St. Louis County Executive Indicted in Federal Pay-for-Play Sting

Steve Stenger lied in public statements and took other actions to cover up the crimes, prosecutors said.
by | April 30, 2019 AT 7:15 AM
St. Louis County Executive Steve Stenger resigned on Monday. (AP/Jeff Roberson)

By Jeremy Kohler

St. Louis County Executive Steve Stenger, a target of a U.S. government investigation into political favors traded for campaign contributions, was indicted by a federal grand jury Thursday on charges of bribery, mail fraud and theft of honest services.

Stenger also resigned as county executive on Monday in a letter to County Counselor Peter Krane, writing that "it is in the best interest of our County and my family."

The council plans to convene an emergency meeting for 6:30 p.m. Monday to vote on a successor, Council Chairman Sam Page said in a statement.

In a copy of the indictment unsealed on Monday, prosecutors said that from October 2014 to Dec. 31, 2018, "Stenger and various individuals and companies schemed to defraud and deprive the citizens of St. Louis County of their right to his honest and faithful services, and the honest and faithful services of the St. Louis Economic Development Partnership's Chief Executive Officer, through bribery and the concealment of material information."

Stenger also helped a Rallo company, Wellston Holdings, LLC, obtain options to purchase two properties in Wellston, Missouri which were held by the Land Clearance for Redevelopment Authority.

Stenger also helped a company that is not named in the indictment get a 2019 -- 2021 state lobbying contract from the St. Louis Economic Development Partnership.

Stenger lied in public statements and took other actions to cover up the crimes, prosecutors said.

He is scheduled to appear in U.S. District Court in St. Louis Monday at 1 p.m.

At a Oct. 23, 2014 dinner while Stenger was campaigning, Rallo complained that "he was tired of giving money to politicians and not getting anything in return," the indictment says. He had no such problems with Stenger, according to the indictment.

Rallo repeatedly made political donations to Stenger before his election with the understanding that he would get contracts from the county or associated entities, and continued to do so afterwards.

A Post-Dispatch investigation in 2017 and 2018 put a spotlight on the deals with Rallo. The indictment noted that when a reporter sought information in August 2017 about the Wellston deal, Sheila Sweeney, the CEO of the Partnership appointed by Stenger, instructed Rallo not to talk to the reporter.

"No don't meet him," Sweeney texted back. "Trying to make the Steve & you connection."

Sweeney instructed Rallo to remove his name from public filings connecting him to Cardinal Consulting as a way to cover Stenger and, she added, "me too!!!"

In May 2018, Stenger also told Rallo not talk talk to Post-Dispatch reporters, according to the indictment. The indictment did not make it clear whether the conversation was in texts or if it was a recorded phone conversation.

"You can't talk to the f---ing press," Stenger told him. "I bent over f---ing backwards for you, and I asked you one simple f---ing thing, don't talk to the f---ing press. And I'm telling you, you're gonna f---ing kill yourself, alright, you're gonna kill yourself with this shit."

Stenger told Rallo the paper's interest would die down after he won his August primary.

"Our goal is not to give him anything. This is just a rehash of what he already has. Rehash of that same old story. It's gonna pass in August, because the reason for what they're doing is gonna die ... I'm winning in the polls .. ilt'll go away."

The indictment also revealed why Rallo's Cardinal Consulting had been paid $130,000 on a contract for which he had bid $100,000, an inconsistency explored by the Post-Dispatch.

According to the charges, Stenger directed Sweeney to have Rallo forward the $30,000 balance to another individual, identified by the initials "JC," who had helped with Stenger's political campaign. Rallo did not know JC, and JC did not do any work for the payment, according to the indictment.

Lawyers for Sweeney and Rallo said Monday they would not comment.

The indictment also demonstrated Stenger's disdain for subordinates who refused to carry out orders to direct county business to his donors. He described Mike Chapman, one of his earliest policy advisers, as a "major pain in the ass." And when Director of Administration Pamela Reitz would not go along with awarding an insurance contract to Rallo, Stenger wrote to adviser Jeff Wagener that "I am absolutely done with her. As soon as a replacement can be found I want her gone."

St. Louis Mayor Lyda Krewson said Monday that Stenger made the right decision to resign.

Despite a bitter cold war with a bipartisan majority on the County Council, Stenger appeared to be at the top of St. Louis' political world as recently as weeks ago, enjoying wide support from unions and business leaders. After raising an unprecedented $4.4 million for his reelection, he narrowly vanquished a deep-pocketed primary foe in Mark Mantovani and easily dispatched Republican Paul Berry III in the general election.

He was sworn into his second term on Jan. 1, promising "transformational" change in affordable housing, access to medical care and unemployment. Days later came news that the nonprofit advocacy group Better Together was planning to launch a campaign to put a merger of St. Louis city and county on a statewide ballot in November 2020. The plan called for Stenger to emerge as the metro city's first mayor.

Even so, clouds were building over his political future. Post-Dispatch investigations pointed to several instances, including the deals involving Rallo, where county contracts went to Stenger's political donors. Stenger's council rivals launched an ethics probe and called for state and federal investigations into the county's long-term lease for office space at the former Northwest Plaza, which is owned by developers who gave Stenger's campaign $365,000.

Stenger repeatedly denied any quid pro quo and complained about the newspaper's coverage of his administration and its "misleading and tiresome" focus on the county's relationships with his campaign benefactors.

In July, two council members said their sources told them federal agents had tailed Sweeney. The Partnership board forced her out following Post-Dispatch investigations into low staff morale and high turnover at the Partnership, the agency's procurement practices and the awarding of contracts to Stenger's campaign donors. Several former employees told the Post-Dispatch that Stenger essentially ran the office through Sweeney.

A federal subpoena issued to St. Louis County on March 21 sought records of every contract and grant issued by the county since Stenger took office on Jan. 1, 2015. It also sought personnel files for five people he hired as well as records of all his communications.

St. Louis County Council Chairman Sam Page revealed the subpoena's existence to a Post-Dispatch reporter in an interview on March 24, a Sunday morning. That same day, Better Together executive director Nancy Rice told Post-Dispatch metro columnist Tony Messenger that the statewide ballot initiative was being redrawn to remove Stenger as the metro mayor.

The Partnership confirmed later that week that it was cooperating with three federal subpoenas served to itself and two county agencies it staffs -- the St. Louis County Port Authority and the St. Louis County Land Clearance for Redevelopment Agency.

Stenger attempted to spin the bombshell as a routine event in the course of an executive's political career, noting that the U.S. government had previously commanded St. Louis Mayor Francis Slay and former St. Louis County Executive Charlie Dooley's administrations to turn over records, and that he wasn't the target of the subpoena. But Slay and Dooley immediately rebutted his comments, saying the government had never subpoenaed records of their communications.

Days later, assistant U.S. attorney leading the investigation, Hal Goldsmith, clarified in a letter that the county should start by turning over records from a list of grants and contracts -- most of them involving Stenger's campaign donors.

As the county began producing records to comply with the subpoena, the ranks within Stenger's inner circle began to thin. Chief of staff Bill Miller quit on April 12, followed by senior policy advisor Lance LeComb on April 16. Other senior staff members in his office, Tom Curran and Linda Henry, also decided to retire.

University of Missouri-St. Louis political scientist Dave Robertson said some politicians feel bullet proof after getting into office.

"It's easy for people who have their validation from voters to feel that they are entitled to use a lot of power and some of those individuals use that power for things that are illegal -- that's what's at stake here," he said. "Ask a few former Illinois governors about that."

He said the Stenger case forms at a time time in politics when candidates want "massive election war chests."

"Hubris," he added, "makes you dumb."

Ed Rhode, a spokesman for the merger campaign Unite STL, said Monday in a statement: "While the reunification effort is unaffected by today's development, we do believe that it underscores the need for change and the potential benefit of reforming and streamlining St. Louis Government."

It was a stunning end to a political career that saw Stenger rise from two terms on the council to oust a seemingly entrenched county executive Charlie Dooley in the Democratic primary in 2014, then narrowly defeat Republican Rick Stream in the general election.

The day of Stenger's announcement that he intended to challenge Dooley, he told a reporter in an interview that his top priority was "restoring integrity to St. Louis County government."

David Hunn and Jesse Bogan of the Post-Dispatch contributed to this report.

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