St. Louis County fraud findings withheld by Dooley administration

June 30--CLAYTON -- Nine months ago, Edward Mueth, a senior manager in the St. Louis County Health Department, pulled into a parking lot near his Webster Groves home, put a handgun to his head and killed himself.

Mueth was supposed to meet with his bosses the next morning to answer questions raised about his ties to a county computer vendor.

As the Post-Dispatch was the first to report at the time, Mueth had over the prior six years bilked county taxpayers out of millions of dollars, secretly creating a company and billing the county for goods and services it never received. Mueth, 39, a procurement manager who earned $86,000 a year, had lived comfortably enough to buy a $1.5 million mansion and an airplane without raising the suspicion of his bosses.

The embezzlement was an embarrassment for County Executive Charlie Dooley, who at the time said he hoped county officials could figure out exactly what happened so they could prevent similar crimes in the future. He later asked for the public's patience while the FBI finished its investigation.

As of today, however, neither an explanation of how the $3.4 million fraud went undetected for so long nor the findings of an FBI audit completed for the county in January have been made public -- not even to members of the St. Louis County Council or the county's own prosecutor.

Only a handful of Dooley's closest advisers have seen any details about the embezzlement or January's audit.

One of those is Garry Earls, the county's chief operating officer. Although the county has so far refused the newspaper's public-records request for a copy of the audit and other records, Earls agreed to discuss some of the findings with a reporter.

Mueth "was extraordinarily effective at stealing from us," Earls said in an interview.

The fraud initially escaped notice, according to Earls, because Gateway Technical Solutions, the corporation established by Mueth to take advantage of his position as the official overseeing the procurement of technical goods and services for the county health department, delivered on an original $60,000 order of 50 to 60 laptops in 2007.

But from that point forward, Earls said, Mueth stole every cent the county paid to Gateway Technical Solutions.

Earls said the audit determined that Mueth had been able to purchase not only the 7,000-square-foot home in Webster Groves, but also $200,000 in landscaping, a $100,000 arsenal that included four machine guns, luxury automobiles and a motorcycle.

Mueth was also "a big consumer of electronics," Earls said.

The financial information in the audit provided by the FBI, Earls added, "accounts for all the money paid to (Mueth) by Gateway Technical Solutions."

Meanwhile, members of the County Council are questioning why Dooley's administration has not disclosed information about January's FBI audit, which has been in the possession of top administration officials since February.

"They keep us out of the loop on everything," Councilman Pat Dolan, D-5th Distric, said. "We represent the people of the county, and we should know what's going on. We shouldn't have to hear it from a media outlet."

Council member Greg Quinn, R-7th District, said the lack of transparency was particularly troubling in light of the ongoing effort by Dooley to gain council approval for a $94,000 independent "forensic assessment" to help the county avoid a repeat of the scheme that permitted the fraud to go undetected for six years.

Even County Prosecutor Robert McCulloch -- who would have tried the case if the health department scandal had gone to trial -- says he did not learn of the audit until this month.

"I had no idea it existed," McCulloch said.

Dooley, in a statement released through spokeswoman Pat Washington, said a Jan. 31 letter from the FBI accompanying the audit requested confidentiality and justified not disclosing the audit results to the council.

"At this point our goal is to make sure that we can file the necessary claims against Mr. Mueth's estate and work with our insurance carrier to recover any losses and work on a fraud review," said Dooley, who is running for re-election. He faces County Councilman Steve Stenger in the Democratic primary Aug. 5. Stenger has been critical of the Dooley administration's handling of the embezzlement case as well as other issues.

Earls said the county expected to recover most of its losses through insurance and a lien on the proceeds from the sale of Mueth's property and possessions.

Completed in January, the previously undisclosed federal audit results were delivered to the county counselor's office and police, who in turn passed audit information along to Earls and other ranking county officials. The audit focused on bank records and other financial aspects of the Mueth case.

The U.S. Justice Department began its audit at the request of former St. Louis County Police Chief Tim Fitch, who had sparred frequently with Dooley. Fitch's last day on the job was Jan. 30. The audit and letter apparently arrived a day later.

The county has cited the 5-month-old letter from the FBI in its denial of a public-records request by the Post-Dispatch to review the audit.

"The documents and their contents are not to be distributed outside your agency, and the documents must be returned to the FBI once your agency no longer needs them," the letter reads.

Yet, the U.S. Attorney for the Eastern District of Missouri, Richard Callahan, informed the county earlier this month that the FBI had closed its investigation. The inquiry had not found "anyone, other than Mr. Mueth, who was involved in that criminal enterprise," he wrote in a June 2 letter to County Counselor Patricia Redington.

County officials insist they still are bound by federal authorities' request from January not to disclose the findings even though the federal investigation is over.

"The letter is self-explanatory," Redington said last week, referring to the Jan. 31 correspondence. "It has always been our policy to cooperate and follow the instructions of the FBI in any matter."

However, Rebecca Wu, spokeswoman for the FBI'sSt. Louis office, made clear Friday that it was now in the hands of the county, not the FBI, to release the audit information.

"The FBI conducted the forensic audit at the request of the St. Louis County Police Department. It is up to St. Louis County Police Department to release its investigation, not the FBI," she said.

County Police Chief Jon Belmar said last week that his department was about to wrap up a final aspect of its own investigation -- an examination of the texts and emails on Mueth's smartphone, desktop computer and laptops.

"We're waiting on the forensic analysis of the electronic equipment that might show if anyone else was involved in a conspiracy with Mr. Mueth or who might have benefited from the stolen assets," the chief said.

Belmar said the department expects to release its findings early next month.

County council members, prosecutor McCulloch and former Chief Fitch have criticized Dooley's administration over its handling of the Mueth case from the start.

High billing by Gateway Technical Solutions first raised attention from some county finance employees in 2010, but Mueth was able to soothe those concerns easily.

Then, on Aug. 20 of last year, a Health Department financial officer spotted a suspicious Gateway invoice that would prove key to the scheme's collapse. By Sept. 13, other agency officials had figured out Mueth had a connection to Gateway. On Sept. 19, finance officers in the health department presented the County Counselor's office with evidence of Mueth's crimes. No one notified the county police.

Gunn and Earls instead cut off Mueth's access to the health department computer system and summoned him to a meeting in Earls' office at 9 a.m. the following morning. Mueth ended his life hours after the summons. The county police learned of his misdeeds early on Sept. 20 at the same time they were notified of the suicide.

Gunn, whom Dooley has stood by in the wake of the embezzlement scandal, maintained in a mid-January interview that "we acted appropriately and immediately."

Her statement coincided with a plea from her and Dooley that the public remain patient until the investigation into the Mueth matter was completed.

The FBI audit landed in the county building two weeks later without a word from the health department or the Dooley administration.

"I don't want to accuse anyone of covering up, but it certainly looks suspicious for anyone following what's going on," said County Councilman Dolan.

The reluctance to fully disclose information about the Mueth scandal continued earlier this month when the county responded to a public-records request by the Post-Dispatch for Mueth's transactions on a county-issued credit card. Only a portion of the records were provided to the newspaper.

The Post-Dispatch subsequently obtained the entire purchase record from a separate source.

The statements provided to the Post-Dispatch show that Mueth used his county purchase card to buy $132,000 in computer equipment and cameras as well as miscellaneous items such as rubber bands and paint scrapers over the seven years before his suicide.

County officials say they believe they can account for most, although not all, of the materials and services charged on the purchase card that Mueth used from 2007-2013.

"It was not as consistent as it should have been, but we're more consistent now," Health Department Director Gunn said of the agency's monitoring of card transactions.

The county issues the cards to a handful of high-ranking county employees to obtain items costing less than $500. To track or catalog each sub-$500 purchase would place an undue burden on the county procurement office, Earls said.

The documents obtained by the Post-Dispatch show that Mueth made nearly 475 such purchases. The first was on April 1, 2007; the last was posted on Sept. 20, 2013 -- the day after Mueth shot himself to death.

The statements show that Mueth often ordered the same or nearly identical items from the Computer Discount Warehouse (CDW) or outlets over a matter of days.

"For him to use the P-Card on a daily basis was not unusual if he was supplying over 500 people," said Gunn. "I don't remember seeing anything unusual."

Earls said it was county policy to procure relatively low-cost items such as printers and computer cables on an as-needed basis.

Brent Maas, the executive director of the National Institute of Governmental Purchasing, said the Virginia-based organization frowned on piecemeal procurement.

"Splitting purchases is absolutely not a recommended practice," Maas said. "In fact, quite to the contrary."

The health department generally did not catalog or note the destination of goods and services that fell under the $500 limit during Mueth's tenure. "But (we) are now," Gunn said.

Gunn, who has described Mueth as a "model employee" who "was there early" and "worked late," emphasized that she reviewed and approved everything charged to Mueth's card.

Quinn, the 7th District councilman, said the failure to track goods charged to the Mueth card after the equipment or software was delivered to the health department raised issues about the county procurement system.

"Certainly the administration needs to crack down and make sure procedures are followed or that the people that don't follow them are fired," the councilman said.

Gunn maintains that the inventory has determined that nearly all the transactions were legitimate.

Earls says the county has seen no evidence that Mueth sold equipment purchased at a government discount on Ebay, Amazon or other resale sites.

Earls based the assessment on his review of the not-yet-public FBI audit.

Robert Patrick of the Post-Dispatch contributed to this story.

General assignment reporter Steve Giegerich covers St. Louis County. On Twitter @stevegiegerich

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