Stenger Crony Accused of Bilking Investors Out of $1.2M

By on May 14, 2019

From St. Louis Post-Dispatch:  A businessman charged with crimes in former St. Louis County Executive Steve Stenger’s pay-to-play scandal is now accused by Missouri officials of defrauding investors out of $1.2 million.

John G. Rallo, one of Stenger’s earliest campaign donors, was served with a cease-and-desist order from the Missouri secretary of state’s securities division last week, his lawyer said Saturday.

The lawyer, John Rogers, said he had yet to review the order with Rallo and had no comment. Rallo, of Olivette, will have an opportunity to reply to the allegations against him, Rogers said.

The 18-page order claims that Rallo collected more than $1 million from five investors in the St. Louis area and one in Utah. Rallo asked them to invest in a company selling coconut powder to Costco and Sam’s Club as a sweetener and for use in food products. Rallo eventually told them that the business, Food for Health International LLC, was unable to pay them back, the order says. But state officials say that Rallo actually funneled the money into his other businesses.

Rallo told investors that a Utah company already had purchase orders from retailers, said one of the investors, who did not want his name used in this story. Rallo said a coconut water slurry would be shipped from Asia to Oregon, where it would be dried using a proprietary process, then packed and shipped to retailers, the investor told the Post-Dispatch on Saturday. Rallo later said that the company was having financial difficulties.

After the investor became suspicious, he spoke to state regulators, as well as the prosecutor and the federal agents involved in the Stenger investigation.

The state order says that in 2015 and 2016, Rallo convinced two investors from Wildwood, two from St. Louis, one from O’Fallon, Mo., and one from Utah to invest. The investors ranged in age from 37 to 58 and each put in between $83,000 and $400,000, the order says, for a total of $1.3 million.

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