OBKC&G - Ottosen, Britz, Kelly Cooper and Gilbert, LTD - Attorneys at Law Illinois OBKC&G - Ottosen, Britz, Kelly Cooper and Gilbert, LTD - Attorneys at Law Illinois
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Return to Home page Two new cases look at felony forfeiture provisions in the Illinois Pension Code : Publications : Pension Articles : Ottosen Britz Kelly Cooper Gilbert & DiNolfo - Illinois Law Firm Representing Municipalities
Two new cases look at felony forfeiture provisions in the Illinois Pension Code
Legal Insights for Pension Boards (Spring 2006)

by Donald L. Potts

If a member of a pension fund is convicted of a felony, the Illinois Pension Code provides that pension benefits can be forfeited under certain circumstances. Members who lose their benefits as a result of a felony conviction are entitled to a refund of their contributions. Illinois courts have recently had occasion to decide two issues affecting felony forfeiture: (1) which pension benefits are affected, and (2) the amount of refund due.

What benefits are affected?


The question of what benefits are affected by a felony forfeiture statute arises in cases where the member has accumulated creditable service through more than one position, with one or more employers.

In Taddeo v. Board of Trustees of the Illinois Municipal Retirement Fund, 216 Ill.2d 590 (2005), August Taddeo was employed as a township supervisor for Proviso Township and mayor for the Village of Melrose Park. He had accumulated creditable service in IMRF with both employers. Taddeo pled guilty to extortion, a felony offense, in connection with his position as mayor. The IMRF felony forfeiture provision addresses the issue of benefits forfeited by convicted felons in relevant part as follows:


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 an employee. (40 ILCS 5/7-219)


As a result of the felony conviction, IMRF terminated all of Taddeo’s pension benefits. Taddeo appealed, arguing that he should only forfeit those benefits he would have received as a result of his service as mayor. The Illinois Supreme Court agreed, holding that there must be a nexus between the employee’s criminal wrongdoing and the performance of his official duties. Such a nexus existed between Taddeo’s crime and his duties as mayor, but not between the crime and his duties as township supervisor. The court held that IMRF could only terminate the benefits Taddeo would have received as a result of his duties as mayor.

In Wells v. Board of Trustees of the Illinois Municipal Retirement Fund, 361 Ill.App.3d 716 (2nd Dist. 2005), Timothy Wells held four different positions with the Village of Antioch throughout his career, accumulating service credit in each position. He pled guilty to two felonies in connection with his final position as village administrator. As with Taddeo, the IMRF terminated all of Wells’ pension benefits. Wells appealed, arguing that, like Taddeo, he should only forfeit those pension benefits he would have received as a result of his employment as village administrator.

The appellate court disagreed, noting that Section 7-219 applies to any “service as an employee.” The court held that a felony conviction related to one position affects benefits that would have been received for all positions with the same employer. Because “service as an employee” covers all of an employee’s service with any one employer, Wells forfeited all of his pension benefits.

Even though the police and firefighter felony forfeiture provisions of the Illinois Pension Code are worded differently than the IMRF provisions, the Taddeo and Wells decisions can be used to analogize how similar cases should be handled. The relevant police and firefighter provisions in Article 3 and Article 4 of the respective Pension Codes read as follows:

  • None of the benefits provided 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 or her service as a police officer. (40 ILCS 5/3-147)

  • None of the benefits provided under this Article shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with service as a firefighter. (40 ILCS 5/4-138)


The only difference between the two provisions and the IMRF provision is the type of service affected. While the IMRF provision is broad, and applies to any service with one employer, regardless of the position, the Article 3 and 4 provisions apply specifically to service as a police officer or firefighter. Thus, if a person worked for a municipality in a different position before becoming a firefighter, and was subsequently convicted of a felony as result of his or her service as a firefighter, only the pension benefits resulting from service as a firefighter would be forfeited.

A more difficult issue arises in the case of a person who has earned service credit from two different employers as a police officer or firefighter. For example, if a police officer serves in more than one police department throughout his or her career, earning service credit in each, and is subsequently convicted of a felony in connection with one of those positions, does he or she forfeit all pension benefits earned during his or her career as a police officer? Wells would seem to support this conclusion, but under Taddeo, there must be some nexus between criminal wrongdoing and the performance of official duties. In such a situation, only the benefits that would have been received as a result of the position connected to the felony conviction would be forfeited.

These questions have not been addressed in the context of the Illinois Pension Code provisions for police officers and firefighters. If such an issue should arise, the pension board should seek legal advice specific to that situation.

How much of the pension contributions must be refunded?


Both Article 3 applicable to police officers and Article 4 applicable to firefighters provide that an employee who forfeits his or her pension benefits as a result of a felony conviction is entitled to a refund of the contributions he or she made to the pension fund. (40 ILCS 5/3-147 and 40 ILCS 5/4-138) (“This Section shall not . . . preclude the right to a refund.”). If the felony conviction occurs, before any pension benefits have been paid, the refund of employee contributions is not an issue. In such a case, the employee receives a refund of all contributions he or she has made to the fund. However, if an employee has started receiving pension benefits prior to termination of those benefits as a result of a felony conviction, the question arises as to whether the refund should be reduced by the amount of benefits already received.

The Third District Appellate Court considered this question in Bassett v. Pekin Police Pension Board, 362 Ill.App.3d 235, 839 N.E.2d 130 (3rd Dist. 2005). The First District Appellate Court had already decided in Phelan v. Village of LaGrange Park Police Pension Fund (327 Ill.App.3d 527 (1st Dist. 2001)) that when benefits already received exceed the employee’s contribution, there is no entitlement to a refund. However, that decision was based on another case which was ultimately reversed by the Illinois Supreme Court. (Shields v. Judges’ Retirement System, 204 Ill.2d 488 (2003))

Bassett reconsidered the question in light of the Illinois Supreme Court’s decision in Shields. The Illinois Supreme Court held that the right to a refund in felony forfeiture cases is unconditional. Because the refund provision of the Judges’ Retirement System is identical to the provision in the Police Pension Code, the appellate court held that Bassett was entitled to a refund of all his pension contributions, undiminished by any benefits received prior to termination.

Conclusion


When a member of a pension fund is convicted of a felony relating to, arising from or in connection with his or her service, the pension board must carefully examine the circumstances surrounding the conviction and the relevant section of the Illinois Pension Code to determine whether benefits must be terminated. If benefits are terminated, the employee is entitled to a full refund of all contributions he or she made to the fund, even if benefits already have been received by the former employee.


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