Pagano Fallout Costs Metra

The cost of former Metra Executive Director Phil Pagano's dipping into forbidden funds and the related cleanup comes to about $3 million and counting.

Pagano, a respected railroad executive, shocked the region when he took his own life a year ago amid an investigation into financial abuses.

The absolute authority that state law and the Metra board of directors gave Pagano allowed him to operate unchecked for years, amassing at least $475,000 in unauthorized vacation pay along with other pricey and irregular perks for a favored few.

To find out what went wrong, Metra directors hired a slew of consultants, who in turn hired other consultants. The tally for their services is more than $2 million, according to documents obtained by the Daily Herald through the Freedom of Information Act.

The findings come at a time when the agency faces budget challenges because of high fuel costs and lacks money to spend on service expansion.

Here's a look at expenses related to the scandal and subsequent reforms.

* $89,375 to attorney James Sotos' firm. Sotos was hired by Metra last spring to investigate allegations against Pagano.

* $475,000 is what Pagano received between 1999 and 2010 in vacation payouts regardless if he took time off or not.

* $47,098 was spent by the Regional Transportation Authority in 2010 to audit Metra regarding pension fund misuse.

* $264,000 is how much the RTA audit concluded Pagano enriched his pension and those of other executives by using unorthodox vacation and sick day payouts.

* $896,885 is the amount paid to consultants Hillard Heintze as of mid-April. Metra hired the firm to act as its inspector general and report on fraud or waste.

* $1.16 million is what Metra has spent for

legal advice from the Johnston Greene firm and what Johnston Greene has spent on consultants Blackman Kallick, an accounting firm, and Protek, a computer firm, as of mid-April.

* $90,000 is what the Federal Transit Administration fined Metra in April for failing to submit proper documentation for lobbying firm contracts that Pagano personally handled.

Several state lawmakers have criticized Metra for approving contracts with Johnston Greene, Hillard Heintze and Blackman Kallick without a competitive process.

Metra officials contend the urgency of obtaining expert help to assess and advise on the extent of abuses under Pagano's tenure outweighed the need for competition.

Both Blackman Kallick and Hillard Heintze produced reports posted on the Metra website that detail problems during the Pagano years and recommend improvements. It's part of how the agency is reforming itself and providing more transparency, officials said.

"As I read through their reports, I felt it was worth the money there's a lot of information to base our next decisions on," board Director Caryl Van Overmeiren of Geneva said. "It had to be done to get things turned around. But when these contracts are up, that will be it."

"I think it was money well spent," Director Jack Schaffer of Cary said, acknowledging that in some cases Blackman Kallick told the board "things that we did know" already. But "they've made a series of recommendations that (Executive Director) Alex Clifford and staff can move through. It gives the new administration a road map."

But state Sen. Susan Garrett, a Lake Forest Democrat, called the consulting fees "egregious." The fact Johnston Greene subcontracts with Blackman Kallick is problematic because it limits the amount of information available under the Freedom of Information Act, she said.

"It's a layered approach to insulate and protect the board," said Garrett, who is supporting legislation that would require all the Metra board directors to resign. It is sponsored by Sen. Terry Link, a Waukegan Democrat.

In responding to the Daily Herald's FOIA request, Metra was not able to separate out payments made to Blackman Kallick or Protek by Johnston Greene and later billed to the agency.

Copyright 2008 LexisNexis, a division of Reed Elsevier Inc. All rights reserved.
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