Tishaura O. Jones did not get long to savor her victory in the August 7 Democratic primary for City Treasurer – or to prepare her transition team, pending her almost certain win in the November general election – before more scandal hit in the troubled office she will soon direct.
On Monday, the local minority subcontractor on the Treasurer’s contract to provide parking services for the city, Dannielle Benson, owner of Dankar Enterprises, pled guilty to defrauding majority contractor Duncan Solutions and the Treasurer’s Office from June 2009 through December 31, 2011.
Benson pled guilty to one felony count of mail fraud for bilking the city and the majority contractor out of more than $328,000 by paying two unnamed people who didn’t do any work and then paying an unnamed consultant who didn’t do any consulting after the consultant learned of and threatened to expose the fraudulent arrangement.
The wording of Benson’s plea agreement suggests more fraud will be prosecuted based on these incidents. The two “ghost employees” are indicated by initials, which suggests their identities are known but being withheld for a future indictment or plea agreement. In charging documents the “ghost consultant” is named with the generic phrase “John Doe,” often used for someone who is either a cooperating witness or a suspect for larger fraud schemes.
Assistant United States Attorney Hal Goldsmith, who is handling the case for the U.S. Attorney’s Office, declined to answer questions about “John Doe,” the fraudulent consultant, and whether he is cooperating with the investigation or the target of more substantial charges of his own.
A source close to the case told The American that a St. Louis lobbyist is “John Doe,” but Goldsmith declined to confirm or deny his identity. The Post-Dispatch ran with the same unconfirmed rumor and identified former state Rep. Rodney Hubbard.
“It makes me concerned that there is more to come and what else is going on in the office,” said Jones, who served as state representative and assistant minority floor leader in the House before stepping down to run for Treasurer.
However, the additional bad news for an office that has spawned scandals for years under the leadership of Treasurer Larry Williams also confirmed the necessity of the Jones’ campaign platform to start her tenure with a transparent audit of the office.
“We could have found this fraud during the audit process,” Jones said. “I’m an HR professional. I would have discovered the same anomalies looking at the payroll register vs. the time clock report and who physically was there and who wasn’t.”
Jones father, former city Comptroller Virvus Jones, managed her campaign and has been assisting her in her preliminary transition toward running the office. Virvus Jones spoke to an executive at Duncan, the majority contractor, about the fraud.
“Duncan said they were basically a victim, which is essentially what the U.S. Attorney told them,” Virvus Jones said. “They have terminated Dankar’s contract, sent them a letter Monday, and took over all parking functions Tuesday at 7 a.m.”
Duncan, based in Milwaukee with more than 2,000 clients worldwide, contracted with Dankar for day-to-day on-street parking meter maintenance and revenue collections in St. Louis. Duncan has an unusually long contract with the Treasurer’s Office for a provider of municipal services – 10 years – which will be reviewed under the new administration.
“We always approached it as if everything was on the table,” Tishaura Jones said. “All contracts will be reviewed, top to bottom, once we get to work and conclude our audit. We have the opportunity to really press the reset button.”
The Treasurer’s Office manages $1.5 billion in revenue every year, according to a budget estimate provided to the Board of Aldermen. The contract with Duncan is valued at $1.74 million.
The “reset button” also will be applied to staffing for what has always been treated as a patronage office.
“I am a person who lives by process,” Jones said. “I will install a system that is fair and equitable, not just giving jobs to people because they have a sponsor who happens to be an elected official.”
Her goal, particularly in the wake of another humiliating “ghost employee” scandal, is to professionalize office operations.
“We will conduct yearly evaluations, with raises tied to performance,” Jones said. “That’s the school I was brought up in. We’ll have to change the expectations of some of the employees.”
Virvus Jones said that the Duncan exec told him the fraud stopped on December 31, 2011 when the contractor switched to a flat-fee method of accounting, which closed the loophole the subcontractor had been using to fraudulently inflate its bills. Duncan said the U.S. Attorney brought the fraud to the contractor’s attention.
Also, Williams’ complicity with the fraud is suggested by the fact that, according to the plea agreement, he introduced Benson to the “ghost consultant” and forged their relationship for one of the two bogus consultancies. Williams has been dogged by rumors of federal investigations for decades.
Sentencing for Benson, 41, of St. Peters, has been set for November 16. Wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000. She is represented by Arthur Margolis, and her plea agreement says she has agreed to cooperate with the prosecution but has not yet provided substantial cooperation.