State audits SLDC’s north St. Louis grant program and former president’s severance pay

St. Louis’s development arm will undergo an audit following allegations of improper activity and severance pay made to former president Neal Richardson following his departure.

Auditor Scott Fitzpatrick announced Tuesday his office launched an audit into the St. Louis Development Corporation after uncovering “possible improper governmental activity” in the organization.

Fitzpatrick’s office launched an investigation into SLDC after receiving multiple complaints over the $30 million North St. Louis Small Business and Non-Profit Grant Program that raised “several red flags.” One of those complaints led the auditor to conclude that an audit was needed.

“We received multiple whistleblower complaints that alleged misuse of ARPA funds through a grant program administered by the SLDC," Fitzpatrick said in a statement. "With millions of dollars flowing through this program it is imperative sufficient oversight is provided to ensure the funds are used appropriately.

The North St. Louis Small Business and Non-Profit Grant Program was designed and led by SLDC in an effort to provide grants to nonprofits and businesses on the North side impacted by the COVID-19 pandemic.

Previously, city officials pulled millions in grants awarded to businesses after an investigation by the St. Louis Post-Dispatch revealed issues within the program, including grants being awarded to businesses located in boarded-up buildings or vacant lots.

Richardson, the corporation’s former president, departed earlier this year shortly after Mayor Cara Spencer’s inauguration. The St. Louis Business Journal reported he was paid $141,318 in severance from the development corporation and a $25,000 consulting fee.

In response to the audit, Spencer said she supports the audit and is confident in the new leadership at SLDC.

“No one, least of all the people these grants are meant to help, benefits if these funds don’t go where they should, so I fully support this audit,” Spencer said in a statement.

The SLDC Board of Directors elected Otis Williams as interim president and executive director of the corporation after Richardson’s departure. He previously served in the role during his 22 years at SLDC.

Spencer called the new vetting process for the small businesses and non-profits grant program put into place by Williams and current SLDC leadership “rigorous.”

“I have long expressed my deep concern about this program's initial lack of vetting to ensure that recipients were real and eligible businesses located in north St. Louis,” she said.

St. Louis Development Corporation did not immediately respond to a request for comment.

The audit officially began Sept. 25.

“We will do our best to give the people of St. Louis the answers they deserve and uncover any mismanagement or misuse of funds,” Fitzpatrick’s statement read.

This story has been updated with comments from St. Louis Mayor Cara Spencer.