Sheila Sweeney pleads guilty to covering up Stenger’s pay-to-play scheme

Pictured above: Former Economic Development Partnership CEO Sheila Sweeney, left, and her attorney William Margulis leave the Thomas F. Eagleton United States Courthouse Friday. Photo by Erin Achenbach.

By Gloria Lloyd
News Editor
glorialloyd@callnewspapers.com

Sheila Sweeney, the former CEO of the St. Louis joint city-county economic development agency, pleaded guilty Friday to helping former St. Louis County Executive Steve Stenger cover up a pay-to-play corruption scheme that exchanged county contracts for campaign donations.

Former St. Louis Economic Development Partnership CEO Sweeney, 61, of Ladue, took a plea deal in a plea hearing at the Thomas F. Eagleton United States Courthouse in downtown St. Louis, telling U.S. District Judge Catherine D. Perry — also Stenger’s judge — that she is guilty of “misprision of a felony,” which is a felony itself and translates, the judge said, to mean that Sweeney both concealed Stenger’s crimes and knew about them and didn’t report them. Stenger pleaded guilty a week ago to bribery, theft of honest services and mail fraud, all felonies.

Former Economic Partnership CEO Sheila Sweeney outside court May 10, 2019, after pleading guilty to a felony for covering up former County Executive Steve Stenger’s pay-to-play corruption. Photo by Erin Achenbach.

Sweeney will be sentenced by Perry Aug. 16, a week after Stenger. Under federal sentencing guidelines, Sweeney is listed as either a 9 or a 10, compared to Stenger’s 21. She could get four to 12 months in prison, depending on how prosecutors treat her in a pre-sentencing report. Stenger is facing three to four years in federal prison.

A separate judge held a bond hearing with Sweeney after her guilty plea hearing and released her on her own recognizance, with no bond. She surrendered her passport and, like Stenger, can’t leave the Eastern District of Missouri — including to go to Illinois — without permission.

Surrounded by her three attorneys, Sweeney agreed to take the guilty plea, bypassing the process of a grand jury indicting her as it did Stenger and the businessman he demanded she create contracts for, John Rallo. Rallo is charged with the same three types of fraud as Stenger and pleaded not guilty earlier Friday.

She told the judge she had “extensively” talked with her lawyers about the charge. At one point during a conference Perry held for the attorneys at the bench, she put headphones on as the courtroom was filled with white noise. At Stenger’s arraignment and guilty plea hearing, he went up to the judge’s bench with his attorney Scott Rosenblum.

Stenger recommended Sweeney as head of the Partnership in August  2015, after he took office as county executive in January 2015. She made more than $500,000 a year in the role, also serving as executive director of the St. Louis County Port Authority and as a board member on the Land Clearance Redevelopment Authority.

Sweeney was appointed, supposedly after a nationwide search, although the federal indictments said that Stenger influenced her appointment. She had been the interim CEO after Denny Coleman left in June 2015.

“I have enjoyed working with Sheila over the past few months as interim director, and I know she will continue to bring the expertise and business acumen we need to continue to grow our local economy and help create jobs across the region,” Stenger said in the announcement of her hiring.

Then-St. Louis Mayor Francis Slay also joined in, saying, “Sheila builds on a strong foundation of positioning St. Louis to compete as a region to continue the momentum of landing big projects like Ikea, Square, and Boeing. Marketing St. Louis City and County together under the Partnership has proven effective in growing our economy.”

The Economic Partnership board chairman, Dee Joyner, said, “We looked all over the country and realized the best candidate was right here in St. Louis.”

As the head of the agency, Sweeney established projects like the 39 North agricultural tech district in Creve Coeur by Monsanto. But the whole time, she was also pursuing phony contracts to appease Stenger and his donors, prosecutors said.

“Sweeney had knowledge of Stenger’s ongoing bribery scheme, whereby Stenger accepted political donations in exchange for awarding contracts through St. Louis County and the St. Louis Economic Development Partnership and its affiliated organizations,” the U.S. Attorney’s Office said. “Stenger’s scheme deprived the citizens of St. Louis County of their right to the honest services of both Stenger and Sweeney. Knowing of Stenger’s illegal bribery scheme, Sweeney failed to report the criminal conduct to law enforcement.  Sweeney also took steps and engaged in conduct to conceal and cover up Stenger’s illegal bribery scheme which allowed Stenger’s scheme to continue undetected for several years.”  

Assistant U.S. Attorney Hal Goldsmith is handling the case for the U.S. Attorney’s Office.

After Goldsmith outlined the evidence that a jury would hear during a trial to Perry, Perry asked Sweeney, “Is everything in this document true?”

“Yes, Your Honor,” Sweeney said.

Perry said, “Steve Stenger committed honest services, bribery and mail fraud in violation of United States code… You had full knowledge of that fact and you failed to notify authorities and took affirmative steps to conceal his crimes.”

Sweeney faces a maximum penalty of three years in prison and a $250,000 fine.  Restitution is also mandatory.

The Federal Bureau of Investigation and the Postal Inspection Service are investigating this case with the assistance of the Internal Revenue Service Criminal Investigations.   

Stenger admitted that he got Sweeney, who also served as executive director of the St. Louis County Port Authority, to push a $100,000 marketing contract through the Port Authority board for Rallo and his friend Montel Williams, allegedly to help rehab the county’s reputation post-Ferguson. But Rallo didn’t have any marketing experience, and no work was done on that contract other than an op-ed from Williams that even misspelled Stenger’s last name.

Sweeney increased that contract to $130,000 without board approval so that she could launder money through Rallo to pay $30,000 to “J.C.,” a political operative friend of a politician unnamed in the indictment who had come through for Stenger with a key endorsement in the 2014 election. The description of the politician matches U.S. Rep. William “Lacy” Clay, who represents the city of St. Louis and North County, and the Post-Dispatch identified “J.C.” as John Cross, a Clay associate. This particular scheme is where federal prosecutors allege mail fraud, since Rallo mailed three checks to Cross.

Rallo also wanted to buy two parcels of county-owned land in Wellston for business ventures. Stenger directed Sweeney to help Rallo buy the land through the Land Clearance Redevelopment Authority, which Sweeney was on the board of. Sweeney put the sites out to bid, proofed the bids ahead of time for Rallo and his partner, Corey Christanell, and told them how much to bid based on whether anyone else was bidding. The county had spent several million dollars clearing, grading and preparing the  properties. Rallo and his partner bought the sites for $256,000 and $275,000.

After Post-Dispatch reporter Jacob Barker submitted Sunshine Law requests last year for information on the Wellston land deal, Stenger was caught on audio — possibly Rallo wearing a wire — saying, “You can’t talk to the f—ing press. 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, all right, you’re gonna kill yourself with this s—.”

With federal agents again apparently listening in, Stenger outlined his philosophy on governance to his top staffers in November 2018, while discussing whether they could pressure Sweeney into approving the law firm, identified only as “Company One” in the indictment, that had previously held SLEDP’s state lobbying contract again instead of a competing bid from “Company Two.”

“I am a political person, I have to be, I’m in politics. That’s what we do. It’s not the art of f—ing over your friends,” Stenger said.

He later added, “It’s the art of staying in power. It’s about your agenda, and your administration, and (Company Two’s) not in my administration. Never got there. They’re an ancillary player. And (Company One) knows our issues, can get s— done.”

In the same conversation, he calls Sweeney a “nightmare b—-” and said “if she’s going the wrong thing on this, I’m firing her before she makes the decision. Seriously, we can’t have that.”

If she chose Company Two, the board would reverse her because “we’ve got too many people on the board.”

He added of Sweeney, “I’m about this close to just pulling the trigger and saying get the f— out of here” and “(Sweeney’s) a political creature, she was appointed by a politician, and by people who were appointed by politicians to take this role. She took the role. Now you’re in it. You’re either going to do it or you’re not. Get the f— out. You’re a political person.”