Government & Politics

Two mayoral challengers ran up years’ worth of federal, state tax debts

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.”

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:

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.

Other records show that King failed to pay state unemployment taxes in 1987 and in 1988 for a company called Good Housekeeping Service. The amount was $209.12 in 1987 and $281.85 in 1988.

 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.”

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  • Nate Martin

    What an idiotic, sensationalistic way to frame this story. Most normal Americans have financial difficulties at some point in their lives, which they remedy the best they can. Bagneris’ ended nearly 25 years ago. Of course someone from a rich political family like Landrieu will have his inherited wealth to shield him from such pitfalls. In a poor city like New Orleans, I’d almost rather have someone who has firsthand knowledge of handling shaky financial situations in charge.

  • 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.

    Is this really an idiotic way to frame this story? If you say everyone has some financial problems, WHY didn’t this judge get the federal judgeship nomination while being recommended by the Senator in 2009? Are you saying a US President doesn’t under financial difficulties, especially medical ones? Is that what you are saying?

  • Nate Martin

    Well, maybe “idiotic” is a bit harsh, but that’s all I’ll give.

  • Keith Hardie

    Boy, is your timing off! in Dickens’ Christmas Carol, you may recall,
    Tiny Tim was going to die because his parents could not afford medical
    treatment! There is abundant fecund muck to rake in this town, and why
    the Lens would decide to run this story on December 20 is simply beyond
    me. As Tiny Tim said, “God Bless us all!” In the 1880’s, Abraham Lincoln purchased a general store on credit and signed a personal note. The store failed. While Lincoln was attending the Illinois legislature, his horse, saddle, and surveying equipment were seized to satisfy the note. In what was largely a reaction to debtor’s prisons in England, the Constitution gave Congress the power to enact laws on bankruptcy, and in 1881, Congress authoriized voluntary bankruptcy, a tremendous progressive shift in debtor-creditor law which has survived the constant attempts of the financial industry to weaken it. Healthcare debt is one of the most common reasons people take bankruptcy. The above article reflects a Scroogish, prudish, even un-American attitude towards debt, an attitude which could be loved only by Angelo Mozilo and the gents who run your local payday lending store.

  • Tyler Bridges

    Keith: We posted the article on December 20 because that’s when it was ready for publication. The Friday night before Christmas, I should note, is not an ideal time for a news website to publish an article. But that’s when we had finished the extensive reporting and writing involved. Also: I was interested to read your account of Old Abe, although I should point out that he died in 1865. Thanks for reading our article and commenting.

  • QuienesSomos

    This type of dredging up 20 year old crap is why we wind up with the same old pile of politicians each and every election! Who cares? Should one plan on running for office when they are a child? Thus requiring careful steps in all they do throughout life? No decent private business person wants to even run for dog-catcher because of this type of journalism. The one attribute the Republicans have over us Dems is that they don’t eat their young like we do.

    Mitch might be thrilled with the Lens for this article – I’ll be voting for Bagneris in spite of it.

  • Adrienne Dixson

    The general message from the posts so far point to how Right-leaning and out of touch this internet blog is with unprivileged people in New Orleans. I expect this from the T-P given their animosity towards the unprivileged and unwealthy in the City (I’m using that construction in purpose). But, I guess your funders are cut from the same cloth as the T-P’s owners current and previous. Perhaps you’re playing to the naïveté and animus of nouveau New Orleans transplanted to New Orleans and funded by trust funds and living in homes purchased by their parents. I’m sure “debt” suggests some sort of irresponsibility and malfeasance, but most Americans, do in fact encounter challenges that greatly impact their personal finances. Health care costs are generally the number one cause and divorce is high ranking as well. That Judge Bagneris still had aspirations to serve the City is laudable. In this particular neo-liberal moment the poor and those with “unpaid” debt are shamed and essentially disenfranchised by the monied elite. Sad commentary on our society writ large and a so-called “free press.”

    Can someone tell me if Orleans Parish Civil Court, for the last 20 years, due to its judges’ rulings, has made New Orleans a better place?

    Or has Orleans Parish Civil Court just kept up the status quo for the last 20 years?

    Were there are any civil service judges’ ruling(s) in the past 20 years that have made positive change to say, for example, the city’s services, water, civil service, utlities, schools, law enforcement hiring, finance, banking permits and inspections, etc?

    Is New Orleans “an easy and good place to do business” in regards to the judges decisions by Orleans Parish Civil Court?

    I ask cause if someone is elected to Orleans Parish Civil Court, and then, after 20 years, wants to run for mayor, shouldn’t this person have some sort of track record of making significant change as opposed to “talking about change” or “talking about listening”?

    Listening is one thing. And that’s good, but ultimately results must follow and after 20 years of listening, what actions have been taken that has made Orleans Parish a better place?

    Saying that one has listened for 20 years is one thing.
    Making positive action on 20 years of listening is another.

    If one is an elected official for 20 years, and now more than 8 years after Hurricane Katrina, one should already have been listening for the last 20 and the last 8, and already know what needs to be done on DAY ONE of taking office.

    Last question: Does NOLA have time for elected officials that need 20 years of listening with no positive significant actions to show for themselves?

  • In The Bag

    It is clear by the biased presentation of the skewed information, who The Lens is supporting in the mayor’s race. If it wasn’t obvious before, that the incumbent mayor is nervous about Mr. Bagneris being a serious challenger…it is now. I support Mr. Bagneris in this race and I know he has it…In The Bag.

  • Keith Hardie

    You are, of course, correct: Lincoln’s property was seized in the 1830’s., citing, at ftn 30, Donald, David Herbert (1995). Lincoln. New York: Touchstone pg. 50–54. Thomas Jefferson also accumulated significant debt, so much so that, towards the end of his life, he asked the Virginia legislature to authorize him to conduct a private lottery with Monticello as the prize. These private financial problems have never been seen as having compromised the great respect Americans feel for the jobs these men did as president.

    I think a more relevant inquiry would have been to look at how Bagneris, as a Judge, and Landrieu, as Lt. Gov. and Mayor, have handled public funds, contracts, and hiring, rather than looking at private affairs from the distant past. Both of these candidates have extensive records in public office, and if the Lens could focus on those records, it might do more of a service to the voting public.

  • Tyler Bridges

    Thanks for the updated info on Abe and Jefferson — interesting stuff. Also, thanks for your suggestions on potential stories, Keith. All worthy ideas.

  • scotchirish

    NOLA has had time for the past 200+ years. Same names keep recirculating.

  • Janet Hays

    Sounds to me like Mayor Bagneris has exactly the kind of real world experience that will make him an outstanding Mayor…. unlike those who may be more economically privileged and disconnected from “every day people”, Bagneris sounds like the kind of guy that will use his intelligence to balance the interests of residents and developers to create a more equitable City. The health of the City depends on the health of residents. ALL residents.

  • Columibiana Slough

    Bangneris decades old tax issues are a total yawn,after reading the first paragraph, I now understand why some commentators on blogs often post with the abbreviated phrase tl:dr. What would be interesting to me and perhaps
    other New Orleanians would be Bangeris links to the GOP and how he would benefit from their support and why he would choose to receive the support. An examination of the history of the GOP supporting Black democratic candidates in New Orleans would be enlightening.

  • Janet Hays

    Columibiana Slough: I’ve never thought of civic elections as being particularly political. The needs of residents are more fundamental than political ideology. Clearly, it’s not money that wins elections anymore. Look at Latoya’s campaign. Or Yolanda King or even Vance McAllister. I get that this article was tl:dr but hopefully the following link will interest you.

  • Columibiana Slough

    Money will always play a pivotal role in elections as well as political ideology. Voters will need to know, who is trying to influence their opinions and why. In regards to Yolanda King, I forget her opponent’s name, his campaigned erred and ignoring Algiers and communities other than Uptown as well as the impact of CC toll vote. Thanks for the link!

  • Jenel Hazlett

    It is best for all of the history on all of the candidates to be out in the open as soon as possible.
    Does it matter how debt was handled and resolved? Yes it does. The truth will always matter.
    We should know as much as possible about the individuals we allow to run our city.
    And given the election is only months away the sooner the better. So the timing is right.

    I like Keith Hardie’s suggestions for stories.

    This kind of reporting is why it’s called “The Lens”; everyone gets their chance under it and we are all better for it.

  • MacCoon

    this information was public record. the lens is sensationalizing it. that’s the truth.

  • MacCoon

    and i’ll be supporting king…

  • MacCoon

    it’s cute, but what’s the second line for? anyway, danatus king has shown himself to be more of the people’s champion and hopefully will get more support. but bagneris’ republican (and probably tea party and/or alec) backing is a HUGE red flag.

  • MacCoon

    what? not particularly political? in new orleans? you can’t be from here. the needs of politicians pockets have almost always trumped the needs of residents here.

  • Janet Hays

    “danatus king has shown himself to be more of the people’s champion “. based on what? I love Danatus in his role as leader of the naacp. Bagneris’ role was as a Judge – IE: enforcer of the law. You can’t compare what each would do as Mayor. Waiting to see what policies and ideas each will have to support their platform. We need real solutions. Not just talk. Posted the video because the TBC were playing “Every Day People” – See former post.

  • Janet Hays

    You’re right MacCoon. I grew up in Canada in a family of politicians. LOL! But I’ve lived here for 14 years.
    Politics sometimes makes for strange bedfellows and yes, it’s important to know where the money comes from but that is not always the determining factor and I don’t think it will be in this election. There are issues that similarly affect 99 percent of us regardless of our political ideology, nationality, religion, etc. Mental Health for instance. I think the majority of residents see the need for more in-patient facilities that work in conjunction with – not exclusive to – outpatient care. We need to come up with creative solutions locally to deal with the mental illness epidemic.
    I think Bagneris, as Mayor, will be open and willing to listening to residents about ideas such as the one below and will allow people to determine priorities rather that governing by fiat.
    Any candidate that gets on board with this idea has my support!

  • MacCoon

    it is pretty clear that someone who champions people’s rights could be seen as a more appropriate representative of all citizens than someone who was an ‘enforcer of the law’. duh, dear, the position they’re running for is MAYOR, not police chief or city prosecutor- there’s something strange about your logic. and yes, we’re all waiting for the platforms. but you are making it abundantly clear that you’re campaigning for bagneris, so your comments will be considered in that context: you’re just doing your job.