Raleigh, NC – A powerful state legislature last year borrowed half a million dollars from a man who was later charged and accused of attempting to bribe another state official.
House Rules Chairman David Lewis said his Harnett County farm needed help and he turned to a friend and fellow farmer, John Gray. Gray loaned him $ 500,000 for allegedly four months in June 2018.
The trust deeds filed as part of the deal show that Lewis and his wife, along with their farm and real estate company, have deposited land in four North Carolina counties as collateral. The loan was not repaid and Gray did not foreclose the property, as the deeds show.
Hurricane Florence struck two months after the loan was closed, causing “catastrophic loss” on Lewis’ farm, lawmakers said. Gray, who Lewis has known for about 10 years, agreed to extend the loan.
Lewis, R-Harnett, said Gray never asked lawmakers for anything in return. Lewis said he was unaware of Gray’s impending legal trouble at the time.
Gray was charged in March of attempting to bribe State Insurance Commissioner Mike Causey, along with insurance tycoon Greg Lindberg, partner John Palermo and then North Carolina Republican Party leader Robin Hayes. Causey had secretly worked with the FBI and recorded conversations with the four men now standing before the federal prosecutor.
“I just know (Gray) as a good guy,” Lewis said this week.
Gray, Lindberg and Palermo have pleaded not guilty. Hayes struck a plea deal last week in which he admitted he lied to the FBI during the investigation.
The terms of the loan are not available in public documents, but Lewis said the interest rate is 12 percent backed by approximately $ 1.2 million in real estate. He said he hoped to repay it after selling this year’s soybean crop.
The publicly available trust deeds indicate that Lewis put up properties in Counties Harnett, Cumberland, Sampson and Brunswick to secure the loan. Lewis said that this is most of the property he and his wife own, with the exception of their main house, and that Gray “set the price so high that no one can question that it was a bargain” .
Lewis listed a “personal loan,” a document that lawmakers and other officials must file with the state to disclose potential conflicts of interest in his most recent economic interest statement. State law doesn’t require them to say who the loans are from or how much they are just to acknowledge debts of $ 10,000 or more.
Gray was a campaign donor who has contributed $ 7,300 to Lewis’ campaigns since 2016. He gave around $ 145,000 to other North Carolina political groups through 2002, according to State Board of Elections records. He has favored Republican candidates and a forest political action committee, and has worked as a timber consultant.
Gray is described in the federal prosecution as a Lindberg advisor who helped Causey pledge about $ 2 million in campaign contributions if Causey removed a deputy from his department who took legal action against Lindberg’s insurance companies. Since then, the department has taken over the running of these companies, sifting through the books and reviewing how Lindberg invested insurance premiums in other companies he owned.
Lindberg’s team also worked in the state parliament in late 2017 and early 2018 and unsuccessfully pushed for more flexible insurance regulations. From September 2017 through January 2018, Lindberg donated $ 290,000 to the House Republican Caucus Fund, which can accept unlimited donations and campaign for the re-election of Republican House members.
Lewis said Monday that he hadn’t heard anything about the loan from federal investigators. The FBI and US attorneys handling the Lindberg case have repeatedly declined to discuss their investigation.
Through his legal team, Gray declined an interview request, but his attorneys emailed a brief statement: “Mr. Gray believes he hasn’t done anything inappropriate or violated any law.”
Public records show that Lewis has taken out two more six-figure loans in the past year and a half, also backed by real estate. One of them was a $ 100,000 loan from an agricultural company owned by Senator Brent Jackson, R-Sampson. The paperwork is dated a few days prior to the paperwork for the Gray loan, and the maturity was just over a month.
It was satisfied, said Jackson and Lewis both this week, and it was an advance on a crop payment. Jackson “buys all my grain,” said Lewis.
The second loan was for $ 700,000 from Central Loans Inc., based in Smithfield, which lists W. Frank Lee as president. It was completed in June of this year and, according to the trust agreement, runs until the end of 2020.
“We are in a real bind,” said Lewis. “Pretty much every financial institution has farms cut off.”
Lewis said he used to borrow money from a bank in the area when he needed cash to get from crop to crop, but they didn’t stop loans to farmers. Executives at that bank did not respond to inquiries from WRAL News on Tuesday.
Reuters reported earlier this year that at least the country’s largest banks have pulled out of lending and that cash flow problems have pushed some farmers into early retirement and others into bankruptcy.
When asked for a response to criticism the Gray loan could spark, Lewis said he was embarrassed to have to contact friends and pointed out the terms of the loan.
“It’s a secured business loan,” he said. “It’s above the market rate … and it’s an indication of how tight liquidity is for people who are still trying to farm.”