Charlotte councilman-elect could face criminal penalties for RJ Leeper ownership, memo says
Councilman-elect James “Smuggie” Mitchell could face criminal penalties after he takes his oath of office for owning too much of a company that does business with the city, according to a memo from City Attorney Patrick Baker.
Mitchell, who finished fourth in the at-large council race, is in an ownership dispute with RJ Leeper a construction firm that’s done work for the city of Charlotte, including at the Charlotte Douglas International Airport. First reported by WBTV, the percentage Mitchell owns could affect the city’s ability to continue to do business with the company.
But it’s unclear how much, if any, ownership interest Mitchell has in RJ Leeper. The company and its attorneys met with Baker in February to assure him Mitchell divested from the company, yet Mitchell told Charlotte news outlets he retains 25% ownership.
Mitchell in 2021 also said he would continue to own 25% after he left his executive position atop RJ Leeper, The Charlotte Observer reported. He told the Charlotte Business Journal in May he would be willing to reduce his ownership stake below 10% if elected.
Mitchell said he was disappointed by the city attorney’s memo and said he expects a clarification to be issued by Baker. The Observer asked for a copy of any clarification and hasn’t received one.
Mitchell is still planning on being sworn in Tuesday and said he wants “nothing more than for this to be behind me.”
“I remain focused on upholding my oath to those that elected me and will allow my legal team to handle the matter in the proper forum, as I want nothing more than for this to be behind me,” Mitchell wrote in an emailed statement. “As of today, there has not been a judicial determination as to my ownership and I look forward to having a judge render a decision in the near future.”
North Carolina criminal statute GS 14-234 makes it illegal for a city to conduct business with a company if a member of the city’s governing board owns more than 10% of it. If it’s proven Mitchell owns more than 10% of the company, Mitchell, not the city, could be criminally liable, Baker said.
“The statute does not contemplate a scenario such as the present where there is an apparent dispute as to the ownership interest of the council member,” Baker’s memo states. “Should a criminal complaint be filed against the incoming councilmember, it would be for the courts to decide the ownership issue rather than the City Council or City Attorney. “
Baker said he hasn’t seen a situation like this in his 26 years of municipal law practice. He emailed current council members and copied city staff members when saying he received “inquiries from a number of you regarding the potential conflict.”
“I am not aware of any legal authority that would prevent the incoming council member from being sworn in at next week’s ceremony. It is up to the council member to determine whether taking the oath could potentially subject him the criminal penalty of GS 14-234,” the memo states.
The ownership dispute is tied to a $375,000 loan Mitchell obtained from RJ Leeper in late 2020 that the company demanded he pay back in December.
Bright Hope Capital, an investment firm that purchased the construction company, considered Mitchell as failing to pay back the loan in subsequent weeks until saying it took control of Mitchell’s stake in the construction company, records show.
The new council is set to be sworn in at 6 p.m. Tuesday at the Charlotte-Mecklenburg Government Center.
This story was originally published August 31, 2022 at 7:41 PM.
