County Health Department official set up bogus firm, performed services and paid himself
This article first appeared in the St. Louis Beacon, Sept. 24, 2013 - A spokeswoman for St. Louis County Executive Charlie Dooley said the county will pursue every avenue – including the courts – to recover county money that may have been embezzled by a top official in the county Health Department. As the investigation closed in, he killed himself.
Insurance may cover some or all of it, said spokeswoman Pat Washington, who declined to speculate on the total.
Edward Mueth, the St. Louis County Health Department’s director of executive administration, apparently formed a bogus IT company that then obtained county contracts worth millions of dollars to perform various high-tech services.
The company, Gateway Technical Solutions, performed the contracted services, which included providing leased laptops and other items for county Health Department operations, said department director Dolores Gunn at a news conference Tuesday.
But what county officials didn’t know was that the work was being done by Mueth, and that the money they were paying was apparently going into his own pocket.
Mueth also approved all the invoices, which totaled $1.5 million since 2010. The bogus firm’s address was that of a small house in Rock Hill once owned by him.
How much money was fraudulently paid to Mueth still is being determined, county officials say. Both Gunn and Dooley said that such a contract violates the county’s prohibition against awarding contracts to any city official or employee.
The company apparently first was awarded the contract in 2008 after winning the standard bid process, Gunn said.
"This was a very, very elaborate scheme,'' she said.
Civil service employee had no political ties
Gunn also noted that Mueth was a civil service employee, meaning that he had risen through the county’s employment ranks solely by his performance. He was not a political appointee, and Dooley’s staff said the county executive had nothing to do with Mueth’s hiring or advancement.
"He was a model employee," Gunn said. "He was there early. Worked late. He actually had gained all of our trust. And he was the person that people looked up to."
Mueth killed himself last Thursday night, after he was asked to meet Friday with county officials to discuss the contracts. His computer access had been shut off Thursday afternoon when county officials began to suspect that something was terribly amiss.
Gunn told reporters Tuesday that no wrongdoing had been detected earlier because the services were performed and equipment provided, as dictated in the IT contract.
What raised recent questions, said Dooley spokeswoman Pat Washington, was the “cost creep” in how much the county was paying. That’s when Gunn began to ask Mueth questions about the firm, Washington said.
Said Gunn: "In preparation for the 2014 budget ... we began to notice some discrepancies in some of the specific line items and categories for the lease of the purchased laptops ... We started to investigate. And one inquiry lead to another inquiry that was presented to the county counselor’s office for review and advice. After consultation with the county counselor’s office, we took appropriate steps to restrict access of all information systems to Mr. Ed Mueth."
Gunn said that the amount that actually went to Mueth improperly can't be calculated until officials determine "the actual amount paid for the hardware we have in our possession and service. … We’re going to look for an actual total amount minus the goods and services and come up with an actual, approximate dollar amount."
County Police Chief Tim Fitch has said that the amount embezzled by Mueth may total millions of dollars. Washington disputed that figure, saying that the actual lost may be less than $1 million because the bogus firm actually did the work that it had been contracted to do.
Luxurious lifestyle went undetected
Washington said that county lawyers “already are looking at ways to recover assets” that had been fraudulently paid to Mueth.
When asked if the county might even file suit against Mueth’s estate, Washington replied, “Absolutely.”
The county will pursue “any and all manner afforded to us,” she said.
Mueth resided in a large brick mansion in Webster Groves that occupies one of the largest lots in town and is a well-known landmark. The mansion is assessed at well over $1 million, with grounds including a pool, tennis courts and a multi-car garage.
His salary was less than $90,000 a year, raising questions as to how Mueth had been able to purchase the property in 2010 and reside in the mansion without attracting notice from other county officials.
Gunn said she had asked questions of co-workers after discovering in recent days how Mueth had lived. "I was kind of surprised when I found that out," she said, citing "rumors that go around about somebody died and left him money."
Gunn explained, "We had a relationship at work. I did not socialize with him after work or after hours or know much about him. And I won’t speculate on his personal life."
Several vehicles were at the home Tuesday, some of them with out-of-state license plates. An older man on the property identified himself as a relative. A young boy was outside in the gated area of the yard. Somebody tossed a large dog bed from inside the house on the front stoop.
Mueth had shot himself in his car, which he had parked a couple blocks away in a parking lot by railroad tracks. He left a suicide note. Authorities have not disclosed its contents.
'Good people do bad things'
(UPDATE) Soon after Tuesday’s St. Louis County Council meeting, Dooley told reporters that there have been previous instances where county money had been unaccounted for, but not through such a scheme.
“One of the issues of this is, in any governmental agency or private entity, you can put all the safeguards in there that you want," Dooley said, and sometimes people still manage to circumvent the system.
"Good people do bad things,'' Dooley said.
“It happens," he continued. "And what we’ve got to figure out is what happened, what’s the extent of it and what safeguards can be put in and how they can be addressed moving forward.”
Asked whether he had discussed with the county procurement department about why they didn’t notice the problem earlier, Dooley said “it’s being investigated right now” by the St. Louis County Police Department.
“I’m going to wait until the investigation is through – including the procurement as well,” Dooley said. “They’re going to make recommendations to us at that time. We’ll find out all the particulars.”
Even though the county possesses insurance to replenish any funds that have been stolen or misappropriated, Dooley said, “What we want to do is prevent it the best we can.”
“The key to it is people,” Dooley said. “And we’re encouraged that our people came forward and presented this issue. And we investigated that process with Dr. Gunn. … So again, from that point of view it did work. But can we make it work quicker and sooner? That’s what we need to work on.”