Chapter 1: Steve Russo

Before You Read...

Tony Crony is an ongoing investigative series examining public records, court filings, government actions, and other documented information related to Orange Beach, Alabama. Each chapter focuses on a specific topic within the broader investigation.

Unless otherwise stated, the reporting is based on publicly available records, documents obtained through lawful means, interviews, and information independently verified by Murder Creek Media. Where allegations or unresolved claims are discussed, they are clearly identified as such. Readers are encouraged to review the underlying documents and draw their own conclusions.

To answer the question, "What the hell is going on in Orange Beach?" we need a little context.

Actually...we need a lot of context. And a relatively short history lesson.

Because none of this started with ethics complaints, body camera footage, or lawsuits. By the time those stories began racking up millions of views, the relationships behind them had been developing for years.

To understand today's Orange Beach, you first have to understand how a network of people, businesses, nonprofits, developers, attorneys, and public officials became intertwined over time. Those relationships didn't appear overnight, and they certainly didn't begin when Tony Kennon became mayor.

Like any good investigation, we're going to start at the beginning.

With Steve Russo.

Who Is Steve Russo?

The short answer? It depends on who you ask.

If you moved to Orange Beach recently, there's a good chance you've never heard his name. But if you've lived here for a while, you probably have an opinion. Some people remember him as a visionary who helped shape modern Orange Beach. Others remember him for the controversy that surrounded his time in office.

One thing almost everyone agrees on is this: you can't tell the story of Orange Beach politics without telling the story of Steve Russo.

That's because many of the relationships, rivalries, and political dynamics that still influence conversations today can be traced back to his administration. So before we talk about Tony Kennon, ethics complaints, or body camera footage, we need to talk about the man who came before him.

Steve Russo served as mayor during one of the most transformative periods in Orange Beach's history.

Russo did not become mayor through a normal open-seat election. He first entered Orange Beach government as a city councilman in 1996. Two years later, he became mayor through a special election after the winner of the 1996 mayoral race, Bert Krages, was removed by a Baldwin County judge over campaign finance disclosure issues.

Voters then kept him there. In 2000, Russo defeated challenger William Benjamin with 72 percent of the vote. In 2004, he won again, this time in a much closer and more contentious race against City Councilman Brett Holk, prevailing by fewer than 200 votes. I mention this because it will become an important tidbit of information in future chapters, so hang with me here.

Understanding Orange Beach as a Community

Today, people know Orange Beach for its sugar-white sand beaches, emerald Gulf waters, towering condominiums, and millions of visitors who flock here every year. But Orange Beach wasn't always the bustling resort destination it is today. It officially incorporated in 1984, and for much of its early history, it was a small coastal community built around fishing, boating, and a slower pace of life.

Unlike many parts of the country, coastal communities like Orange Beach don't just grow. They rebuild. Major storms can reshape entire neighborhoods overnight, destroying homes, businesses, roads, utilities, and public infrastructure. Recovery often takes years and requires coordination between local, state, and federal governments.

One of the most devastating examples came in September 2004, when Hurricane Ivan slammed into the Gulf Coast. The storm left widespread destruction across Alabama, Florida, and neighboring states, claiming more than 100 lives throughout the United States and the Caribbean. In Orange Beach, Ivan damaged or destroyed hundreds of structures and dramatically altered the landscape. President George W. Bush later visited the area to survey the damage alongside Mayor Steve Russo.

For city leaders, disasters like Ivan didn't pause development. In many ways, they accelerated it.

Entire areas had to be rebuilt. Roads were repaired and expanded. Infrastructure was redesigned. New condominiums replaced older buildings. Property values shifted. Developers returned with new proposals. With every recovery project and every new development came another decision for city government to make.

So when developers were coming in from all sides, multimillion-dollar projects were being proposed, and the city was making decisions that would shape Orange Beach for decades, it may not have seemed unusual that elected officials, developers, engineers, attorneys, contractors, and business owners all knew one another.

After all, growing cities are built through relationships. And Steve Russo built those relationships through his business.

We’re talking about Sam’s Stop & Shop, better known to many locals as Sam’s Bait & Tackle, a longtime Orange Beach fixture on Canal Road right in the heart of the city. Depending on who you ask, Sam’s was (and still is) part gas station, part bait shop, part tackle store, part breakfast stop, and part local information desk. In a beach town built around fishing, boating, tourism, and hurricane recovery, places like Sam’s were more than businesses. They were community hubs.

In Orange Beach, business, politics, development, and community life were not separate worlds. They overlapped constantly. The mayor might also be a business owner. The city attorney might also know the developers. The developer might also be a neighbor, a donor, or someone you saw at the gas station before sunrise buying bait.

In other words, Russo was not some obscure figure who quietly slipped into power. Orange Beach voters chose him, repeatedly, during a period when the city was growing fast, rebuilding after hurricanes, and making development decisions worth millions. 

The First Domino

By the start of 2005, Steve Russo wasn't just the mayor of Orange Beach. He was Orange Beach, at least to a lot of people.

Then, in December 2005, everything changed.

Federal prosecutors announced that Russo had been indicted following a two-year public corruption investigation.

Imagine waking up one morning to find out your city's mayor, someone you've known for years, is standing at the center of a federal case announced by the FBI, the U.S. Attorney, the Alabama Attorney General, and the Baldwin County District Attorney. That's the moment Orange Beach found itself in.

If we're going to understand why that case still echoes through Orange Beach politics today, we need to set aside the rumors, the coffee-shop versions of events, and the Facebook comment sections.

What, exactly, did the federal government accuse Steve Russo of doing?

What Was Steve Russo Accused of Doing?

If you’ve never read a federal indictment before, I don’t blame you. They’re not exactly beach reading. They’re also a lot harder to understand than they need to be.

One thing that’s important to remember is that federal corruption cases are often built over time. 

When the first federal indictment was handed down in December 2005, the allegations were actually much narrower than the case would eventually become.

The first indictment focused on two basic allegations.

First, prosecutors alleged that Russo used campaign contributions to pay personal expenses. Second, they alleged that personal vacation expenses were ultimately paid by the citizens of Orange Beach through costs associated with a beach restoration project.

According to the indictment, prosecutors alleged Russo failed to disclose more than $33,000 in campaign contributions during his 2004 reelection campaign, even though those contributions had been deposited into his campaign account. They also alleged that campaign money was later used to pay personal American Express charges, including clothing purchases, hotel stays, restaurant meals, cable television service at a condominium in New Orleans, casino expenses, and a home computer costing more than $3,500.

The second part of the indictment focused on a January 2005 trip to New York City.

The issue wasn’t that Russo took a vacation. Public officials are allowed to go on vacation just like everyone else. According to prosecutors, the problem was who ultimately paid for parts of it.

The indictment alleges that Russo and others stayed in a luxury hotel, used limousine services, attended a Broadway show, and incurred other personal expenses. Prosecutors claimed those costs were connected to a company involved in Orange Beach’s beach restoration bond project and ultimately became expenses borne by the citizens of Orange Beach rather than Russo himself.

If that had been the end of the story, it would have been a significant public corruption case on its own. But it wasn’t the end of the story.

Over the next few months, investigators continued reviewing bank records, business records, property transactions, and financial disclosures. When they returned to the grand jury in March 2006, the case looked very different.

The superseding indictment didn’t just add defendants. It changed the scope of the investigation.

Steve Russo was no longer the only person charged. Orange Beach City Attorney Laurence “Larry” Sutley, developer Jim Brown, and developer Kenneth Wall were now part of the case. Prosecutors also shifted their focus beyond campaign spending and alleged a broader pattern involving business interests, real estate transactions, and financial relationships between public officials and developers.

That’s where this story starts to become much bigger than one mayor using campaign money.

The Land Flip

If you’ve ever bought or sold a house, you know that real estate transactions usually aren’t instantaneous. 

Someone lists a property. A buyer makes an offer. Financing is arranged. The deal closes. Sometimes the property is held for years before it’s sold again.

What caught the attention of federal prosecutors was a transaction that looked very different.

According to the government’s allegations, Russo became involved in the purchase of a parcel on Gulf Bay Road in Orange Beach. Prosecutors alleged that developer Jim Brown and developer Kenneth Wall arranged the financing for the purchase and that Russo invested none of his own money in the deal. The property was purchased for approximately $1.2 million.

The part that investigators focused on was that the property was resold almost immediately.

The purchase and resale occurred on the same day, with the property being sold for approximately $1.6 million. The difference between those two prices, roughly $400,000, became the centerpiece of what prosecutors referred to as the “land flip.”

Now, making money on real estate isn’t illegal. Buying property and selling it for a profit happens every day. The government’s allegation wasn’t that Russo made money on a land deal. It was how he made that money.

Prosecutors argued that Russo was able to participate in the transaction because of financial assistance provided by Brown and Wall, both developers with interests before the City of Orange Beach. Rather than viewing the $400,000 profit as the product of an ordinary investment, prosecutors said it was the financial benefit provided to Russo because he was the mayor.

Throughout this case, you’ll notice prosecutors weren’t arguing that every real estate transaction involving a public official is improper.

Their argument was that certain transactions weren’t arms-length business deals at all. They alleged these were undisclosed benefits flowing from developers to a public official who was in a position to influence matters affecting those developers.

Russo disputes that characterization. During an interview with Murder Creek Media, he said he viewed the transaction as a legitimate real estate investment rather than a hidden financial benefit tied to his office. He acknowledged making a substantial profit on the sale but said that, in his view, there was nothing improper about buying and selling property for a gain. He also disputed prosecutors' contention that he received something for nothing, saying he and others signed loan documents and assumed financial risk on various real estate ventures.

But the story doesn’t end with the land flip.

According to evidence discussed during the forfeiture proceedings after Russo’s conviction, approximately $400,000 from the land flip was later used to purchase two lots in Burkhart Estates. Russo contributed about $50,000 of his own money toward that purchase, while the remaining $400,000 was found by the court to be traceable to the land flip proceeds. Because the court concluded those proceeds were connected to the honest services fraud convictions, it ordered the forfeiture of that portion of the property’s value.

In other words, prosecutors weren’t simply interested in the original transaction. They followed the money to see where it went next.

American Hot, LLC

If the land flip made prosecutors ask where the money went, American Hot, LLC made them ask another question.

Who else was benefiting?

According to the superseding indictment, the government alleged that the land flip wasn’t an isolated transaction. Instead, prosecutors argued it was one example of a larger relationship between Steve Russo and developer Jim Brown. 

One of the clearest examples they pointed to was a company called American Hot, LLC.

On paper, American Hot looked like a fairly ordinary limited liability company. It owned a house on West Beach Boulevard in neighboring Gulf Shores. But prosecutors alleged the ownership structure told a different story.

The company was divided into three equal ownership interests. One-third belonged to Jim Brown. One-third belonged to Steve Russo. The remaining one-third belonged to Orange Beach City Attorney Laurence “Larry” Sutley. 

That immediately raises an obvious question. Why would a developer, a mayor, and the city’s attorney all own equal interests in the same private company?

By itself, that isn’t illegal. Public officials can own businesses. They can invest in real estate. They can even go into business with other people. 

The government’s allegation wasn’t that Russo and Sutley owned part of an LLC. It was how they became owners.

According to prosecutors, Jim Brown gave Russo and Sutley their ownership interests even though they invested little or none of their money into the venture. They argued those ownership interests were not legitimate business investments, but financial gratuities provided because of Russo’s position as mayor. They further alleged that Russo failed to disclose his ownership interests on the Statements of Economic Interests he was required to file as a public official.

And according to the evidence presented at trial, the benefits didn’t stop with ownership in the company.

When Hurricane Ivan damaged the West Beach Boulevard house, American Hot received insurance proceeds. The court later found that Russo received a share of those proceeds even though the evidence showed that he had not contributed toward the insurance premiums. In the court’s view, those payments were traceable to the same honest services fraud scheme and were therefore subject to forfeiture.

Russo likewise rejected the government's characterization of the American Hot venture. He told Murder Creek Media that he believed the investment was structured like many other real estate partnerships and that he never considered it to be an improper gift or gratuity. He maintains that federal prosecutors interpreted ordinary business relationships through the lens of public corruption, a conclusion he continues to dispute.

So What Crimes Was He Convicted Of?

Those transactions formed the foundation of a lengthy federal indictment charging Russo with offenses including honest services fraud, mail fraud, and wire fraud.

The legal terminology can sound intimidating, but the government’s theory was straightforward. Prosecutors argued that Russo accepted undisclosed financial benefits connected to his position as mayor, depriving the public of its right to his honest services.

Russo disputes that characterization, as well. He noted that although he was convicted of honest services fraud, mail fraud, and wire fraud, he was never charged with bribery.

"I was never charged with bribery. They could never prove bribery because nobody ever said Steve Russo told me, 'I had to give him this for that,' because it didn't happen," he said.

After a federal trial in 2006, the jury convicted Russo in the vast majority of the charges against him. The court later ordered the forfeiture of numerous assets, including business interests, real estate, bank accounts, and funds the court determined were proceeds of or traceable to the offenses. 

According to Russo, he was sentenced to 120 months in federal prison, though the sentencing judge later reduced that sentence by one year. Russo said he entered federal custody on May 7, 2007, was released from prison on July 10, 2014, and completed the remainder of his sentence in home confinement.

Those convictions marked the end of one chapter in Orange Beach’s political history, but they weren’t the end of the story.

You see, governments don’t disappear when a mayor is convicted. City Hall still opened the next morning. Council meetings continued. Development projects moved forward. The city still had to function. Someone had to pick up where Steve Russo left off.

You might think the next chapter begins with someone entirely new. 

It doesn’t.

The man who would eventually become mayor had already been sitting inside City Hall, watching it all unfold.

His name?

Tony Kennon.