castine Center from the web site of St. Tammany's Recreation District #1

The FBI has launched an investigation of St. Tammany Parish District Attorney Walter Reed. At least part of that investigation centers around findings by FOX 8 News and Times-Picayune in our "Louisiana Purchased" probe of campaign finances.

A government watchdog says it's a clear sign the district attorney in St. Tammany Parish is in the crosshairs of the federal government.

"This is the first public confirmation that a federal probe is underway right now," says Metropolitan Crime Commission president Rafael Goyeneche.

The FBI sent a subpoena to the staff of the Castine Center in Mandeville. That subpoena asks for a long list of records related to fundraisers held there by Reed. The FBI wants all records related to the DA and his son, Steven.

"This subpoena specifically references [the fundraisers]," says Goyeneche, "so it's very apparent that those are the major parties that the federal government is interested learning more information about from the Castine Center."

In April, our Louisiana Purchased investigation showed how Walter Reed hosted a fundraiser at the Castine Center in 2012 and paid his son's company, Liquid Bread, almost $30,000 for bar services. The DA and his son had differing stories about what Liquid Bread actually did at the event - Walter Reed said they provided alcohol but his son said he didn't.

That story aired on April 29. Six days later, on May 5, the FBI dropped off a subpoena at the Castine Center, asking for all records related to Walter and Steven Reed dating back to January 1, 2008. The FBI wants files, contracts, invoices, emails and pictures.

When they receive the file on the event, they'll find that Steven Reed is not mentioned once. FOX 8 News and later published that file as part of our reporting and, though Steven Reed was paid almost $30,000 for bar services, the Castine Center documented nothing about him in the event file.

Last month, a long-time bartender has a shocked reaction when he saw an invoice that showed the campaign paid Steven Reed nearly $30,000.

"That's not possible," Travis Sanders told us. "29 grand? $29,400? That's ridiculous. That's half of my salary in a year."

Since 2005, Walter Reed's campaign has paid his son's catering and production company $95,945.

"It just seems that this is a way for a father to funnel money to his son, to kind of support his family," said Ed Chervenak, a UNO political scientist, in an interview on the topic in early May.

We don't know if the FBI is looking at other payments Reed's campaign made to his son's companies. But it's clear they are focusing on payments related to a 2012 fundraiser.

The Castine Center has apparently handed over the subpoenaed records to the FBI.. The feds gave them a May 22 deadline.

"This is one subpoena," Goyeneche notes, "and usually where there's one there are going to be others. So I suspect that this is not the end of the investigation but literally the beginning of the investigation."

Walter Reed has been in office since 1984. He's the longest-serving parish-wide elected official in St. Tammany. Now, the long-time law enforcer is being investigated by the FBI, at least in part for how he spent his campaign money.

"This is a subpoena to the grand jury," Goyeneche tells us. "This is not a civil matter. This is an indication of a criminal probe. So this is I think bad news for the sitting DA in St. Tammany Parish.

It's a critical development in a case that the MCC head says St. Tammany citizens cannot ignore, given that their top criminal prosecutor is now the subject of a federal criminal probe.

We reached out to Reed's office, which had no comment.

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