Attorney General Eric Schmitt is investigating the longtime former top general of the Missouri National Guard for possible criminal activity relating to the operation of a nonprofit foundation that obtained state low-income housing tax credits that benefited a company owned by the general’s son.
The two-star general, Stephen Danner, retired from the Guard in August, shortly after the Post-Dispatch revealed the connection between the Missouri National Guard Foundation, which was founded under Danner’s watch, and his son’s real estate company. The Missouri Housing Development Commission awarded about $14 million in state and federal tax credits to the Missouri National Guard Foundation between 2014 and 2017 for senior housing projects in Poplar Bluff and Cameron, both proposed to be built near existing Missouri Veterans Homes.
The attorney general’s investigation, according to documents obtained in a Sunshine Law request, centers on whether Danner “misused his office” to pressure state officials to award the low-income housing tax credits to the foundation, which contracted with North Star Housing to be the developer of the projects. North Star Housing is co-owned by Danner’s son, Andrew, and Lela Gruebel, a former official of the housing commission.
Officials from the attorney general’s office declined to comment because it is an ongoing investigation. The attorney general’s office closed some records sought by the Post-Dispatch, citing the active investigation exception of the Sunshine Law.
The investigation by the attorney general’s office actually began in July 2018 under the administration of former attorney general Josh Hawley, after the inspector general for the Department of the Army referred the case to the state.
“As a result of our discussion and your subsequent email … the potential criminal complaint involving Major General (MG) Stephen Danner, The Adjutant General, Missouri, is referred to your office … ,” wrote Col. Eric Zeeman of the Army investigations division on July 11, 2018, in a letter to the attorney general’s office.
The Army had been investigating after a complaint was filed by a high-ranking Guard officer earlier that spring. The Army referred the complaint to the Missouri attorney general because it determined that state, and not federal, money was involved. In fact, many of the tax credits handed out by the housing commission are federal dollars passed through a federal low-income housing program. It’s not clear from the Army documents whether the inspector general’s office was aware of this.
According to the referral letter from the Army, the complaint alleges that Danner planned to run the senior apartment complexes, built in part with tax credits, after he retired. In his private business, Danner is a lawyer who has operated hotels and other real estate properties. Since he retired, he has filed applications to enter Missouri’s nascent medical marijuana business.
“A retired (Missouri National Guard) official told the complainant that (Major Gen.) Danner receives money directly from Andrew Danner as a result of these contracts,” the referral letter from the Army inspector general’s office says.
After the attorney general’s office began its investigation in 2018, the attorney in charge of it, Jason Dunkel, left state employment to take a job in the U.S. attorney’s office. At some point in the transition of Hawley being elected to the U.S. Senate in November 2018 and Schmitt being appointed attorney general in January 2019, the investigation stalled.
It was rekindled earlier this year, after the Post-Dispatch Sunshine Law request seeking documentation related to the Missouri National Guard Foundation and Danner alerted Schmitt’s office to the previous federal referral. That Sunshine Law request was filed in July. The attorney general’s final response, including the documents it provided, came Oct. 31. The attorney general’s office has also referred a complaint to the state Department of Revenue because the investigation involves the issuance of state tax credits.
Both the state treasurer, which Schmitt was before he became attorney general, and the attorney general, sit on the Missouri Housing Development Commission. The elected officials who sit on the housing commission, including the governor and lieutenant governor, often send deputies to commission meetings.
The Poplar Bluff facility was built, but the Cameron project has been slowed down, in part because the Missouri Veterans Commission refused to support its application, and local veterans advocates have raised issues with various tax incentives connected to the proposal.
“What in the hell is the Missouri National Guard doing in the low-income housing business?” Roger Foreman, vice chairman of the Cameron Veterans Home Assistance League, asked back in July when the Post-Dispatch first reported on the connection between the foundation and Danner’s son. “This project is not to benefit veterans. It’s to benefit the Danners.”
Danner was first appointed as the adjutant general of the Missouri National Guard in 2009 by Gov. Jay Nixon. He served in the role under three governors, including Gov. Eric Greitens and Gov. Mike Parson. His tenure was marred by multiple whistleblower complaints filed by officers who said they were retaliated against after raising issues of sexual harassment, racial discrimination and other violations of federal rules and regulations.
Danner did not return calls to his office or cellphones, nor did he respond to an email seeking comment.
In filing a form with state regulators to qualify for the tax credits, the foundation failed to disclose any connection to the major general.
On that form, filed by the foundation and North Star in April, 2018, the foundation was asked to disclose: “any business or personal (including family) relationships that any of the staff members, directors or other principals involved in the formation or operation of the non-profit have, either directly or indirectly, with any persons or entities involved or to be involved in the project on a for-profit basis including, but not limited to, the owner of the project, any of its for-profit general partners, employees, limited partners or any other parties directly or indirectly related to such owner.”
Public records, interviews and press accounts show that Danner has been involved with the nonprofit foundation, but the form filed by the foundation doesn’t mention him or his relationship to his son.