St. Louis Parks Employees Embezzle Half-Million from City of St. Louis
The St. Louis Post-Dispatch recently reported on a “massive” embezzlement scheme involving the City of St. Louis. Just a few days ago two municipal employees admitted to embezzling nearly $500,000 from the City of St. Louis over the course of about eight years. The scheme was a fairly sophisticated version of a “ghost vendor” scheme: a fraud scheme where an employee submits fictitious invoices for payment to a company he or she created and has control over its bank accounts. In the case with the City of St. Louis, the two employees did create a fake company and opened bank accounts in the name of this company, but instead of submitting invoices directly to the City of St. Louis for payment, they had three legitimate vendors of the City inflate their invoices and pass the difference on to the fake company once the vendors were paid by the City.
Because money wasn’t received directly from the City itself, it made the prevention and detection of such a scheme very difficult. It is unclear how the two employees were caught, but they were indicted by a federal grand jury and subsequently pled guilty to charges of mail fraud. The FBI is still investigating the case. I’m interested to see if anything will happen to the three vendors who participated in the scheme. More to come…
Read the federal indictments and the articles written in the St. Louis Post Dispatch: