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kinloch, missouri fire protection district chief pleads guilty to federal fraud charges

FOR IMMEDIATE RELEASE
July24, 2013

St. Louis, MO – The Fire Chief for the Kinloch Fire Protection District, Darran Kelley, pled guilty to charges involving his unauthorized use of more than $140,000 of District funds from January 2007 to January 11, 2013. He also pled guilty to making a false statement relative to his receipt of Social Security disability payments, which resulted in overpayments to him of approximately $120,000.   Kelley has been the District Fire Chief since 2002.

According to court documents, the Kinloch Fire Protection District maintained a District banking account for the receipt and disbursement of District funds. From January 2007 through January 2013, the District received approximately $160,361 in tax revenues from St. Louis County, Missouri.  The City of Kinloch also distributed city funds to the District’s bank account for payroll and operations of the District. It was a part of Kelley’s scheme that on one or more occasions he made unauthorized cash withdrawals from the District’s bank account for his own personal use, including for the purchase of various personal items and for gambling at several casinos in the St. Louis area, that were unrelated to the legitimate operations of the District.  It was a further part of Kelley’s scheme that on one or more occasions he made unauthorized transfers of funds from the District’s bank account to pay for charges on his own personal Mastercard credit card, which were unrelated to the legitimate operations of the District.

In June 2010, the Federal Emergency Management Agency (FEMA) awarded the District a grant of $237,500 to cover 95% of the $250,000 total cost of a fire engine, based upon an application submitted by Kelley.  The City of Kinloch also distributed $15,000 of city funds to the District to cover the District's responsibility to pay 5% of the cost of the fire engine.  Some of these funds were later used by Kelley to purchase personal items and for gambling at several casinos.  During April 2011, it was widely reported by the St. Louis area media that the District was unable to pay the insurance premium due on the newly purchased fire engine.  The premium then due was reported to be approximately $2,322.  Numerous private citizens saw the media reports and made donations to the District to pay for the insurance premium, which donations totaled well in excess of the premium then due.  Kelley paid the insurer $2,322, and the remaining donated funds were retained in the District's bank account and later used by Kelley to purchase personal items and for gambling at several area casinos.  While Kelley engaged in the unauthorized use of District funds, there were substantial outstanding bills from AmerenUE for electric service, American Water for water service, to AT&T for telephone and communications services and to North Central County Fire Alarm System for dispatch services, radios and pagers.  Many of these bills went unpaid as a result of his alleged criminal conduct and some of the necessary services were  reduced or cut off due to non-payment.

Beginning on August 15, 2000, Kelley began receiving monthly disability benefit payments through the Social Security Administration pursuant to his application for benefits relative to a personal medical condition.  Following his initial application, and in order for the Social Security Administration to determine his continued eligibility for disability benefits, he was required to immediately report any work and income, and to periodically verify his continued disability and report any work on Continuing Disability Review Reports.   Kelley failed to truthfully report his work for the Kinloch Fire Protection District, and his income from that work to the Social Security Administration.  On July 26, 2011, Kelley made a false statement on his Continuing Disability Review Report by stating that he had not worked since April 1, 2006, the date of his last medical disability decision, when in fact, he had been working as the paid Chief of the Kinloch Fire Protection District during that period of time. Kelley was paid a salary of approximately $640 every two weeks until December, 2011.      

DARRAN KELLEY, Ferguson, MO, pled guilty to three felony counts of wire fraud, one felony count of federal program theft and one felony count of making false statements, before United States District Judge Catherine D. Perry.  Sentencing has been set for October 16, 2013.

Each count of wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000; federal program theft carries a maximum of 10 years prison and/or fines up to $250,000; and false statement carries a maximum of five years prison and/or fines up to $250,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

This case was investigated by the Federal Bureau of Investigation, the St. Louis County Police Department and Social Security Administration-Office of Inspector General.  Assistant United States Attorney Hal Goldsmith is handling the case for the U.S. Attorney's Office.

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