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CLAYTON — The St. Louis Economic Development Partnership has sued its former CEO and former chief financial officer, seeking to recoup nearly $350,000 in unauthorized bonuses the two directed to themselves and other employees when they were at the helm of the organization.

In its lawsuit, the Partnership accuses former CEO Sheila Sweeney and former CFO Joyce Steiger of a “conspiracy” to pay themselves more than $200,000 in unauthorized bonuses — money that largely comes from St. Louis and St. Louis County public funds — without board approval.

The legal action, filed Dec. 17 in St. Louis County Circuit Court, comes more than a year after a report from Missouri Auditor Nicole Galloway’s office found Sweeney and Steiger oversaw more than $350,000 in unauthorized bonuses to themselves and other employees. The audit, released in September 2020, recommended the Partnership pursue reimbursement of those payments. Partnership staff said in their written response to the audit they were consulting with legal counsel but have stayed quiet on the matter since then.

Former St. Louis economic development chief gets probation, $20,000 fine in Stenger's pay-to-play scandal

Sheila Sweeney leaves the Thomas F. Eagleton U.S. Courthouse with her legal team after being sentenced to three years probation and fined $20,000 for her role in Steve Stenger’s pay-to-play scandal on Friday, Aug. 16, 2019. Photo by Laurie Skrivan, lskrivan@post-dispatch.com

The audit report was a post-mortem of St. Louis County governance in the wake of the 2019 pay-to-play scandal that sent former County Executive Steve Stenger to prison. Sweeney and the Partnership played a central role in federal prosecutors’ case against Stenger: The former county executive installed Sweeney in 2015 to lead the organization, and contracts the Partnership awarded to Stenger political donor John Rallo made up the bulk of the government’s case.

Sweeney pleaded guilty to misprision of a felony and received probation and a $20,000 fine but no jail time.

But not all of the audit was a recitation of the facts in the Stenger indictment. It also offered some explanation as to how Sweeney managed to inflate her total compensation to around $500,000 by 2018, well above that of her predecessor who had decades in economic development.

And for the first time, the audit implicated Steiger in the mismanagement of the Partnership.

St. Louis Economic Development Partnership holds special meeting

Board member Ed James and CFO of the St. Louis Economic Development Partnership Joyce Steiger attend a special meeting for the Partnership board on Thursday, Jan. 3, 2019, at the Pierre Laclede Center in Clayton. Photo by Laurie Skrivan, lskrivan@post-dispatch.com

Steiger, who had worked at the Partnership and its predecessor for years before Stenger took power, oversaw $65,000 in unauthorized bonuses to herself in 2016 and 2017. Steiger also “abused her position,” according to the audit report, by instructing her staff to add to her paid time off hours and then rolling over her unused hours, contrary to the Partnership’s policy. That resulted in her receiving an additional $38,000 in unauthorized compensation when she retired from the partnership in April 2019.

Sweeney, meanwhile, paid herself $160,000 in bonuses in 2016 and 2017. Including retirement and other benefits, by the time the Partnership board fired Sweeney in early 2019, she had been paid some $1.5 million from the public entity, according to a tally from the auditor’s office.

Sweeney and Steiger also oversaw $123,000 in improper bonus payments to other, unidentified employees at the Partnership.

Independent audits of Partnership finances in 2016, 2017 and 2018 did not reveal the unauthorized transactions, the organization said in its lawsuit. It only became aware of the payments when the Missouri Auditor’s report was released in September 2020.

“Sweeney and Steiger did not disclose the unauthorized transactions to the Board — much less seek the required approval,” the Partnership says in its lawsuit. “Indeed, Sweeney and Steiger took steps to conceal the unauthorized transactions, by accounting for and categorizing the transactions in ways that would prevent their discovery.”

The group accuses Sweeney and Steiger of unjust enrichment and breach of fiduciary duty in addition to conspiracy.

“Both Sweeney and Steiger directed and implemented the disbursement of the funds as executive officers of the Partnership, while fully aware that the disbursements required Board approval,” the lawsuit says. “Under these circumstances, a meeting of the minds existed between Sweeney and Steiger to enrich themselves and others, at the expense of the Partnership, and without any justified public purpose.”

Neither Sweeney nor Steiger returned calls and messages requesting comment. They do not yet have lawyers listed.

The Partnership is represented by law firm Stinson in the litigation. A Partnership spokesperson said the organization doesn’t comment on pending litigation.

The board of the Partnership has largely been replaced by St. Louis County Executive Sam Page since Sweeney and Steiger left. Rodney Crim, a longtime economic development official at the St. Louis Development Corp. who moved to the Partnership in 2013, now leads the organization.

The Partnership focuses primarily on economic development in St. Louis County, though it does do some site selection and tax-exempt bond work for the city. Four of its board members are appointed by the St. Louis mayor, while the 11 other members are county executive appointees. Its roughly $7.4 million budget gets about $4.2 million from the county and $1.1 million from the city.

Joel Currier of the Post-Dispatch contributed to this report.

Originally posted at 3:53 p.m. Monday, Jan. 3, 2022 

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