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Metra Had Policy on Pagano

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    NEWSLETTERS

    From Mayor Daley to Phil Pagano, these folks have policies. (Published Monday, Mar 7, 2011)

    How far does corruption go in Illinois? So far that Chicago’s commuter rail agency actually took out insurance against it. And that insurance paid off.

    When Metra chief Phil Pagano stepped in front of a speeding commuter train last May, he took a number of secrets with him.

    Perhaps the largest was what he did with the nearly half-million dollars he was accused of misappropriating from the agency. Specifically, Pagano was accused of taking some $475,000 in improper advances on vacation time, even forging the signature of Metra chairman Carole Dorris on the paperwork.

    Since his untimely death, as former co-workers speculated about why such a long-time stalwart of the agency would resort to such tactics, sordid stories arose in his widow’s bankruptcy proceeding of "other households" Pagano may have been supporting.

    But after his suicide, few held out hope that the public would see any of the money returned.

    Some of it came back last week in the form of a check, from an insurance company. Since 2001, Metra has required its executive director, chairman, and board members to carry corruption insurance.

    In Pagano’s case, the policy covered malfeasance ranging from theft and forgery to computer and wire fraud up to $5 million.

    Metra officials filed a claim for approximately $169,000, the portion of the fraud branded as actual theft. After a deductible was satisfied, the agency received a check from their carrier last week for just over $70,000.

    "You can only go after what was criminally obtained,” said Metra spokesman Judy Pardonnet, adding that the agency is attempting to pursue the remainder of the funds through other means. They are even trying to get taxes back which were withheld from the checks Pagano received.

    The City of Chicago requires surety bonds on several of its public officials. Those are not actual insurance policies, but are designed to hold those officials to "the faithful performance of their duties." 

    The bonds range from $2 million for the City Treasurer, to a quarter million dollars for the director of revenue.  The mayor is covered for just $10,000.

    Better Government Association chief Andy Shaw applauded Metra for their foresight, but urged the agency to pursue the remainder of Pagano’s ill-gotten gains.

    "Seventy thousand dollars is better than nothing,” Shaw said, urging other public bodies across the state’s scandal plagued political landscape to follow suit.

    “If agencies are concerned enough to take out a policy of sorts to guard against misconduct, they ought to be jumping through hoops to get the money back when there is misconduct," he said.