Snakes in the Office

Copperheads invade a local real-estate company, but former employees say the biggest snake of them all is their ex-boss.

Oct 18, 2006 at 4:00 am
Those who worked for the real-estate brokerage Blake & Davis say Steve Peterson was always a bit off-kilter. They recall their former boss's habit of locking his office door whenever he left his desk — even for a quick trip to the bathroom. They remember him taking his computer tower home with him each night and locking it securely in the trunk of his car. Rarely, they say, did he ever make eye contact and, although he owned the company, Peterson was a guaranteed no-show at the annual holiday party.

Still, it wasn't until recently that Peterson's behavior became even more mercurial. Among the most inflammatory accusations current and former employees level at Peterson is that he bugged the Blake & Davis phone lines and installed hidden cameras and microphones to eavesdrop on them. More recently the 38-year-old Peterson is alleged to have hired a private-detective firm to trail staffers. Odder still are claims that he may have planted venomous snakes in the office as a way to further intimidate his subordinates.

Once known as an exclusive firm that catered to high-end clients buying and selling homes in some of the tonier suburbs of St. Louis, industry insiders say Blake & Davis is today a shell of its former self. The company has offices in just Clayton and Chesterfield after shuttering its Webster Groves, Town & Country and St. Charles branches. As recently as 2005 Blake & Davis boasted more than 140 sales agents. Today those numbers have dwindled to fewer than 50, according to the company Web site.

In the past year Peterson has sued at least five former employees on grounds that they stole company trade secrets and violated terms of their non-compete agreements when they moved on to other real-estate firms. In turn, ex-agents have filed suits against him, claiming he withheld paying them their commissions. Creditors, too, have joined the fray, suing Peterson for back rent and other delinquent bills.

On December 7 St. Charles County prosecutors will try Peterson on charges of domestic assault in the third degree for allegedly strangling and biting his wife, Kathy Kilo Peterson, in July 2005. In divorce filings, Kathy Peterson also charges her husband and his sister, Laura Peterson, with conspiring to defraud her of some $1.8 million in funds she brought into the marriage.

Peterson calls the allegations outrageous and says he's confident he'll win any and all legal challenges.

"They're just making waves, and to the extent they want to continue to blow smoke, the courts will deal with that," says Peterson, who commented only briefly for this story before referring all questions to his attorneys. "With respect to the employees at Blake & Davis, these charges are just another opportunity for them to do what they can to harangue people."

But Blake & Davis employees say they couldn't possibly make up anything as bizarre as the time they spent working for Peterson. Last month Marilyn Gibson, who until recently served as manager of the company's St. Charles office, filed a three-page restraining order in St. Charles County Circuit Court. She charged that Peterson "harassed, intimidated, stalked and terrified me" throughout August and early September.

Gibson declined an interview for this story, but her complaint backs the assertions of many other former Blake & Davis employees.

"This was supposed to be a small, quiet real-estate company," says one former staffer. "Steve Peterson turned it into a made-for-TV horror flick."

On August 15 of this year Marilyn Gibson arrived at work only to find that someone had rifled through the contents of her office. Still, she reports going about her normal routine that Tuesday morning. Halfway through her 10 a.m. meeting with sales agents, the office receptionist burst into the room to announce that something had slithered into her office. Soon the entire office staff was peering nervously at a foot-long snake staring up at them from behind a garbage bin.

"We were just shocked," recalls Karen Lupo, a former agent who witnessed the event. "When none of the male employees would get near the thing, I decided to do it myself."

Using a pair of salad tongs she found in the break room, Lupo coaxed the reptile into a cardboard box and deposited it outside on the lawn. "It was hissing at me when I let it go," she recalls.

But if Blake & Davis employees were alarmed when the snake was in the building, Lupo says they became even more disturbed when they realized the serpent was not a garter snake — as first suspected — but a venomous copperhead whose bite can be lethal.

"From that moment on," says Lupo, "we were petrified as to what else we might discover in the office."

The creepy occurrences would not be limited to inside the office walls. Someone, they say, was watching them as they came and left the building. On August 19, just days after the copperhead scare, Gibson reports the first of many encounters with the man she believes Peterson hired to spy on her and others.

"I was at a restaurant having breakfast with Cindy Fox, another [Blake & Davis] manager, and Joe Riley, president of Blake & Davis Realtors," writes Gibson in her restraining order. "The man at the next table kept watching us and trying to eavesdrop. He left when we left."

Riley, one of several former employees currently being sued by Peterson, also confirms seeing the mysterious man at the IHOP that morning.

"He looked like a bad Inspector Clouseau," recalls Riley. "He had this jet-black moustache that appeared to be pasted on, and he kept leaning closer and closer to our table. I thought he was going to fall out of his booth."

Says Greg Young, another former Blake & Davis employee: "It was ridiculous. I just started waving at him. We used to have a staff lunch every Friday on the lawn behind the office. The guy would be sitting in a grey Taurus in the adjacent parking lot watching us. Every once in a while he'd stick out a camera or what appeared to be a listening device. It was so obvious."

But by August 29 Gibson writes that the detective's presence had so alarmed some employees that receptionist Mary Halaska approached Peterson, and two of his allies, Blake & Davis agents Irina Kish and Kelly Shaw, to demand that they call off the sleuth. "She was told, 'It's not you that we were following.'"

The day before Gibson was again meeting with fellow agents Joe Riley and Cindy Fox when she reports that Peterson and Kish ambushed them at a restaurant. "When he tracked and hunted me on Aug. 28, 2006, and found me at the Embassy Suites lobby, I thought he had a gun and would kill me and the five others at my table. He has a history of physical violence. I'm afraid for my safety," writes Gibson in the restraining order.

Riley says that the group was meeting to discuss a new real-estate venture they planned to start after leaving Blake & Davis. Like Gibson, he says Peterson's outburst created a scene at the hotel restaurant and that he, too, feared for his life.

"The first moment I saw him, I thought to myself: 'Oh, God! He's got a gun. He's going to kill us!'" Instead, says Riley, Peterson fired all three employees on the spot. Riley counters that he was — in effect — already fired after receiving a registered letter from Peterson in July informing him his employment would be terminated in September. In light of that notice, Riley says he had a right to plan for his future employment outside of Blake & Davis.

Peterson's Clayton-based lawyer, Howard Wittner, contends the meeting was a direct violation of Riley's employment contract. "It's a breach of loyalty," argues Wittner. "If you're the acting president of a company, you cannot go into business with the competition while still accepting payment from the company with whom you're still employed. It makes no legal sense and it makes no common sense, either."

On August 29 Riley and others entered into another squabble when Gibson arrived under police escort to remove her possessions from the office. Irina Kish, according to Gibson's restraining order, denied her access to the building and later came out of the office with Gibson's computer tower and locked it in the trunk of her car.

In a restraining order filed against Joe Riley, Kish accuses the former Blake & Davis president of attacking her that day as she tried to confiscate the computer.

"I was putting the computer in the back of my car when Joe ran to the car, assaulted me by pushing me away from the trunk and he tried to grab the computer. I told him to stop pushing me and not to touch the computer. He then yelled 'stupid bitch' and then I called 911."

Riley maintains, for the record, that he called Kish a "crazy bitch" and that he never touched her. Kish's restraining order has since been thrown out.

On September 7 pandemonium again ensued when employees say they discovered a video camera hidden away in a light socket in the ceiling of the break room at the St. Charles office.

"Everyone crowded around to see it," recalls Karen Lupo. "It was pretty big, probably four inches in diameter, with a microphone attached to it. We followed the cord to the back room. There was a VCR and a router with two splices. My immediate concern was whether there was a camera in the ladies' room. It's an eerie feeling to know someone is watching you."

Peterson says he's unaware of the incident and suggests employees fabricated the story as a way of getting back at him. "They took offense to the fact that the president (Joe Riley) was terminated for competing against our company," says Peterson.

On the same September day employees discovered the video camera, Gibson, Riley and several other Blake & Davis castoffs were at work setting up a new office under the name Best Seller Real Estate in O'Fallon. Suddenly, Riley saw the shadow of a man pass by the outside windows. Moments later, according to Gibson's restraining order, Cindy Fox walked outside the office and screamed. "Another small copperhead snake was coiled outside the door."

This time around Greg Young removed the serpant with a dust pan. He surmises that the snake made its way to the doorstep from a nearby field. "I think the snakes are a freak thing," he posits. "The copperhead they found inside the office probably came in with a delivery of boxes. The other one probably wiggled its way from a vacant lot. But it sure makes for a good story."

Riley, on the other hand, believes Peterson planted the snake. "The windows had paper on them because we had a crew in there painting," he says. "But the shadow matched Peterson's silhouette. He has this weird hair profile — it's kind of a Donald Trump hairdo. The snake was right there — just six inches from the door. You could have stepped on it!"

Counters Peterson: "That's ridiculous. I don't even know where their office is."

Peterson's attorney, Wittner, says he's never seen anything so crazy. "Bizarre is more like it. I've been in this business a long time and these allegations are really, really unusual. It's borderline embarrassment.

"I think Steve has the kind of personality that he's not what you call a funny guy," continues Wittner. "He's a very serious guy and a bright guy. And I think he's all business and I think that rubs some people the wrong way."

Steve Peterson grew up on West Swon Avenue, a picturesque street in Webster Groves that boasts big turn-of-the-century homes and manicured lawns. Neighbors recall his parents, especially his father, Gary, as pleasant and cordial, and his sister, Laura, as a popular blonde. Steve Peterson, on the other hand, seemed to be a brooding loner, they say. One mother recalls her son and his friends referring to Steve as a "nerd."

While the Petersons appeared be a normal suburban family, neighbors say they were shocked when in 1984 Gary Peterson pleaded guilty to charges of embezzling funds from his employer, Centerre Bank. The scheme involved Peterson, the bank building's manager, cutting checks to a corrupt contractor for bogus plumbing work. In total, he and the conspiring plumber flushed some $485,000 from the bank before being caught. He was sentenced to eight years in prison.

A sophomore at the prestigious Country Day School at the time of his father's conviction, Steve Peterson grew more insular, turning to his sister, Laura, for support. Today, Laura, 36, remains one of Peterson's few — if only — friends, according to colleagues.

With his father in prison, Peterson's mother, Marguerite, became the family's breadwinner and succeeded far beyond expectations. By the late-1980s her real-estate management firm, Scott Price & Associates, represented some of the largest condominium associations in the region. Peterson joined the company after graduating from Washington University.

In 1999 Peterson married Kathy Kilo, the daughter of the prominent physician and medical researcher Charles Kilo. That same year, Peterson made a splash in the local real-estate market when he purchased a stake in Blake & Davis. The marriage and the new business title seemed to catapult the then 32-year-old Peterson to the ranks of the privileged class.

Dressed in a breezy uniform of starched Oxford-cloth shirts, needlepoint belts, khaki pants and loafers with no socks, Peterson made a name for himself impressing clients and agents with four-course lunches at the members-only St. Louis Club. Outside of work he could be spotted cruising through town in his Mercedes 320, accompanied by his dogs, a pair of Weimaraners he named Blake and Davis.

As Peterson flaunted his new position with the company, employees with Blake & Davis say he showed casual indifference to critical business matters, tossing away bills and shirking promises made to his sales agents. With his five-foot-nine frame, generous waistline and Coke-bottle glasses, Peterson was hardly an imposing figure, but employees say he relished the way he could manipulate his underlings.

Employees say Peterson required them to sign non-compete agreements and threatened to file lawsuits against anyone who dared to leave the company.

"He even made clerical workers sign the contracts," recalls a former employee. "People were paralyzed with fear. They thought they'd be unable to work if they left."

Peterson confirms that he required some of his employees to sign non-compete agreements but dismisses the notion that people didn't know about the documents. "They signed them, didn't they?" he says. Peterson has little tolerance for those who he believes have broken the contracts and found new jobs outside Blake & Davis.

"To the extent that they've done something improper, they'll be pursued," he says. "And to the extent that they haven't they won't, because they moved on and they've followed the rules. You have to have simple standards. If you can't follow simple standards, then we'll look at the courts to define them."

Former employees, meanwhile, say it wasn't long before the entire office began to feel insecure and worried about Peterson.

"The whole office was just a toxic cesspool of mistrust," says a former agent.

"You'd drive by the Clayton office and everyone would be outside talking on their cell phones," says another ex-worker. "We were all convinced he was listening to phone calls."

In February 2005 morale hit a new low when the co-owner of Blake & Davis, Andrew Dielmann, abruptly severed ties with Peterson. Dielmann declined to comment on why he left other than to say he wanted to start his own business. But his departure opened the floodgates at Blake & Davis, with dozens of agents leaving within weeks to join him in his new venture. Dielmann can't recall off the top of his head exactly how many people left to join him in his new company.

"I'd say at least 50, but it could be as many as 60 or 70, but probably not 75," says Dielmann. "I'd have to count."

Back at Blake & Davis, employees say the defection fueled Peterson's paranoia. He began his practice of taking his computer tower home with him each night and constantly locking the door to his office. He started calling himself the "Wizard of Oz," as he basked in his new role as sole owner of the firm. Soon after Dielmann's exit, employees say he organized a staff meeting for the sole purpose — it seemed — of vilifying his former partner.

"He used to stay up all night obsessing about these presentations," recalls a former staffer. "By the look on his face, it was evident he hadn't slept in days. The whole presentation was how Andy 'abandoned' us. It was never about how we were going to pick up the pieces and move on. We were hemorrhaging staff and he was more concerned about who's right or wrong."

On July 24, 2005, police responding to a 911 call arrived at the Peterson's O'Fallon home to find Kathy bruised and shaken. Minutes earlier, at approximately 12:13 that Sunday afternoon, police report that Steve Peterson allegedly attacked his wife by "grabbing her by the throat and throwing her to the floor."

The cops note that Peterson also bit his wife, leaving teeth marks from both his upper and lower jaws. When they attempted to place him under arrest, the police say Peterson was uncooperative. "An arm bar was used to stop the immediate resisting, yet he remained rigid and stiff during the entire hand cuffing," writes the arresting O'Fallon police officer, Mike Magrew. "He was advised to stop resisting multiple times."

In a restraining order filed against Peterson later that day, Kathy Peterson provides a more descriptive account of the assault. She claims the attack occurred following an argument and that that his assault also injured the couple's daughter.

"Steve was holding my daughter Lucy (two years old) in his left arm," reports Kathy in her restraining order. "As he lunged forward at me, Lucy's head swung and hit the wall. Steve put his hand around my throat and pushed me to the floor choking me. I lunged for his pants pocket to get my cell phone and he leaned over and bit my right forearm. I was unsuccessful getting the phone — he grabbed my right arm and kept slamming it on the end of the bed frame. He finally gave me the phone and I called 911. The officers took photos of my neck and bite marks on my arms."

St. Charles County Prosecuting Attorney Jack Banas says the assault qualifies as a Class A misdemeanor that could carry a sentence of up to one year in jail and a $1,000 fine. As with any domestic assault, Banas says his office plans to prosecute Peterson to the full extent.

Kathy Peterson won't say what she and Steve were arguing about prior to the assault. On the advice of her attorney, she declined comment for this article. The couple's divorce filings, however, reveal that the marriage was not an honest one — at least when it came to the couple's finances.

In a petition before the court Kathy alleges that shortly after the couple wed in April 1999, Peterson and his sister Laura devised a plan to defraud her of some $1.8 million in inheritance and other funds. The siblings carried out the plan by persuading Kathy to transfer her nest egg to several accounts, one of which was accessible to both Steve and Laura Peterson.

The ultimate goal, according to her lawsuit, was to transfer all funds from accounts in her name into the account also controlled by Steve and Laura. Money from this joint account was then used to pay the expenses on a 17-acre farm in Defiance that Steve and Laura purchased together in 1995. To conceal the conspiracy, Kathy alleges her husband physically removed the mailbox from the couple's home, thus preventing her from intercepting financial statements that would tip off the scam. Without the mailbox, all the couple's mailings were sent to Blake & Davis.

Kathy later funneled $350,000 to the property when Steve allegedly called her in January 2003 to falsely report the farm risked immediate foreclosure. According to the suit, her husband promised to repay her within a week of making the loan but never did. Later, Peterson allegedly duped her into signing a title document that cleared any claim she had to the property. Peterson says he's unaware of any of these allegations.

Last month Steve Peterson added to the couple's ever-growing divorce file. In a complaint filed September 14, Peterson charges that eighteen months earlier — in February 2005 — Kathy arrived, visibly upset, at his Chesterfield office. Peterson alleges Kathy pushed him into a cabinet and hit him in the face, causing bruising and lacerations. He's asking the court to award him $25,000 in punitive damages for the assault.

Just as Peterson's divorce case was heating up last summer, employees say conditions at Blake & Davis were spinning further out of control. In spring 2005 Briarcliff Condominium Association sued Peterson and Blake & Davis on charges that the owner and his company mishandled funds, over-billed the association and refused to turn over the condominium's financial records. The court dismissed Peterson of personal wrongdoing but demanded that his Blake & Davis pay Briarcliff $79,000 in damages.

Eighty-four-year-old Barbara Dillon, who served as treasurer for Briarcliff, says Peterson took over the job after his mother ceded her Scott Price & Associates to him. Peterson later rolled the management firm into Blake & Davis.

"She had done a damn fine job managing our association for seventeen years," says Dillon. "I thought the son would follow the mother. We are most unhappy with Mr. Steve Peterson. He put us in serious financial arrears and set our condominium back several years." Dillon adds that Blake & Davis has yet to pay the judgment and doubts the condo association will ever see a dime of the money.

Wittner, who tried the case on behalf of Blake & Davis, says he's unaware of whether the judgment has been paid.

Meanwhile, other suits were pending. In February of this year the company's advertising firm, Kupper Parker, filed a suit claiming Blake & Davis owes it more than $75,000 for marketing and promotional work. That case was set to go to trial October 16.

Landlords, too, claim they're owed money. Late last month the owner of the St. Charles office building filed a rent and possession petition against Blake & Davis, claiming he'd not been paid the August and September rent. Peterson failed to show up for the October 16 court date, says the property owner's attorney Tony Linson, and the judge ruled in favor of the landlord.

"I was frequently dealing with vendors who hadn't been paid," recalls Brett O'Daniell, who served as director of marketing for Blake & Davis. "But then I was misled from the first day I worked there. I'd approach Steve about all his unfulfilled promises and he didn't care."

Par for the course, says O'Daniell, was when he went to the dentist last summer only to discover that the company's health insurance had been canceled. "I called the insurance company and they told me the policy hadn't been paid since June 1. This was mid-July. I confronted Steve about it and he said it was a mix-up. The check must have been lost in the mail."

Desperate to right the ship last fall, Peterson found new investors in his sister, mother (who now resides in Las Vegas), Joe Riley and fellow agents, Tom Omnus, Irina Kish and Kelly Shaw. Together they signed a guarantee for a $2.1 million loan — $500,000 of which was to start a new company that would affiliate Blake & Davis with GMAC Home Services. The remaining $1.6 million was to purchase a tract of land in Winghaven. Laura Peterson was to serve as chairman and chief executive of the new company.

The business never came together, says Riley, because Peterson refused to turn over Blake & Davis' financial statements to GMAC. "Every month it was supposed to happen and never did," recalls Riley. "Then Laura just disappeared for about six months. We never heard from her."

Laura Peterson declined to return phone calls for comment.

"The running joke was that she and Steve had a falling out and he buried her in the back yard," says another former agent. "She was supposed to be managing the company and, poof, she's gone."

Last month Peterson filed a temporary restraining order against Riley that would bar him from practicing real-estate in the St. Louis area. The suit contends that Riley "intentionally, willfully, and maliciously misappropriated and misused trade secrets and proprietary confidential information of Blake & Davis and continues to do so." On September 27, a St. Louis County judge granted the restraining order. A follow-up hearing is scheduled for October 19.

"Mr. Riley has been told he can no longer conduct real estate as a trade and needs to immediately cease and desist," states Steve Peterson. "By virtue of what he and others are doing, they're just making life difficult to themselves. And it's extremely disappointing. They need to act like professionals and move on with their lives."

For his part, Riley denies learning any "trade secrets" at Blake & Davis that he didn't already know from more than twenty years in the real-estate business and is confident the judge will overturn the restraining order once his attorney pleads his case this week. In the meantime, he's eager to distance himself as much as possible from Peterson. He likens his ten months as president of Blake & Davis to babysitting a problem child, with Peterson ordering him to fire employees for no cause and routinely skimping on commitments to his agents.

Last May Riley was conducting a meeting in the Clayton office when former Blake & Davis agent Marcia Harris challenged Peterson for failing yet again to advertise the company's listing in the Post-Dispatch.

"He marched up to her from the back of the room, grabbed her by the elbows and warned her: 'If you want to voice your opinion you need to put your money in and become an investor.'" recalls Riley. "Everyone in the room was just stunned. Then after the meeting he comes into my office and demands that I fire her. I told him I wouldn't do it and that if he were one of my employees I would have fired him on the spot."

In August, Harris filed suit against Peterson, claiming he fired her in an attempt to avoid paying her more than $60,000 in commissions. "These were done deals," says Harris' attorney Steve Cohen. "Basically all that was left for her to do was to pick up her check."

But as the lawsuits mount, Blake & Davis employees say the "Wizard of Oz" is retreating further behind his curtain. Attorney Steve Cohen says he had to hire a special process server to deliver notice of Harris' suit.

"We tried serving him at his place of business and his residence, but couldn't get him there," says Cohen. "Finally we tracked him down at a party where we knew he'd be in attendance."

In court filings, Peterson's current address is listed at any number of places, including his sister's farm in Defiance and a condominium in Chesterfield that belongs to a family friend. In May he supposedly purchased a $575,000 home at 2 Maryhill Drive in Ladue. But like other investments, the house is not registered in his name. Instead, the St. Louis County Department of Revenue lists the owner as Selfridge Revocable Trust and gives the same mailing address as his mother's in Nevada.

Still, employees say, Peterson can be found most days at either the Clayton or Chesterfield Blake & Davis office. After an eventful couple of weeks this summer, the St. Charles office closed quietly last month. Karen Lupo, who ousted the copperhead from the office just weeks prior, said management sent out an urgent e-mail on Friday, September 23, requesting that all employees show up for a mandatory noontime meeting that day. Lunch would be provided.

But Lupo says Peterson — accompanied by his cohorts Irina Kish and Kelly Shaw — didn't show up until 1:30 that afternoon and they didn't bring lunch. By the time Peterson arrived, Lupo says she was one of a just a few people remaining in the office that day.

"They told me that if not enough agents wanted to stay on, they were going to shut the office down," she recalls. "On Saturday morning I drove by the office and saw them packing up equipment. That was the end."

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