Longtime Metra Executive Director Phil Pagano was supporting two other households besides his own, according to his widow’s bankruptcy attorney.
The revelation, made in court and reported in the Chicago Tribune, may for the first time shed some light on the mystery as to why Pagano, of Crystal Lake, needed the hundreds of thousands of dollars he skimmed from Metra during his 20 years at the agency’s helm.
Marengo attorney James Mullally told the bankruptcy court at a Dec. 1 hearing in Rockford that Pagano was supporting households in Chicago and one in Palatine as well, although he said he did not want to get involved in “innuendo and hearsay,” the Tribune reported from a court transcript.
Mullally could not be reached for comment Tuesday. He told the judge at the hearing that more information needs to be “flushed out” regarding the households and that his client would fight her creditors because she is not responsible for the debts, according to the Tribune.
Pagano’s widow, Barbara, filed for bankruptcy Sept. 29 in federal court in Rockford, claiming more than $1 million in debt left to her. Pagano committed suicide May 7 by stepping in front of a Chicago-bound Metra train near his home, just hours before the Metra Board of Directors was poised to fire him for fiscal improprieties.
The majority of the claims against Barbara Pagano come from lender Beneficial, which holds two mortgages totaling $765,000 against a home valued in the filing at $340,000. The Northwest Herald reported in the weeks after Pagano’s suicide that he refinanced his home at least three times since 2005, the last for $389,687 – the Paganos bought the home in 1989 for $177,000.
Thirty-three more claims by creditors such as credit card companies, department stores, banks and other vendors add up to about $255,000. They range from $49,756 claimed by United Mileage Plus Cardmember Services, to $69 claimed by Toys ‘R’ Us.
Barbara Pagano lists $852,300 in assets, including a $500,000 life insurance policy from the death of her husband and a $4,900-a-month pension. Court-appointed trustee Stephen Balsley filed a motion last month requesting that the life insurance policy not be exempted from what is owed creditors – state law exempts life insurance proceeds if the debtor was dependent on the deceased.
The job of a trustee in bankruptcy cases is to ensure that the debtor’s assets are accounted for and used to pay off creditors.
Metra board Chairwoman Carole Doris suspended Pagano on April 30 after he confessed to forging her signature in order to receive payouts for 11 weeks of vacation time for each of the 2010 and 2011 fiscal years.
The only clue Pagano gave investigating attorney James Sotos before his death was that he “was badly in need of money for personal reasons,” and that the funds he took were not needed for “anything illegal or immoral.”
Investigations commissioned by Metra and released shortly after Pagano’s suicide painted a picture of a man who became increasingly hungry for cash on top of his $269,625 annual salary at the time of his death.
Sotos concluded that Pagano took at least $475,000 in unauthorized vacation payouts since 1999 on top of his salary. Pagano died owing Metra an additional $127,000 from loans he took out against his executive compensation package – he had accrued more than $700,000 he could access upon turning 60, but borrowed almost $840,000 against it.
Pagano in 2008 also authorized paying himself and five other senior employees a total of $133,000 for vacation days they had allegedly been shorted, and he was among 14 high-ranking Metra employees who received a total of almost $200,000 in 401(k) contributions from Metra on top of their existing retirement incentives.
Metra’s 11-member board since has faced intense criticism from watchdogs and state lawmakers. They alleged that board members enabled Pagano rather than supervised him, despite members’ claims that they responded swiftly and decisively to prevent future abuses.
Recent legislation proposed in Springfield would give the state’s executive inspector general authority to investigate Metra and other state transit agencies. Other bills propose removing and replacing all Metra board members, eliminating salaries and pensions for all members of mass transit boards, and changing how members are appointed.