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Time for a law change

Tuesday, Jul 8, 2014

* From Section 5-227 of the state’s Pension Code

None of the benefits provided for in this Article shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his service as a policeman.

That’s pretty darned broad, if you ask me. It’s pretty clear that triggering this provision doesn’t have to directly involve a felony during service, but the felony has to somehow be connected to the service, however loosely.

* This bring us to the disgusting case of former Chicago police Commander Jon Burge

For decades, police and prosecutors had discounted complaints that suspects were being coerced into making false confessions — at gunpoint, with shocks to the genitals or with plastic bags over their heads — at the Area Two headquarters, where Burge supervised the violent crimes unit.

Later, those same authorities wrung their hands and claimed the case against Burge wasn’t strong enough to win a conviction. The evidence was old, they said; the witnesses were uncooperative or unreliable.

After the statute of limitations expired, it fell to U.S. Attorney Patrick Fitzgerald to get a measure of justice: In 2010, Burge was convicted of perjury for lying during a 2003 civil trial brought by one of his many victims.

* That felony conviction most certainly “arose” from his service as a police officer. The four members of the police pension board appointed by the mayor voted to yank Burge’s pension. The four police officers on the pension board sided with Burge. Attorney General Lisa Madigan quickly stepped in

A week later, the Attorney General filed suit in the Circuit Court, naming the retiree, the Board and all its individual Trustees as defendants, seeking an injunction to prohibit further pension payments to the retiree and requiring that all payments made since his conviction be refunded. The defendants filed motions to dismiss, alleging that the Circuit Court lacked subject matter jurisdiction over what amounted to a collateral attack on a routine benefits decision of the Board. The Circuit Court agreed and dismissed. The Appellate Court reversed, holding that the Circuit Court had concurrent jurisdiction over the Attorney General’s claims pursuant to Section 1-115 of the Pension Code, which authorizes the Attorney General to sue to “enjoin any act or practice which violates any provision of this Code.” 40 ILCS 5/1-115.

That appellate ruling certainly seemed reasonable since Burge’s conviction was obviously related to his service time. But

The Supreme Court reversed the Appellate Court. The majority notes that Section 5-189 of the Pension Code expressly confers “exclusive original jurisdiction” on the Retirement Board “in all matters relating to of affecting the fund, including . . . all claims for annuities, pensions, benefits or refunds.” That grant of authority includes deciding proposals to “increase, reduce, or suspend” any pension.

The Attorney General argued that Section 1-115 was a sweeping grant of concurrent jurisdiction over any decision to award benefits, so long as the award violated some clause of the Pension Code. The majority disagreed, finding that the Attorney General’s construction would potentially create two tracks of Circuit Court proceedings, one via administrative review, with the Circuit Court required to give deference to the Board’s findings, and one an independent suit under Section 1-115. Such a system would inject “tremendous instability . . . into the Fund.” The majority acknowledged that “[p]reventing significant violations of the Pension Code” were “important goals,” but found that authorizing collateral attacks against any Board decision wasn’t necessary to achieve that goal, since acts in excess of jurisdiction and breaches of the Trustees’ fidicuciary duties could be challenged in separate suits. In addition, the Department of Insurance has general responsibility for examining and investigating pension funds created under the Code. But no such issue was involved in the case, the majority found. The Attorney General’s challenge to the Board’s action was merely an allegation that the Board had erred in failing to terminate benefits on the particular facts involved here – an “individualized error.”

* The dissent was stinging and made a lot of sense

Chief Justice Garman dissented at length, joined by Justice Thomas Kilbride. There were several problems with the majority analysis, the Chief Justice argued. First of all, read literally, Section 5-189 would give the Board exclusive original jurisdiction over its own breaches of fiduciary duty. Second, the majority ignored the breadth of the Trustees’ fiduciary duties. In addition to loyalty, the Trustees have duties to diversify (with limited exceptions), to exercise “care, skill, prudence and diligence,” and to administer in accordance with the Code. So if the retiree’s felony conviction related to, arose out of, or was in connection with his service as a policeman, continuing to pay him benefits was a breach of the Trustees’ fiduciary duty to administer the Fund pursuant to the Code.

Even more disturbing, the Chief Justice argues, the majority’s sweeping construction of the Board’s original and exclusive jurisdiction would seem to place decisions awarding retirement benefits beyond any court review. There was no basis for believing that another system participant could intervene in a retiree’s benefit proceeding. Appeal under the Administrative Review Act was limited to parties of record aggrieved by the decision. Therefore, “[n]o party would have both incentive and ability to challenge the Board’ s error. So long as the Board awards benefits, its errors will now go unchallenged” – even if the Board chose to openly defy a decision of the Supreme Court itself.

Obviously, the statute now needs to be changed.

- Posted by Rich Miller        


25 Comments
  1. - LincolnLounger - Tuesday, Jul 8, 14 @ 10:17 am:

    Rita Garman is an Illinois treasure.


  2. - Gift Giver - Tuesday, Jul 8, 14 @ 10:23 am:

    This plays right into Rauner’s message about public sector unions. Protecting their own at the expense of the public.

    If he wasn’t so over the top, his message would really be resonating.


  3. - forwhatitsworth - Tuesday, Jul 8, 14 @ 10:28 am:

    This comment is a little off the topic of pension reform language, but it is very much connected to yesterday’s hot topic of “What Next.” Many people propose the idea of taxing retirement income/pensions to generate more revenue, yet fixing our outdated taxing structure gets very little mention. Carmello Anthony is in the spotlight as a free agent in the NBA and a possible Chicago Bull. Since 2011 as a New York Knick, Carmello’s New York tax liability has been almost $10 million dollars - $7 million to the state (8.82%) and almost $3 million (3.876%) to New York City. If Carmello had played for the Bulls his tax liability would have been $3.8 million. Why can’t Illinois collect its fair share of revenue from the people who can afford to pay it, instead of creating new taxes on people with limited income to solve Illinois’ economic woes?


  4. - PublicServant - Tuesday, Jul 8, 14 @ 10:36 am:

    ===This comment is a little off the topic of pension reform language, but it is very much connected to yesterday’s hot topic of “What Next.” Many people propose the idea of taxing retirement income/pensions to generate more revenue, yet fixing our outdated taxing structure gets very little mention. Carmello Anthony is in the spotlight as a free agent in the NBA and a possible Chicago Bull. Since 2011 as a New York Knick, Carmello’s New York tax liability has been almost $10 million dollars - $7 million to the state (8.82%) and almost $3 million (3.876%) to New York City. If Carmello had played for the Bulls his tax liability would have been $3.8 million. Why can’t Illinois collect its fair share of revenue from the people who can afford to pay it, instead of creating new taxes on people with limited income to solve Illinois’ economic woes?===

    Spot on forwhatitsworth. Carmello is staying in New York by the way. This goes to show that the rich live where they live regardless of the tax burden.

    As for Illinois, our poor economic recovery is based in no small part on our regressive tax system, which collapsed when the great recession hit, and the middle class and poor took it on the chin. If we had had a progressive tax in place, we’d be much better of than we are now by a long shot.


  5. - A guy... - Tuesday, Jul 8, 14 @ 10:45 am:

    Not to dispute the fellow above, but Carmelo Anthony was required to file taxes in Illinois, prorated for the number of days he played here. Pro Athletes must file taxes in every state (or province in Canada) and city (where applicable, like NYC) on a pro rata basis. So, his actual NY filing would include home game dates (1/2) + any games in Brooklyn. Your point is still well taken, but the premise is slightly flawed.


  6. - Lil Squeezy - Tuesday, Jul 8, 14 @ 10:47 am:

    A member should file suit for breach of fiduciary liability.


  7. - A guy... - Tuesday, Jul 8, 14 @ 10:49 am:

    To the post: It’s disgusting that Burge isn’t in jail. More disgusting that he’s receiving a public paid pension, one that even pales in comparison to what “the people” have had to pay out to his victims. This creep is just the gift that keeps on giving. I’m surprised, really surprised, none of those brutally attacked victims never paid him a visit. The pension system has a severe flaw for this creep to get a penny. That blue wall remains solid generation after generation. Ugh.


  8. - PublicServant - Tuesday, Jul 8, 14 @ 10:55 am:

    Agreed A Guy. Burge and other pension abusers are what give the pensions a bad name. And I agree with Lil Squeezy too. Those “thin blue line” cops on the board ought to be sued for breach of fiduciary duty.

    And…Rich is right too. We need a pension code change to correct this garbage.


  9. - DuPage - Tuesday, Jul 8, 14 @ 11:00 am:

    I thought the pension systems had to follow the law. I guess not.


  10. - Lycurgus - Tuesday, Jul 8, 14 @ 11:01 am:

    but wouldn’t a pension code change at this time impair or diminish Burge’s pension rights? Wouldn’t that be unconstitutional? What a world.


  11. - Geronimo - Tuesday, Jul 8, 14 @ 11:09 am:

    According to the logic of people and businesses fleeing Illinois should they be required to pay higher taxes, why isn’t New York a ghost town?


  12. - Nonplussed - Tuesday, Jul 8, 14 @ 11:12 am:

    A guy: I think Burge is in prison.


  13. - Jake From Elwood - Tuesday, Jul 8, 14 @ 11:17 am:

    The four police officers who refused to revoke the pension are to blame here, not the legislature. They are the four who failed to adhere to fiduciary duties in making such a nonsensical finding. Of course the felony is tied to the policework. Shame on these four failed fiduciaries.


  14. - Jake From Elwood - Tuesday, Jul 8, 14 @ 11:21 am:

    Also not sure whether the City of Chicago intervened in the case. If not, why not? If they had intervened, they would have likely had standing to fight this issue on appeal, where the AG did not.


  15. - Old and In The Way - Tuesday, Jul 8, 14 @ 11:22 am:

    A Guy
    Can’t speak for Carmelo but none of the pro athletes (8) we represent file as you describe. Not sure where you got this.


  16. - A guy... - Tuesday, Jul 8, 14 @ 11:44 am:

    ===Old and In The Way - Tuesday, Jul 8, 14 @ 11:22 am:

    A Guy
    Can’t speak for Carmelo but none of the pro athletes (8) we represent file as you describe. Not sure where you got this.====

    Check again. My Tax Atty. has several Blackhawks, White Sox, a couple Bulls, and one Cub on his roster. They all file multiple state and province returns.


  17. - A guy... - Tuesday, Jul 8, 14 @ 11:46 am:

    ===Nonplussed - Tuesday, Jul 8, 14 @ 11:12 am:

    A guy: I think Burge is in prison.====

    Not to quibble with you, but I believe he was in prison awaiting trial and I believe I’ve subsequently read that he moved back to Florida.


  18. - Precinct Captain - Tuesday, Jul 8, 14 @ 12:29 pm:

    Jake, I’m not surprised the cops on the pension board voted for Burge. They probably don’t think he did anything wrong and that he’s not a racist too. Could they even be part of the cabal that marched him at the South Side Irish Parade years ago? Wouldn’t surprise me. Denial, obfuscation, and cover up are the name of the game at CPD & FOP. The SA’s office too. The irony of the whole Burge saga is that it was a dead to rights cop killer, Andrew Wilson, who blew the whole thing open.

    A guy, Burge is in prison, #50504-018, in North Carolina. http://www.bop.gov/inmateloc/


  19. - Obamas Puppy - Tuesday, Jul 8, 14 @ 1:21 pm:

    ===This plays right into Rauner’s message about public sector unions. Protecting their own at the expense of the public.===
    The law is made by the General Assembly and interpreted by the courts what this has to do with unions is beyond me.


  20. - A guy... - Tuesday, Jul 8, 14 @ 1:25 pm:

    === Precinct Captain - Tuesday, Jul 8, 14 @ 12:29 pm:

    A guy, Burge is in prison, #50504-018, in North Carolina. http://www.bop.gov/inmateloc/====

    Thanks for the update. Hope it’s not a pleasant stay.


  21. - Tom Joad - Tuesday, Jul 8, 14 @ 2:29 pm:

    A Guy
    Can’t speak for Carmelo but none of the pro athletes (8) we represent file as you describe. Not sure where you got this.” Maybe you should call the Illinois Department of Revenue. This has been the law for over 10 years.


  22. - A guy... - Tuesday, Jul 8, 14 @ 2:49 pm:

    Here you go:
    www.bostonglobe.com/business/2013/03/21/tax-season-crunch-time-for-accountants-serving-pro-athletes/rA1UqaYIA1AOOE59kHR5uI/story.html


  23. - Former Pension Trustee & Retired - Tuesday, Jul 8, 14 @ 4:06 pm:

    The pension trustees did follow the law. Once retired from police service the pensioners actions do not apply. He is no longer a police officer. Commander Burge was not convicted of a crime that occurred while he was a police officer. His conviction is a separate offense that occurred after his police service. You may not agree with that but it is proper.

    There are many other public pensions that have a similar provision. The pensioner must be charged and convicted of a felony that occurred while in office.

    Many politicians skate on this because they were not charged or convicted while in office.

    It appears that Burge was involved in illegal activity. He has not been convicted of any such offense. What about his superiors, the politicians and prosecutors that allowed this to occur?


  24. - Amalia - Tuesday, Jul 8, 14 @ 5:22 pm:

    @PrecinctCaptain, who was in the Mayor’s chair 1983-1987? why was nothing done about Burge then?


  25. - Rollo Tomasi - Tuesday, Jul 8, 14 @ 10:28 pm:

    If Burge lost his pension then the same should hold true for Beavers. Funny the four appointed city people all voted to let Beavers keep his pension. Why? Maybe because he’s one of them and refused to wear a wire and get near John Daley. Even convicted felons get treated differently if they hold elected office.


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