James “Smuggie” Mitchell takes the oath of office for Charlotte City Council at the Charlotte-Mecklenburg Government Center in Charlotte in September.
Observer file photo
Charlotte City Council member James “Smuggie” Mitchell doesn’t own a stake in the R.J. Leeper or Bright Hope Construction companies and hasn’t violated any relevant state criminal laws, according to a report released Thursday by Mecklenburg County District Attorney Spencer Merriweather.
Mitchell for months said publicly he owned 25{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} of R.J. Leeper, a company he previously led as its president. He resigned from the City Council in 2021 because of conflict of interest violations associated with his role and ran for council in 2022 after being fired as president of R.J. Leeper, which has active contracts with the city of Charlotte.
A state investigation requested by Merriweather found “extremely compelling” evidence Mitchell no longer owns a stake in RJ Leeper or its parent company Bright Hope Capital. Therefore, he is not violating a state law that prohibits the city from doing business with a company if a member of its governing board owns more than 10{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a}, Merriweather said in a report to the N.C. State Bureau of Investigation.
Mitchell failed to repay a $375,000 company loan, money designed specifically for Mitchell to buy into the company as he became president, the district attorney’s report states. He didn’t meet a payment deadline set after his firing, and Bright Hope took the loan collateral — Mitchell’s ownership stake.
“I’m glad to have this behind me now and I can focus on really serving the citizens of Charlotte who elected me to do so,” Mitchell told The Charlotte Observer Thursday morning.
The district attorney’s report said Mitchell continues to claim he has an ownership stake and could petition a court to make a determination in the matter — a move Merriweather called “peculiar.”
“Admittedly, it will be a peculiar posture for someone to pursue a civil claim that, if successful, would also serve as a dispositive affirmation of a violation of North Carolina criminal law,” Merriweather wrote.
Mitchell said he had no comment on if he would pursue further legal action.
Mitchell disagrees with his attorney
Mitchell and his attorney acknowledged to investigators they did not object to the foreclosure within the time demanded. A conversation with investigators quoted in Merriweather’s report also shows Mitchell and his attorney disagree on whether Mitchell is still disputing the foreclosure.
“Mr. Mitchell clearly has an alternative position on the status of his ownership interest, but even his counsel has admitted this position has not been asserted in the forum Mr. Mitchell believes to be the ultimate arbiter of such business disputes — a court of law,” Merriweather wrote.
The excerpt quoted in Merriweather’s report states:
SBI investigator: Are you disputing that (foreclosure on Mr. Mitchell’s member equity in BH Construction)?
Mitchell: Oh yes.
Counsel for Mitchell: At some point, we intend to, but, at this point and time, we are letting it stand as is.
SBI investigator: Ok. As it is being foreclosed on…to be revisited at a later date?
Counsel for Mitchell: Potentially
Investigators meet with R.J. Leeper
SBI investigators met with present and former Leeper Construction employees, including a chief operations officer, chief financial officer and vice president of operations. Each said they believed Mitchell’s ownership stake ceased by September when he took his seat on the City Council.
There is no evidence Mitchell participated in RJ Leeper management, sought or received financial documents, paid for any company operations or received any profits since his departure, employees told investigators.
R.J. Leeper is one of the major Black-owned Charlotte businesses and has active contracts at Charlotte Douglas International Airport and the Charlotte Convention Center.
The City Council also has yet to sign off on the first phase of a wastewater treatment plant project led by a joint venture involving R.J. Leeper and PC Construction. The item was pulled from a council agenda in November and did not appear on the council’s agendas in December either.
R.J. Leeper will continue to serve clients and is appreciative of the investigation, an attorney for the company said in an emailed statement.
“Their thorough investigation validates our position over the last 10 months: Mr. Mitchell has had no ownership interest in RJ Leeper Construction, or its parent, Bright Hope Construction, since March 2022,” the company said.
What would Mitchell do?
Mitchell willingly met with SBI investigators, who asked what he planned to do if a court later found that he was entitled to 25{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} ownership interest in the construction company.
Mitchell said he would attempt to sell enough of his ownership to fall below the 10{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} threshold established by state law and would recuse himself from any Charlotte City Council votes involving R.J. Leeper, according to Merriweather’s letter.
Charlotte city attorney Patrick Baker thanked Merriweather in a statement.
“I understand and accept his conclusion and will advise the City Council and Administration accordingly,” Baker said.
Charlotte City Councilwoman LaWana Mayfield said she’s glad the investigation is complete.
“Now that everything has come out through the DA for me I feel like this is a chapter we can close and we can move forward with the business of the community,” Mayfield said.
Charlotte Observer reporter Michael Gordon contributed to this reporting.
This story was originally published January 5, 2023 10:00 AM.
Genna Contino covers local government for the Observer, where she informs and serves people living in Charlotte and Mecklenburg County. She attended the University of South Carolina and grew up in Rock Hill.
