St. Louis County Executive Steve Stenger

A Good Day for a Hanging

Former County Executive Steve Stenger pleads not guilty to bribery, mail fraud, and theft of honest services, as giddiness infects the press gallery and U.S. Marshals hand out steno pads.

All Smiles: Former St. Louis County Executive Steve Stenger (fourth from left) poses with other dignitaries on Dec. 13, 2018 at the NGA Land Transfer ceremony held at the St. Louis Public Library Central Branch. Immediately behind Stenger is Deputy Assistant Secretary of the Air Force Richard K. Hartley, a former CIA operative attached to the National Reconnaissance Office, 1997 to 2003.

Assistant U.S. Attorney Hal Goldsmith stayed on script Monday afternoon, responding tersely to questions posed by a gaggle of reporters during a news conference held on the sidewalk outside the Thomas Eagleton Federal Courthouse in downtown St. Louis.

“We are confident of our case,” Goldsmith said, referring to the three-count criminal indictment issued by the U.S. Justice Department against former St. Louis County Executive Steve Stenger. Following this vague answer, a veteran broadcast journalist turned aside and muttered to himself: “Great sound bite — six words.”

The dearth of prosecutorial verbosity and courthouse histrionics did not deter the assembled press, however, from relishing the proceedings in an amicable atmosphere akin to the camaraderie shared by farmers of bygone days who went to town to witness a hanging in the public square.

To commemorate the auspicious event, U.S. Marshals offered free notebooks and pens, but there were few takers. The journalists in attendance seemed satisfied to gloat rather than scribble. KMOV-TV hired a sketch artist for the occasion.

The only thing missing were picnic baskets.

After pleading not guilty to bribery, mail fraud and theft of honest services, Stenger was released on his own recognizance by Judge Noelle  C. Collins. Celebrated defense attorney Scott Rosenblum represented Stenger during the arraignment.

The second term Democrat resigned from public office Monday morning following the release of the indictments. He had won reelection in November but continued to be dogged by allegations of corruption involving favors granted to campaign contributors, including businessman John Rallo. The scandal, which played out in the pages of the St. Louis Post-Dispatch and before the St. Louis County Council over the course of the last year, centered on the actions of Stenger underling Shelia Sweeney, CEO of the St. Louis Economic Development Partnership.

Five Post-Dispatch reporters contributed to the story today. A pack of TV and radio reporters were also present.

One of the many questions not asked of Goldsmith at his sidewalk press conference was whether federal investigators are probing the contract between the St. Louis Economic Development Partnership and Kit Bond Strategies, the lobbying firm of former U.S. Sen. Kit Bond and his wife.

In January 2016,   Linda Bond, the former senator’s wife, signed a contract with St. Louis Economic Development Partnership CEO Sheila Sweeney. The Development Partnership is a joint government agency of the city of St. Louis and St. Louis County, which wields broad powers and operates largely in the shadows with the benefit of millions of dollars in annual payments from  casino interests raked in by the St. Louis County Port Authority, an agency that shares the same staff as the Development Partnership. The County Port Authority’s purpose has nothing to do with ports. Instead, it acts as a conduit for the casino payments.

In 2016 and 2017, the St. Louis Economic Development Partnership funneled $230,000 of public funds to Kit Bond Strategies, according to federal lobbying reports. Part of that total went to pay for the failed congressional effort to turn the West Lake Landfill Superfund Site over to the U.S. Army Corps of Engineers — an agency that expressed serious reservations about assuming the responsibility for taking control of the project in the first place. The exact amount spent specifically on the West Lake lobbying effort is uncertain. A request under the Missouri Sunshine Law for further details was denied last fall.  But this much is known:  the development agency’s contract called for KBS to be paid $10,000 a month for its services. The lobbying records show that the public money was doled out to the lobbyist in quarterly payments. The St. Louis Economic Development Partnership paid the lobbying firm an additional $60,000 in 2018 , but by then the effort to persuade Congress to turn the West Lake clean up over to the Corps had been dropped.

Note: Stenger pleaded guilty on May 3. 

Rip Off

Judges in Paradise: Headquarters of Global Security Service near Festus, which is also the residence of the owner of the business — Judge Ed Page, and his wife, Judge Lisa Pagano Page.

Global Security Service — a company founded by convicted murderer William N. Pagano — overcharged the St. Louis Parks Department $285,000 over a period of years, but when the jig was finally up, the feds refused to prosecute. Instead, they claimed the politically-connected firm had been duped. 

The swindle continued undetected for several years, with the co-conspirators funneling misappropriated funds in monthly installments to a dummy corporation located in a South St. Louis County strip mall. Gradually, the pilfering added up to hundreds of thousands of dollars. The majority of the graft involved a city contractor with a checkered history — Global Security Service. But a federal probe concluded that the firm itself was an unwitting victim in the scam.

The St. Louis Post-Dispatch, Dec. 6, 2013.

Two  St. Louis Parks Department officials pleaded guilty to the crime in 2013 and received light prison sentences. In addition to Global Security, two other city contractors avoided prosecution. 

Appearing before Judge Carol E. Jackson at the sentencing of one of the defendants, Assistant U.S. Attorney Hal Goldsmith absolved Global Security and the other vendors of complicity in the scheme, saying “we believe they were duped.” The embezzlement by the high-ranking city employees netted a total of nearly $500,000 from the St. Louis Parks Department. $285,000 of that amount was due to the creative accounting methods of Global Security.

Global Security is owned by Jefferson County Associate Circuit Court Judge Edward L. Page, who took control of the business in 1992, after his father-in-law. William N. Pagano, was charged with murder. Page is married to Pagano’s daughter, Lisa Pagano Page. William Pagano founded Global Security in 1987, while serving as the Festus, Mo. police chief. In 1991, Pagano was charged with homicide in the shooting death of  Mark Todd, a top lieutenant in Pagano’s private security guard service. Pagano was convicted of the crime, but never served time because he committed suicide in 1994, after his appeals efforts had been exhausted.

Jefferson County Associate Circuit Court Judge Ed Page, the late William Pagano’s son-in-law and current president of Global Security Service.

Pagano’s tragic death did not thwart the growth of the company he founded, however. Under his son-in-law’s ownership, Global Security thrived, and mushroomed into one of the largest private security services in the Midwest. Between 2009 and 2013, the company raked in more than $2 million from its city contract alone, providing guard services to the train station, bus depot, Soldiers Memorial and other city-owned sites.

The deal with the city started going sideways when Global Security became involved in the scheme hatched by Deputy Parks Commissioner Joseph Vacca and chief park ranger Thomas “Dan” Stritzel to embezzle city funds under the guise of acquiring additional equipment not provided for in the city budget, according to the federal indictments. The ruse continued for years, with Global Security overcharging the city and funneling the excess money to Dynamic Management Group, a dummy corporation set up by David Michael Goetz, a friend and business associate of Stritzel. But Goldsmith, the federal prosecutor, argued in 2013 that Global Security was an unwitting participant, and, therefore, not complicit.

Then-St. Louis Parks Department Commissioner Gary Bess admitted no foreknowledge of wrongdoing and apologized for the actions of his subordinates. A  little more than a year late, in January 2015, he retired from his long-held city position, and was immediately appointed director of the St. Louis County Parks Department by newly elected St. Louis County Executive Stenger.  Bess resigned his county post last month in the wake of the ouster of Stenger, who pleaded guilty to unrelated federal corruption charges.

Page was recently elected on the Republican ticket as an Associate Circuit Court Judge in Jefferson County. Jefferson County unlike the city of St. Louis and St. Louis County is not bound by the non-partisan court plan. Page’s  wife is a jurist of higher standing. Lisa Page, the daughter of the late William N. Pagano, was appointed to the Missouri Court of Appeals by then-Gov. Jay Nixon, a Democrat, in December 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The FBI Turned a Blind Eye to Rallo Mob Ties for Decades

A long-buried FBI report raises questions as to why the FBI and U.S. Justice Department ignored damning allegations by a now-very dead informant. 

 

The FBI knew that the Rallo Construction Co. had alleged ties to the Chicago Mafia for decades. In indictments filed by the U.S. Attorney for the Eastern District of Missouri against St. Louis County Executive Steve Stenger on April 25, 2019, John “Johnny Roller” Rallo was named as a participant in a pay-to-play scheme. He is scheduled to be arraigned May 10. 

 

The FBI knew about an alleged connection between the Chicago Mafia and Rallo Construction Co. of St. Louis as early as 1991, according to a classified FBI report released under the Freedom of Information Act.

Jesse Stoneking, the unnamed informant cited by the FBI in the report, died of a gunshot wound to the head in Arizona in 2003. Arizona law enforcement authorities ruled his death a suicide. Stoneking had been a top lieutenant of East St. Louis racketeer Art Berne in the 1980s, when he was working undercover for the FBI.  After he testified against Berne and other St. Louis area organized crime figures in federal court, the Chicago Mafia allegedly put out a $100,000 contract on his life.

Case Closed: Crime scene photo of the interior of the 1995 Ford Crown Victoria occupied by Jesse Stoneking on Jan. 19, 2003. The St. Louis mobster and federal informant died from a gunshot wound to the head. Arizona authorities ruled it a suicide.

Last month, the U.S. Attorney’s Office in St. Louis  issued a three-count indictment against St. Louis County Executive Steve Stenger for his role in steering lucrative contracts and property deals in return for campaign contributions from John G. Rallo, a former shareholder in one of the family-owned construction companies — CMR Construction Inc. CMR was formed 1989 by Charles N. Rallo and Michael J. Rallo, grandsons of the of founder of C. Rallo Contracting Co., which was incorporated in 1947.

John G. Rallo, also known as “Johnny Roller” for his long hours spent at the crap tables in Las Vegas, and fellow accomplice Sheila Sweeney were charged one week after Stenger  pleaded guilty. He is awaiting sentencing before Judge Catherine D. Perry in August. Until January, Sweeney headed the St. Louis Economic Development Partnership, a county agency that was used to dole out the contracts to Rallo and other political contributors to Stenger’s campaign coffers.

In May 1991, Stoneking informed the FBI that “Berne had told him that the Rallo Construction Company … belonged to the Chicago La Costa Nostra. …” The report goes on to say that “Berne told [Stoneking] that if Chicago wanted to buy property, businesses, get loans or some other such financial transaction it would be done through Rallo Construction Company in St. Louis.”

Stenger was introduced to Rallo by federal felon Sorkis Webbe Jr. in 2014, according to the federal indictment. Webbe, a former city alderman, was convicted of voter fraud and obstruction of justice in 1985.  Webbe’s father had been convicted of income tax evasion in Nevada in 1983 related to his interests in the Aladdin Casino in Las Vegas, which was then controlled by the Detroit Mafia. The Detroit and St. Louis Mafia families are related.

Given this evidence and other indictors, it is unclear why federal prosecutors in St. Louis did not now pursue the Stenger case under the Racketeer Influenced and Corrupt Organizations Act (RICO), which was crafted specifically to address such criminal enterprises. 

Hal Goldsmith, the prosecutor in the Stenger case, previously served as an Assistant U.S. attorney in East St. Louis in the 1990s, which was Berne’s territory. Goldsmith’s boss at that time was then-U.S. Attorney Charles Grace, who initiated wide-ranging probes of organized criminal enterprises during his tenure. When Berne died in 1996, he was a paid “security consultant” for Pipefitter’s Local 562, which Stoneking had also fingered as being connected to the Chicago Outfit. James O’Mara, the manager of Local 562, was the chairman of the St. Louis County Council at this time.