Incoming City Council member could face criminal charges over ownership stake, attorney says
The City of Charlotte said it’s not responsible for determining whether incoming City Council member James “Smuggie” Mitchell is breaking a state law that prohibits people with significant ownership in companies that do business with a city from holding elected office.
Charlotte City Attorney Patrick Baker said in a memo Wednesday that Mitchell, not the city, would face the consequences of violating that statute.
“It is up to the council member to determine whether taking the oath could potentially subject him to the criminal penalty (under state law)," he wrote.
Baker added that he isn’t “aware of any legal authority that would prevent (Mitchell) from being sworn in.”
Nearly two years ago, Mitchell was appointed chief executive of R.J. Leeper Construction, a minority-owned firm that often does business with the city. Its work includes the current expansion of the main terminal at Charlotte Douglas International Airport and the recently finished renovation of the Charlotte Convention Center.
Mitchell was also given a 25% ownership stake in the company.
He and R.J. Leeper executives were unaware of this state law that would prevent him from serving. Mitchell resigned from City Council in January 2021. He then left R.J. Leeper that summer and announced he would run again for City Council.
That raised a question: Does Mitchell still own 25% of the company?
Mitchell said he did and that R.J. Leeper executives could buy him out so the company could continue doing business with the city.
R.J. Leeper executives said that wasn’t true and wrote to city officials that they seized Mitchell’s ownership stake when he failed to pay back a $375,000 loan. Mitchell said R.J. Leeper didn’t have the right to do that.
In his memo to City Council members, Baker wrote that Mitchell “has consistently made contrary statements to the media that he still retains a 25% ownership interest in the company.”
The dispute hasn’t been heard in court.
Mitchell won one of four City Council at-large seats in July.
Now, other City Council members are pressing Baker as to whether Mitchell would be allowed to be sworn into office on Tues, Sept. 6.
Baker wrote that the state 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.”
Since it would be a criminal violation, Baker said that prosecutors would have to show proof beyond a reasonable doubt that Mitchell owns more than 10% of the company.
Baker said the city would not be a party to any criminal action and that the issue is unprecedented in his 26 years in government.