A businessman already accused of bribery as part of former St. Louis County Executive Steve Stenger’s pay-to-play scheme is facing fraud accusations from a state agency.
The Missouri Secretary of State’s office said Monday that its securities division has issued a cease-and-desist order against John Rallo (on right in picture) , accusing him of defrauding six investors out of more than $1 million. Five of the investors are from the St. Louis area, and one is from Utah.
Rallo’s attorney, John Rogers, declined comment.
Stenger, a Democrat, pleaded guilty on May 3 to federal charges for directing county contracts to campaign donors. Federal prosecutors cited businesses operated by Rallo, who was indicted last week and pleaded not guilty on Friday.
Sheila Sweeney, the county’s former economic development chief, pleaded guilty Friday to one federal count for helping to cover up Stenger’s crimes. Both Stenger and Sweeney face sentencing in August. Sentencing guidelines suggest he could get up to four years in prison, and she could get up to a year.
The cease-and-desist order alleges that Rallo, 53, sought investors in Food for Health International LLC, a company he said would sell coconut powder to Costco and Sam’s Club as a sweetener and for use in food products. The state claims that Rallo largely used the investments for his other businesses.
The state said the individual investments ranged from $83,000 to $400,000.
The order seeks restitution of $1.36 million, which includes interest and fines.
Stenger admitted in his guilty plea that he took actions to ensure that county contracts went to two Rallo-owned companies — Cardinal Insurance and Cardinal Creative Consulting; and to ensure that another Rallo company obtained options to buy two properties that were held by the county’s Land Clearance for Redevelopment Authority.
Stenger also took action to ensure that an unnamed company obtained a state lobbying contract from the St. Louis Economic Development Partnership, an agency headed by Sweeney, a Stanger appointee.
The bribery indictment against Rallo claimed he gave Stenger tens of thousands of dollars in donations in the understanding that his companies would get contracts.
Stenger, 47, resigned on April 29, the same day his indictment was announced. Now, he may also lose his county pension.
The St. Louis Post-Dispatch reported that Republican County Council member Tim Fitch is pushing an ordinance that would prevent any county elected official from collecting a pension if convicted of a felony while serving in office.
Stenger would currently qualify for a pension when he turns 60. He would earn $1,660 per month starting March 1, 2032, and that would increase to $1,963 per month on March 1, 2037, after he turns 65, the Post-Dispatch reported.
