Two candidates seeking to unseat Mayor Mitch Landrieu have a history of large federal and state tax debts: Michael Bagneris failed to pay more than $100,000 in taxes from 1984 to 1990, and Danatus King did not pay about $50,000 from 1998 to 2004.
Both have since paid their overdue taxes, and both said state and federal officials subsequently removed the liens they had applied.
Landrieu himself doesn’t appear to have had tax problems, according to a records search, though his wife Cheryl had unpaid taxes and penalties of about $2,500 in the early 1990s.
Bagneris had an additional financial blow: He lost a home to foreclosure in 1991, records show.
The failure to stay current with the tax obligations and private debts raises questions about a candidate’s fitness to serve as mayor of New Orleans, a job that oversees an annual budget of more than $850 million and 4,100 city employees.
Bagneris said the tax problems weren’t relevant today. King acknowledged his tax situation but wouldn’t provide details. The Landrieu campaign said it was an old issue that Cheryl Landrieu resolved as soon as she learned about it.
The Lens received an anonymous packet of records on Bagneris’ tax liens this week and then searched Orleans Parish records on him, King, Landrieu and the fourth mayoral candidate, Manny “Chevrolet” Bruno, a humorist.
The primary election is Feb. 1.
Medical bills caused problems, Bagneris says
Political handicappers give Bagneris the best shot of knocking off Landrieu. His financial problems are by far more serious than King’s.
Bagneris, who resigned as a local judge last week to run for mayor, paid off his tax debts in 1994, records show, a year after being elected as a Civil District Court judge.
In an interview with The Lens, Bagneris said he could not keep up with his tax and mortgage payments because he had to pay his young daughter’s steep medical bills.
His daughter was born with a hole in her heart and required constant medical attention, Bagneris said in the 45-minute phone call Thursday.
“Costs began to spiral,” he said. “When costs spiral, you can get on the verge of bankruptcy. Thank God it didn’t happen. I was able to work my way out. I didn’t have to declare bankruptcy like so many Americans face.”
Federal tax liens against Michael and Althea Bagneris, now paid
State tax liens filed, also paid
Bagneris said he didn’t believe his tax and mortgage problems mattered in the mayoral campaign. The liens were issued against both Bagneris and his wife at the time.
“That to me is ancient history,” he said. “I have paid the taxes that have been owed for the past 20 years. I paid all my debts that have been incurred. I don’t have anybody clamoring at my door saying I am not a good fiscal manager of my funds.”
Questions about possible financial problems in Bagneris’ past have been whispered in political circles since last week when he made the surprise announcement that he would challenge Landrieu. Those whispers were spurred by an unusual political development a few years ago: after Sen. Mary Landrieu recommended Bagneris for a federal judgeship in 2009, the White House in 2010 declined to give him the required thumbs up. Nannette Jolivette Brown was nominated by President Barack Obama and confirmed instead.
Sen. Landrieu is an older sister of Mayor Landrieu. In 2009, Mitch Landrieu was Louisiana’s lieutenant governor. He was elected mayor in 2010.
Bagneris said he believes that the White House preferred Brown because she would become the first African-American female judge in the Eastern District of Louisiana. He said that he informed Sen. Landrieu of his tax problems before she nominated him but said she told him it wouldn’t be a problem “because of the staleness of it.”
He said he doesn’t question Sen. Landrieu’s support.
“Mary came out and spoke in glowing terms about my credentials and the whole nine yards,” he said.
Landrieu’s Senate office Friday asked The Lens to email its request for her view of what happened about the failed nomination. Her office did not respond to that request.
On Thursday, Bagneris said his financial problems began in the early 1980s, after his daughter was born. At the time, he was a prominent appointed city official, serving as executive counsel to Mayor Dutch Morial.
“I wasn’t born into a privileged family that had real estate ownerships and stock ownerships, that if something happened someone else could bail you out,” Bagneris said. He said his father was a day laborer and then a school janitor while his mother was a maid and then a school cafeteria worker. They raised five children.
“I didn’t have the ability to call Uncle Joe and say I need a few dollars here,” Bagneris said. “I didn’t have any trust funds or anything else. I was like the average American where you do run into financial problems. The question is how you handled them. I think I handled them pretty damn well.”
On June 7, 1990, the IRS filed a lien against Bagneris and his wife for failing to pay federal income taxes, Orleans Parish records show:
$4,916.27 for the 1984 tax year
$3,298.67 for 1985
$5,110.98 for 1986
$16,681.53 for 1988
The IRS filed three more federal tax liens against Bagneris and his wife:
$31,016.08 for 1987, filed on June 27, 1990
$26,275.90 for 1989, filed on Jan. 28, 1991
$16,355.98 for 1990, filed on April 18, 1994
The federal tax liens added up to $103,655.41.
On Dec. 16, 1987, the state Department of Revenue and Taxation filed a lien against Bagneris and his wife for failing to pay state income taxes.
$1,711.42 in 1984
$362.72 in 1985
In October 1994, the Bagnerises won a release from the federal tax liens after satisfying the debt, Orleans Parish records show. The Lens was unable to obtain documents showing how and when they resolved their state tax liens. A state Department of Revenue official said releases from state tax liens often are not filed in parish courthouses.
Bagneris said he paid all of his taxes with money from Bruce Waltzer, who formed a personal-injury law firm with Bagneris after Bagneris left the Morial administration in 1986. Bagneris and Waltzer said most of the money came from Waltzer buying out Bagneris’ share in the law firm, with the rest coming in the form of a personal loan from Waltzer.
Waltzer said Bagneris left just after the law firm won a major case where they represented an individual who was badly injured on the job.
“We were flush,” Waltzer said.
Waltzer explained why he paid Bagneris for his share in the firm.
“When he left, he left [behind] all the business that he brought in,” Waltzer said. “Michael was a very, very good business getter. When he left, he gave up any claim to any of the money that would come in from the cases that were in the office at the time or any follow-up.”
Bagneris and Waltzer said Bagneris repaid the personal loan, although neither said he could remember the amount.
While he was having financial problems, Bagneris twice ran for public office and lost – a 1986 race for an at-large seat on the New Orleans City Council and a 1990 race for Congress. Earlier in 1990, he managed Donald Mintz’s failed campaign for mayor of New Orleans.
In an Aug. 29, 1990, article in The Times-Picayune on his tax problems as a congressional candidate, Bagneris gave a different explanation than his daughter’s health problems.
“Difficult economic times and a $325,000 City Council campaign against Dorothy Mae Taylor in 1986 led to Bagneris’ tax problems, he said,” the newspaper reported.
The Lens reviewed Bagneris’ 1986 campaign finance reports Friday and found that his candidacy apparently cost him $54,500 personally. He made two $5,000 contributions to his campaign. And on July 22, 1994, he wrote the Campaign Finance Office in Baton Rouge to report that he had “assumed personally” $44,500 in loans to his campaign and paid them off.
Bagneris also faced legal difficulties for failing to pay the mortgage on two properties he owned.
On Nov. 29, 1989, Commonwealth Savings Association sought to take possession of a property owned by Bagneris and his then-wife, Althea Leonard Bagneris, at 814-16 North Robertson St. in New Orleans. The amount owed was $12,887.73. The next day, a Civil District Court judge ordered that the property be seized.
But on March 1, 1990, Commonwealth withdrew its request to seize the property because the “case has been settled, and the indebtedness made current,” court records show.
Bagneris said the North Robertson property was the headquarters for a group called the Treme Improvement Political Society, but it was registered in his name. “The organization was supposed to underwrite the payments,” Bagneris said. “They didn’t.”
Bagneris said he “got stuck with the bill. I believe we worked it out with whoever that owner was.”
He said he ended up donating the property to a nonprofit group, whose name he couldn’t remember. The Greater Treme Consortium Inc. now has the property, Orleans Parish records show.
Bagneris faced more problems with a home at 4410 Walmsley Ave. in the Broadmoor neighborhood. On March 30, 1991, Security National Trust won a court order to seize the property because of Bagneris’ failure to make payments on the $99,444.39 remaining on the mortgage.
Security recovered the property at a sheriff’s sale on Sept. 5, 1991, for the price of $49,000. The records do not show if Security sought to recover the additional $50,000 from Bagneris.
He said the house became vacant after he and his wife divorced and both moved out.
“I worked out an arrangement with them where Security National and I didn’t have a problem,” Bagneris said. “I paid something. I don’t know what it was. I agreed to allow them to take the property. It wasn’t any big court battle.”
Bagneris’ most recent personal financial disclosure report to the state shows that he earned nearly $140,000 in 2012 as a Civil District Court judge.
Today, Bagneris and his second wife, Madlyn, live in a home on Bayou St. John that he valued at $900,000, the disclosure report shows. Madlyn Bagneris is a retired Entergy executive.
Bagneris’ daughter, now an adult, leads a normal life, he said, expressing misgivings about disclosing her medical history.
On Friday, Bagneris declined to answer more questions from The Lens.
“My daughter is not too pleased,” he said. “I’m not going to provide anything else. Write what you need to write.”
Asked how he looks back on the tax problems, Bagneris said, “If I had to do it over again, I’d do the same thing.”
King: ‘Taxes have been paid’
Danatus King, the president of the New Orleans chapter of the NAACP, acknowledged his tax problems in a terse telephone interview with The Lens on Friday, but he stressed that they have been resolved.
“Those taxes have been paid,” he said.
Records found by The Lens show that on Aug. 1, 1997, King paid $17,577.79 in back federal business taxes owed for 1998, 2000, 2001 and 2002. The document indicates that King failed to pay unemployment taxes and didn’t remit the taxes withheld from employees’ pay.
King said he has a law firm but declined to say whether he owed the federal taxes for the firm or another business.
Another court record showed that King owed $290.15 in state taxes for his law firm in 2001.
On April 29, 2008, the state also filed a lien against King for nonpayment of Louisiana income taxes in 1998, 2001, 2002 and 2004, totaling $31,429.50. The Lens could not find a record showing that King paid those taxes, but parish records do not always include those documents.
King declined to explain how he was able to pay all of his back taxes.
Mayor’s wife cited for babysitter taxes
The Orleans Parish records show that Cheryl Landrieu, the mayor’s wife, did not pay state taxes from 1989-93 and again in a later year that was not identified. The Landrieu re-election campaign said she paid the improper amount of employment taxes for a baby sitter. The total amount owed was $2,574.42. During that time, Mitch Landrieu was a state representative.
“This is an issue that occurred well over 10 years ago,” said Ryan Berni, a Landrieu campaign spokesman. “Once brought to Mrs. Landrieu’s attention, it was paid in full.”