City of Crestwood settles suit with Leichliter, ex-auditor

By BURKE WASSON

Roughly two and a half years after the city of Crestwood filed a lawsuit against former City Administrator Kent Leichliter for allegedly manipulating financial records, the two sides have reached a settlement agreement.

The Board of Aldermen voted in an April 25 closed session to approve settlements with both Leichliter and the city’s former auditing firm, Hochschild, Bloom & Co., which also was sued by the city in 2003 for alleged professional negligence and breach of contract.

Aldermen voted 6-2 in favor of each settlement agreement. Ward 2 Alderman Jim Kelleher and former Ward 2 Alderman Tim Trueblood — in his final closed-session vote — were the two “no” votes.

Though the closed-session votes were made public late Monday afternoon, the settlement agreements were not available before the Call’s press time.

Mayor Roy Robinson, who believed city officials would likely release the dollar figures of the settlements sometime this week, said he is relieved that both agreements were reached.

“I feel good that the settlement is here and it’s over,” Robinson said. “Now we can focus more on the money that we do have.”

Trueblood said while he knows his vote did not sway the majority of the board from approving the agreements, he believed he could not in good conscience attach his name to either settlement.

“The city was put in this (financial) position by former City Administrator Leichliter, and the auditors failed to check the books,” Trueblood said. “So I wasn’t going to vote for it.”

Both Robinson and Trueblood said they are under the impression that the agreements with Leichliter and the auditing firm essentially end the city’s differences with former Finance Director Robert Wuebbels. Wuebbels was sued in November 2003 along with Leichliter for alleged misuse of accounting practices.

When contacted Monday afternoon, Leichliter declined to discuss his settlement and deferred all comment to his attorney, Tim Kellett, who was unavailable before press time.

A forensic audit of fiscal 2001 and fiscal 2002 was initiated in mid-2003 after city officials began an internal investigation into the accounting practices used by Leichliter and Wuebbels.

“As a result of our forensic investigative procedures, we have concluded that there have been a staggering amount of disbursements, improper journal entries and misrepresentations to the Board (of Aldermen) of the city’s financial position, authorized by Leichliter and performed by both Leichliter and Wuebbels, representing mismanagement of city funds and financial reporting errors,” stated the forensic audit report prepared by Brown Smith Wallace.

In November 2003, the city filed a lawsuit in St. Louis County Circuit Court alleging that Leichliter and Wuebbels breached their fiduciary duties by manipulating financial records to misrepresent the city’s true financial condition to then-Mayor Jim Robertson and the Board of Aldermen. The lawsuit also alleged professional negligence and breach of contract by Hochschild, Bloom & Co., which served as the city’s independent auditing firm from 1998 to 2002.

Based on the forensic audit, the lawsuit alleged that Wuebbels, with Leichliter’s knowledge, “engaged in a complex scheme to manipulate the financial accounts of the city of Crestwood so that the city budget would appear to be in balance and that the city was operating in a positive cash-flow situation, when, in fact, the city was operating in a serious negative cash-flow situation.”

In January 2003, Leichliter filed a counterclaim against Crestwood contending the city breached an agreement to pay him salary and benefits through March 2004. He served as city administrator for nearly 25 years before retiring in December 2002.