By Bryan Denson

The Oregonian/OregonLive

Detective Dave Steele was the brunt of a running joke inside his Oregon State Police squad room. He dropped into the office so rarely that his colleagues scrawled "Dave sightings" on a white board and added hash marks to note his appearances.

Steele was supposed to be leading the most expansive multiple-murder investigation in his department's history. But instead he was burning through leave time, tending to personal problems and leaving work to subordinates.

When Steele did pop into the office, it was often on the way out to handle other crimes instead of focusing on the biggest case of his career against killers David "Joey" Pedersen and Holly Ann Grigsby. The duo had left four people dead in the bloodiest wave of neo-Nazi violence ever seen on the West Coast.

When he did focus on the murder spree, he bungled it.

Steele got caught forging evidence and became the public face of foulups in the Pedersen-Grigsby case. The bad detective work ultimately drew three separate investigations of Steele and a protest from defense lawyers. It also put prosecutors in the crosshairs of a federal judge.

But records obtained by The Oregonian/OregonLive show that Steele's immediate bosses knew from the start that they had assigned the case to a disorganized detective who had never headed a capital murder investigation.

Steele's supervisors all played roles in giving him a small staff, assigning him dozens of new criminal cases and then - after learning how badly he had mismanaged the Pedersen-Grigsby investigation - keeping him at the helm until federal authorities swept into a state police office to seize computers and other evidence.

Records show that at least four of Steele's superiors - Capt. Eric Altman, Lt. Steve Duvall and Sgts. Ken Terry and Steve Payne - knew of the detective's personal or professional troubles but failed to take action as he floundered.

One of them, Duvall, even considered removing Steele from the case several months before federal prosecutors reassigned the investigation to the FBI. Duvall also took steps to put Steele under a personnel investigation but kept him on as the lead detective anyway.

State police now admit that blame for the fiasco goes all the way up from the lower rungs of the department's Criminal Investigation Division to the top of the 1,300-employee organization.

Failure by Steele's superiors to intervene sooner and to recognize that he had cut corners to the point where he began to lie about his work represented a serious failure of accountability, said Deputy Superintendent Patrick Ashmore, the agency's second-in-command. They compounded their errors by not telling the top brass, he said.

"We should have known," Ashmore said. "If we started hearing some of these (problems earlier), red flags would have flown."

Ashmore and other state police leaders have instituted training and record-keeping reforms, and they have shaken up the Criminal Investigation Division staff that handled the bulk of the Pedersen-Grigsby case.

"There is no one in that chain of command," he said, other than the sergeant who supervised Steele in the final months, "that is in that chain of command any longer."

Ashmore spoke to The Oregonian/OregonLive on behalf of Steele's supervisors still with state police. Steele, through his lawyer Michael Staropoli, declined requests to be interviewed for this story.

***

In 2011, a decade into Steele's tenure as a state cop, a job performance review awarded him high marks for tackling a slew of medium-profile crimes, but noted that he struggled to keep up with a state database of case reports.

Instead of making sure he mastered his management of more routine cases, state police came up with a different solution for Steele. They wanted him to take on a major multi-jurisdiction case. That may have been a fine idea if Steele had been mentored and closely monitored. But neither happened, records and interviews show.

How we reported the story

To report this story, The Oregonian/OregonLive relied primarily on documents obtained under state open records law.

Reporter Bryan Denson reviewed hundreds of pages of reports chronicling the mistakes of former Oregon State Police detective Dave Steele. They included a Salem Police Department criminal investigation; an Oregon State Police internal review; Steele's personnel files (including employee evaluations and a log of the criminal cases he investigated); an Oregon Department of Justice review; letters between now-retired Senior U.S. District Judge Ancer L. Haggerty and then-U.S. Attorney Amanda Marshall; a work log kept by state police Lt. Steve Duvall, who supervised Steele; and federal court records and hearing transcripts.

Steele, through his attorney, declined to be interviewed for this story. Amanda Marshall, who resigned from the U.S. Attorney's Office last April, offered her insights about the way federal prosecutors managed the case. Oregon State Police Deputy Superintendent Patrick Ashmore answered questions on behalf of his agency.

In early October 2011, Steele was assigned to investigate the disappearance of a 19-year-old Lafayette man, Cody Myers. But police soon learned that Myers was the third of Pedersen and Grigsby's four victims in a three-state rampage that began on Sept. 26 with the killing of Pedersen's father and stepmother in upstate Washington. The killers headed to Oregon, where they killed Myers and stole his car. They were arrested in Northern California after murdering an African American man. Steele had landed his career case.

His superiors kept him on the job as U.S. prosecutors in Portland consolidated the four murders into one federal case. The government charged Pedersen and Grigsby as a two-person criminal organization that carjacked, kidnapped and killed during a campaign to purify and preserve the white race. The potential punishment: lethal injection.

Sgt. Terry, Steele's immediate supervisor in the Salem Major Crimes Section (part of the Criminal Investigation Division), had never taken the lead in a death penalty case and neither had Steele. But their boss, Lt. Duvall, approved the decision to make Steele the go-to guy, records show.

Investigation of the murder spree was scarcely a whodunit. Pedersen and Grigsby, who had bragged about their crimes, were awaiting trial behind bars. Steele's job was to organize a mountain of evidence - roughly 60,000 pages worth, including thousands of photos and videos - as they poured in from two-dozen police and corrections agencies up and down the West Coast.

Prosecutors planned to use those files to mount a rare federal death-penalty case.

***

Steele moved his small team - a full-time crime analyst, a prison gang expert, a clerical worker and a few detectives rotating in and out of the investigation - into a private room at the state police fleet maintenance building on the north end of Salem, a workspace they dubbed "The Cave."

This was a skeleton crew compared to previous state police investigations of multiple murders. In the 2008 Woodburn bank bombing, for instance, six detectives and three analysts delved into the carnage that left two people dead, including a state bomb technician.

Steele, the only full-time detective assigned to the Pedersen-Grigsby case, had gotten assistance from a handful of fellow detectives in the early days of the investigation. But after federal prosecutors took on the case and his colleagues moved on to solve other crimes, Steele began to feel so overworked he often found himself telling supervisors, "I'm doing the best I can."

Steele's supervisors had picked him for the case because he was believed to be the most tenured of the dozen detectives in his investigative section. But they also liked Steele, who had shown a zeal for rushing out in the middle of the night to investigate crimes.

In November 2012, one of Steele's family members attempted suicide, according to a work log kept by Duvall and a report filed by Salem police as detectives conducted a criminal investigation of his misconduct.

Altman, a regional captain who oversaw Steele's division, permitted the detective, who was a divorced single dad, to work a flexible schedule so he could vary his hours and work at home if necessary. That left one of his immediate supervisors, Payne, to ignore his absences entirely, figuring that Steele had been given a "golden ticket" to do as he pleased, records show.

Case timeline

September-October 2011:

Neo-Nazis David "Joey" Pedersen and Holly Grigsby kill four people: Pedersen's father and stepmother in Washington, Cody Myers in Oregon and Reginald Alan Clark in California.

Oct. 4, 2011:

Detective Dave Steele is assigned as lead detective in the Oregon State Police investigation of the slaying of 19-year-old Cody Myers.

Aug. 16, 2012:

Pedersen and Grigsby are indicted for their roles in the three-state murder spree.

Late 2012:

Steele gets permission to work a flexible schedule to help deal with family issues. Meanwhile, he continues to work dozens of other criminal cases and falls far behind in filing evidence that pours into his office from about 25 other police and corrections agencies.

Early 2013:

Several of Steele's fellow detectives and other colleagues complain to his supervisors that he's rarely in the office and needs to be replaced on the case. But those supervisors dismiss the complaints and keep Steele at the helm of the Pedersen-Grigsby case.

March 3, 2013:

The government turns over 13 volumes of evidence to defense lawyers as part of the normal handover of what is known as discovery.

April 2013:

Defense lawyers for the accused killers notify federal prosecutors that they haven't received crime scene photos from the killing of Cody Myers. This leads prosecutors to push for production of all the files from Steele and his team.

September 2013:

The U.S. Attorney's Office in Portland determines that it must conduct an audit of the murder case files kept by Steele and his team in Salem.

Oct. 5, 2013:

Steele signs a court declaration that he didn't obtain photos from Pedersen's sister, Holly Perez. Investigators later learn that isn't true.

Dec. 3, 2013:

Susan Cooke, who prepares evidence for trial as an employee of the U.S. Attorney's Office, goes to Steele's office in Salem and finds a trove of evidence that was never turned over to the prosecution team. Within 10 days, she hauls out dozens of boxes of materials. The FBI takes over the case.

Dec. 16, 2013:

Steele is placed on administrative leave.

Feb. 7, 2014:

Federal prosecutors file notice that they will not seek the death penalty against Pedersen or Grigsby.

March 3, 2014:

The Marion County District Attorney declines to prosecute Steele, saying that authorities don't have evidence to prove that Steele criminally lied in his declaration to the court.

March 6, 2014:

State police Capt. Jeff Hershman is assigned to conduct an internal investigation of Steele. His investigation later finds evidence that Steele forged evidence.

March 11, 2014:

Grigsby pleads guilty for her role in the murders, accepting a life term without possibility of parole.

April 7-10, 2014:

Senior U.S. District Judge Ancer Haggerty hears arguments in which defense lawyers argue that the government had acted in bad faith as they produced discovery.

April 23, 2014:

Pedersen pleads guilty for his role in the murders, accepting a life term without the possibility of parole. The plea agreements signed by Pedersen and Grigsby withdrew their requests for a finding of bad faith by the government.

Aug. 4, 2014:

Haggerty issues a 63-page supervisory opinion that lays out the missteps and misconduct that he said jeopardized the government's case against Pedersen and Grigsby. The judge criticizes state police and prosecutors, saying the government didn't grasp how it mishandled its responsibilities to hand over discovery and respect the accused's constitutional rights to counsel.

Dec. 5, 2014:

Steele pleads guilty to a felony charge of forgery and a misdemeanor count of official misconduct. A Marion County judge sentences him to 18 months of probation. Steele agrees to give up his state license as a peace officer and resign from the Oregon State Police.

June 5, 2015:

An Oregon Department of Justice review finds that state police lack experience, money and constitutional know-how to properly manage complex criminal investigations, but finds no systemic problem with OSP's case management or evidence handling.

December 2015:

State police Deputy Superintendent Patrick Ashmore, speaking for the department, acknowledges in interviews with The Oregonian/OregonLive that several of Steele's supervisors knew of his deep personal and professional problems but failed to share their concerns with prosecutors or to departmental brass.

As Steele worked outside the office and used up leave time, he took the unusual step of delegating chores in the Pedersen-Grigsby case to his chief analyst, Kim Dempsey, and the prison gang expert. Neither carried a badge.

Dempsey complained to superiors, including Duvall and Terry, that midway through the murder investigation - in roughly late 2012 - Steele seemed to grow uninterested in the case and left her to manage the files. In the meantime, Steele kept volunteering to investigate other crimes.

Duvall told the analyst that their division was so understaffed he had no choice but to assign Steele to other cases. Steele was Duvall's only certified child sex-abuse investigator and also was responsible for investigating crimes at Oregon State Hospital. This meant that he had to conduct interviews, write reports, meet with prosecutors and spend time testifying at trials completely unrelated to the Pedersen-Grigsby case.

Ashmore would later tell The Oregonian/OregonLive that he disagreed with Duvall's assessment, noting that the Criminal Investigation Division wasn't severely understaffed and was adept at moving detectives around when needed to handle major investigations. He also said he didn't believe Steele was ever given so much work that he should have felt overwhelmed, although Steele had told an internal police investigator that the workload had, at a point, driven him to tears.

One of the handful of detectives who rotated onto Steele's investigation team for a time later told that same investigator it was "insane" to leave an analyst with no detective experience in charge of a multistate murder case. It was, he said, "a circus."

***

Complaints against Steele grew in early 2013 as he and his colleagues sent all manner of evidence to the U.S. Attorney's Office in Portland. Prosecutors there faced a deadline to disclose evidence to the defense, a handover known as discovery.

Two assistant U.S. attorneys on the case were busily preparing to fly to Washington to find out whether the attorney general's office would allow them to pursue the death penalty against Pedersen or Grigsby. Rather than pore through the glut of evidence stacking up in their office in Portland, they sent copies of the case files to the defense teams without reviewing all the documents, said Amanda Marshall, Oregon's U.S. attorney at the time.

Defense lawyers complained to prosecutors that they hadn't received crime scene photos from the murder of Cody Myers. So a staffer in the prosecutors' office phoned The Cave to find out where they were. She was astonished to hear Steele and Dempsey tell her that they didn't think they had to send the photos because they were willing to make them available for inspection by the defense teams.

Prosecutors, bewildered by this response, reminded Steele that they wanted every bit of the evidence he had collected.

For many months, several of Steele's fellow detectives, including some who helped on the Pedersen-Grigsby case, had griped to Duvall and Terry that Steele seemed to be missing in action. He wasn't supporting the staff or producing results.

Dempsey, the analyst, told supervisors that Steele disappeared for hours at a time, casually mentioning later that he'd had lunch with his new girlfriend or stopped by to see her. There came a time when he simply didn't show up in The Cave at all, Dempsey told an investigator. Dempsey also said that she had viewed one of his timecards and was surprised to note he had put in for overtime.

On at least two occasions, detectives pulled Terry aside and urged him to remove Steele as head of the murder case and let someone else take the reins. Terry knew files were piling up in The Cave and that another detective had taken charge of digital evidence in the case. But instead of recommending to Duvall that Steele be yanked from the case, he gave the detective a deadline to get the files in order.

One detective recalled Duvall defending Steele to those who complained about his failures, records show. He remembered that in one meeting, Duvall let detectives know that the Pedersen-Grigsby case was Steele's to run.

Records show that Duvall met dozens of times with Steele during the course of the murder investigation, often for updates on the case. But as time went on, the lieutenant spoke to the detective a few times to make sure he was up to seeing the case through. Duvall would later tell an investigator that Steele assured him on multiple occasions in the latter half of 2013 that he was dedicated to the investigation. Duvall said he was comfortable with the detective's answers.

Yet records also show that Duvall had grown increasingly concerned with Steele's personal problems and absenteeism and had considered taking him off the case. He went so far as to ask a subordinate to reach out to the Office of Professional Standards. But as concerned as Duvall grew, Steele hadn't raised so many "red flags" that he felt compelled to replace him, records show.

Late in July 2013, Duvall asked two of the prosecutors in the case to join him at a Starbucks in Keizer, where he asked if Steele was meeting their needs.

Prosecutors knew Steele was flaky, piling work on Dempsey and sometimes unavailable because he was working on other criminal cases. But they also knew Steele had an excellent command of the case. Records show that they told Duvall they were happy to keep Steele as their lead detective, but needed some assurances he would be fully available as they headed toward trial.

Duvall told them that Steele had some personal problems, but left it at that, Ashmore said. He didn't share with prosecutors the nature of Steele's troubles at home or the serious problems he was having in organizing the case files.

***

When Sgt. Gregg Withers took over as Steele's supervisor that August, he questioned the detective about the time he was taking away from the office.

Steele told Withers and at least one other supervisor that even when he was at the doctor's office, he used the time to write emails and work on the case. Steele told them that with the exception of one arrest report, he was caught up on his case files.

Later that summer, prosecutors confronted a new problem: They had not received interviews that Steele conducted with family members of the accused killers. Steele's team rushed five of the so-called "death penalty interviews" overnight to Portland.

Prosecutors were shocked to see that Steele had written the reports nearly two years earlier and hadn't forwarded them. The papers contained important information about Pedersen and Grigsby that might help their lawyers argue they shouldn't be put to death. For example, Pedersen's sister had turned over photos that showed her brother posing with African-American children or Latino friends, evidence he might not be such a virulent racist.

Pedersen's defense lawyers were floored to receive 11 hours of taped interviews conducted nearly two years earlier. They wanted to know why the materials were withheld and filed court papers asking the judge to force prosecutors, once and for all, to disclose all the files required under the law.

Prosecutors who hide or fail to turn over discovery can be sanctioned, even disbarred, for what is known as bad faith. Key members of the prosecution team placed a conference call to The Cave to learn what was going on. They reached analyst Kim Dempsey, who offered a vague reply about how she and Steele were very different in terms of their organizational styles.

"It was obviously a sort of hint to them that something was going on," according to the state police internal report. "They got off the phone and were dumbfounded."

Prosecutors decided they could no longer trust Steele or state police.

***

It's not entirely clear why it took so long for a representative of the U.S. Attorney's Office to drive down to Salem to find out why Steele was having so much trouble turning over files. But on Dec. 3, 2013, a few months after problems with discovery came to light, Susan Cooke did just that.

Cooke, who prepares trial exhibits for the prosecutor's office, sat down with an impatient Steele, who said he had to leave to investigate a homicide from the night before. But he stuck around to answer questions: Where were his handwritten notes? Where were the photos from Pedersen's family? Steele said he never kept notes and didn't have any such photos.

Three hours passed before Cooke began to walk Steele through the allegations lodged by defense lawyers that police were withholding evidence. Steele grew testy.

"He told her that they were all on the same team and should not be wasting time on this sort of internal stuff," according to the state police report.

Then, before Cooke could finish asking her questions, Steele walked out on her.

She took a look around The Cave. What she found made her jaw drop. Piles of documents and CDs - investigative reports, polygraph exam information, jail correspondence, phone calls - lay here and there topped with sticky notes from Dempsey to Steele. One note read, "Shouldn't this be in discovery(?)"

Cooke also found a cache of Steele's handwritten notes and later turned up a letter to Steele from Pedersen's sister that indicated Steele had received photos that might have helped his lawyers - proof to Cooke that Steele had lied to her.

On Friday the 13th of December, Cooke returned to The Cave to collect additional files.

Duvall later stopped in to ask why she was packing up Oregon State Police investigative materials, and she told him that prosecutors ordered her to. When he phoned prosecutor Hannah Horsley, she explained that under federal procedures, the materials had to be sequestered because they contained privileged communication between the defendants and their attorneys.

The state police report later recalled Duvall's concerns: "(He) stated that Hannah Horsley's comment was something to the effect that this was very serious, and the steps they were taking at this point were to save the case or prevent somebody from going to jail."

Duvall helped pack up boxes and called Lt. Mark Cotter, head of the Salem Major Crimes Section. He reached Cotter a little after 5 p.m. in his car, saying Cooke had discovered serious issues in The Cave and had been directed by her superiors in Portland to essentially take everything.

"There were things such as jail calls in The Cave that shouldn't have been there," according to the state police report. Duvall said he had sealed both doors to The Cave with evidence tape. "Lt. Duvall told him that he anticipated a personnel investigation on Detective Steele and possibly himself" and that "he was kicking himself for not keeping a closer eye" on Steele's investigation.

Cotter briefed his boss on the conversation.

***

By the end of December 2013, state police had put new locks on The Cave, the FBI had taken over the case and Steele was on paid administrative leave pending a criminal investigation.

Salem police detectives served a search warrant on The Cave in early 2014, finding evidence to suggest that Steele had lied to Susan Cooke about not accepting photos from Pedersen's sister. But the Marion County District Attorney's Office declined to prosecute Steele because they couldn't prove beyond a reasonable doubt that he committed a crime.

State police Capt. Jeff Hershman, who headed the internal investigation of the Steele mess, later turned up evidence that the detective - in his haste to produce records for prosecutors - had post-dated a report and photocopied a supervisor's signature from another document.

On Feb. 7, 2014, U.S. Attorney General Eric H. Holder Jr. notified the U.S. District Court in Portland that he would not seek the death penalty against Pedersen or Grigsby.

U.S. Attorney Marshall wouldn't comment on the reasons for Holder's decision, saying that capital deliberations are confidential under federal administrative rules. But Steele's foulups clearly would have hurt the government's chances of winning what should have been a slam-dunk death penalty verdict and automatic appeal.

Senior U.S. District Judge Ancer L. Haggerty issued a stinging rebuke that August of Oregon State Police, and particularly Steele, concluding in a 63-page supervisory opinion that the detective failed to log evidence, backdated reports, recorded and listened to confidential jail calls between Pedersen and his defense team and lied to prosecutors and the court about what he did.

Haggerty also lashed out at prosecutors: "It appears that because there was overwhelming evidence of guilt in this case, the government took a laissez faire approach to its obligations to provide discovery."

Steele pleaded guilty in December 2014 to a felony charge of forgery and a misdemeanor count of official misconduct. A Marion County judge sentenced him to 18 months of probation and Steele, under the terms of a plea agreement, turned in his badge.

The Oregon Department of Justice, urged by the judge to review state police missteps in the Pedersen-Grigsby case, conducted its own investigation. The department issued a report last June that determined state police lacked experience, money and constitutional knowhow to properly manage complex criminal investigations.

While the report found no systemwide problem inside state police, Ashmore concedes that the Salem section of the Criminal Investigation Division, which handles the agency's most serious crimes, had serious problems in the way criminal investigators were trained and supervised.

To correct those issues, along with flagging morale in the wake of the Steele mess, state police have put all of the more than 100 employees in its Criminal Investigation Division through mandatory training on production of evidence and other issues identified by the federal judge.

The agency updated its case management system, which keeps supervisors abreast of detectives' progress and lets them know when they fall behind on tasks. The Criminal Investigation Division also instituted new procedures that retain officers' handwritten file notes.

State Police also are now working to create new policies on issues of attorney-client privilege, the handling of electronic evidence and training for all supervisors in federal investigations and prosecutions. They also are considering a mentoring program for new supervisors in the Criminal Investigation Division; too often they were being hurled into leadership positions with no formal training.

The agency's brass also moved new managers into top positions in the division and added three new full-time detectives to prevent another "major malfunction" that could hurt the morale of state police employees across the state. The head of the division, Capt. Cal Curths, retired and was replaced with Hershman, who authored the internal report on the Steele troubles. Capt. Terri Davie now heads the division.

Sgt. Terry became a patrol sergeant in Roseburg. Dempsey, the analyst, went to work for another police agency. And Lt. Duvall was reassigned to a less prestigious job in the patrol division, where he remains "devastated" by mistakes in the Steele matter, according to Ashmore.

State police, meanwhile, are working to put the embarrassing mess behind them and Ashmore is convinced that the agency eventually will take on other complex criminal cases.

"We'll get through this," he said, "and we'll be better for it."

-- Bryan Denson