Parks Department Fraud
Wed November 20, 2013
St. Louis Parks Department Vows Changes After $465,000 Fraud
The head of the St. Louis city parks department has apologized for an elaborate fraud in which two high-level employees stole nearly $465,000 from the city.
"We know that we are the stewards of an incredible legacy, and stewards of the taxpayers' money," Gary Bess told the parks committee. "We want their trust, and know that we have to earn it. That's why I'm as disappointed as anyone that this has happened. On behalf of everyone in the administration, and the parks department, I'd like to apologize. It's not who we are."
Bess and other officials answered questions for nearly two hours today on how former deputy parks commissioner Joseph Vacca and former chief park ranger Dan Stritzel were able to pull off the embezzlement and if it could have been stopped. Both men have pleaded guilty and will be sentenced in December.
Bess said federal prosecutors told him the fraud would have been difficult to detect, even with numerous reviews by the city comptroller and a 2008 state audit of the department.
"Because of the knowledge these two gentlemen had of how our system worked, and unfortunately because of their close personal relationships with long-term vendors, they were able to disguise this," he said.
The fraud had several components, and worked like this:
- Stritzel had a friend, identified only by the initials D.G., set up a company that supposedly repaired and replaced handheld radios. That same friend also set up a second shell corporation called Dynamic Management Group, where the embezzled funds were deposited.
- The city allows small purchase orders or repair contracts under a certain amount to bypass the competitive bidding process. They are limited to $60,000 to the same company in a single year.
- Stritzel and Vacca directed radio repair contracts to this company, but always under the amount that would have triggered questions at the city. It's not clear if the repair work was needed, or requested simply to embezzle the money.
- The city's contracting structure allowed Stritzel to make the requests, which were then approved by Vacca, getting around an intended checkpoint.
- Stritzel and Vacca also asked two legitimate vendors to inflate their invoices, and stole the additional money. One of the vendors no longer does business with the city.
Ald. Antonio French, who pushed for the hearing, was especially concerned that employees at other departments may be making similar requests to other vendors. He was also troubled by the provision allowing small contracts to be targeted to favored companies.
"Could this be happening elsewhere?" he asked. "I don't know," Bess replied.
Bess said the department has implemented some changes to make such a fraud harder in the future. For one, his department will "prequalify" vendors it uses for repair contracts.
"Do they have a real shop that fixes radios, do they have an inventory of radio parts, do they have the necessary business credentials to do business," he said. Such a review is already performed for contracts awarded through the bidding process.
Bess said the department has also taken away the authority of everyone except the top four officials to approve small purchases. A third party will also have to make sure that goods or services have been delivered.
Read the full indictments and guilty pleas here.
Follow Rachel Lippmann on Twitter: @rlippmann
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