Town of Sterlington sued by bank, accused of mishandling loan funds

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STERLINGTON, La. (KTVE/KARD)— Accused of mishandling loan funds dispersed by the Citizens Bank & Trust Company of Vivian, the town of Sterlington is being sued; owing around $1.8 million it borrowed to cover the setup of a water treatment system that never happened. The Caddo Parish bank also claims former Sterlington Mayor Vern Breland wasted the town’s funds.

The Ouachita Citizen reports, during Mayor Breland’s tenure, the town racked up around $20 million in debt and audits proved town officials misused up to $3 million in allotted funds. Breland was indicted on the charge of malfeasance in office by a grand jury last year.

Plaintiff would not have loaned the Town the funds if plaintiff had known that the Town did not have the ability to pay the debt owed

Citizens Bank & Trust’s April 20 lawsuit

The town entered into a 14-year purchase agreement with Government Capital Corp. to purchase the water management system from Capstone Metering LLC. Sterlington received a little more than $2 million dollars to buy a water system that Capstone would eventually install in the ground.

In May of 2021 Sterlington’s Fiscal Administrator “Junior” Shelton provided his final report to the town’s alderman; exiting the position saying he was leaving the town with $600,000 in their bank account. He stated the town will be able to handle any future debt obligations. Citizens Bank & Trust’s lawsuit begs to differ, saying Breland’s agreement with Capstone is “untrue and fraudulent”, according to the Ouachita Citizen.

The bank argues that Shelton publicly acknowledged that Sterlington owes the debt.

“Nothing could be further from the truth and in fact the ‘lease purchase agreement’ was grossly overfunded in attempt to use the excess monies to acquire everything needed to make water,” said Shelton in a letter he wrote in response to the claims.

Capstone Metering LLC knew the Town of Sterlington was without any ability to make water at the time of the ‘lease purchase agreement’ because Capstone Metering LLC was acting as contractor to subcontract the drilling of ground wells and design, engineer, and fabricate system in order to produce water. With at least one well drilled on private property without a use agreement from the landowner. Additionally, of the meters installed, numerous installed meters began to leak resulting in removal.

Junior Shelton

State investigators found that the bidding process based on Louisiana’s Public Bid Law in this project was not carried out properly.

The lawsuit reveals that the town never made a single payment towards the loan and now owes $1,838,390.94 to Citizens Bank & Trust which includes legal fees, interest until paid in full, attorney’s fees, etc..

Citizen’s Bank & Trust referenced a letter signed by Attorney Kathy Balsamo, former legal counsel of Sterlington at the time the loan was taken out. In that letter, Balsamo said she thought the town’s agreement with Capstone Metering was a “legal, valid and binding obligation”.

The Ouachita Citizen of Monroe Louisiana’s Zach Parker contributed to this report.

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