A high-ranking city official’s resignation became official yesterday, but the real reasons behind his departure might not be clear for months, if not years. If the stories some City personnel are telling are true, Baldwin might be escaping with millions of embezzled dollars, with little chance of prosecution.

Michael Baldwin, a deputy director of the City’s Department of Human Services and Public Welfare, submitted his resignation three days ago, claiming he had enjoyed his service to the city but that it was time to “spend more time with his family.” As soon as word of his resignation leaked out of City Hall, though, rumors started flying about Baldwin’s true motive for stepping down.

“There’s two million reasons he’s leaving,” said one city official who, like everyone else we spoke to about Baldwin, demanded anonymity. “Two million reasons the city won’t ever recover.”

Emily Jackson, director of DHSPW, offered a boilerplate message of thanks for Baldwin’s service, but department sources say she had secretly been trying to force Baldwin out for months.

According to DHSPW staff, Baldwin had been responsible for loosening many of the department’s external auditing rules, making it very difficult to track whether grant dollars distributed by DHSPW were used effectively, or even legally.

“We had no idea where millions of dollars were going,” one staffer said. “For all we knew, people were lining their pockets with those dollars.”

That might be exactly what was happening, as sources tell us that Baldwin, using intermediaries, set up a few dummy non-profit organizations that had little purpose other than lining Baldwin’s pockets. By some estimates, Baldwin used those organizations to funnel as much as two million dollars into his personal bank accounts.

While government officials might be expected to react to Baldwin’s embezzlement with anger, not to mention indictments, both Director Jackson and the District Attorney’s office have been oddly quiet about the matter.

The reasons for the DA’s silence are simple—Baldwin’s scheme worked too well. While insiders are confident that Baldwin was lining his pockets, they say they cannot prove it. The accounting and auditing standards introduced by Baldwin were so lax that staffers in the City Comptroller’s office become red in the face at the mere mention of DHSPW. Prosecutors are still working on the case, but off the record they have confided that they are not confident in their ability to get enough evidence for an indictment.

The reasons for Jackson’s silence are more complicated. While sources say she is incensed about the missing money, she has also been tagged as a future mayoral candidate, and the last thing she needs is a scandal in her department that might have fingers pointing at her for lax oversight. For a candidate trying to put together a good-government campaign, the Baldwin situation is a nightmare. There are whispers that Jackson is so anxious to keep the story quiet that she is suppressing evidence that could lead to Baldwin’s indictment, but some staffers believe her personal ambitions have not yet overridden her sense of public responsibility.