People v. Tepper
2016 IL App (2d) 160076
| Ill. App. Ct. | 2016Background
- David M. Tepper was an IT manager for the Forest Preserve District of Du Page County and signed an employee handbook prohibiting unauthorized outside employment.
- Tepper became a sales agent for USA Digital in 2008 and routed commissions to a corporation he controlled (Integrated Design Solutions, IDS); he did not disclose this relationship to the District.
- Tepper participated in the District’s decision to contract with USA Digital for WAN services; the contract was not competitively bid and paid USA Digital about $1,030,000 over three years.
- USA Digital paid IDS nearly $80,000 in commissions and bonuses; Tepper and the District IT director (McDonald) shared withdrawals from IDS’s account; the scheme was discovered in 2011.
- Tepper was convicted at a bench trial on 29 counts of unlawful participation under 720 ILCS 5/33E-17 (one count per commission payment). The trial court imposed concurrent jail/probation sentences and fined Tepper approximately $83,000.
- On appeal the court addressed two questions of statutory interpretation: whether section 33E-17’s "intent to defraud" requires an affirmative act (not mere omission) and whether it requires proof of actual pecuniary loss; it also applied the one-act, one-crime rule to the unit of prosecution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "intent to defraud" under §33E-17 requires an affirmative act (not omission) | Statute criminalizes participation in contracts with intent to defraud; omissions can be part of fraud | Tepper: silence/omission cannot constitute fraud absent a legal duty to disclose | Court: Silence can be fraudulent; omissions accompanied by deceptive conduct satisfy the intent-to-defraud element |
| Whether "intent to defraud" requires proof of a victim's pecuniary loss | State: statute punishes intent to defraud; loss need not be proved under fraud provisions and related precedent | Tepper: no pecuniary loss occurred because District received services, so no intent to defraud | Court: No requirement of actual pecuniary loss; statutory definition of "with intent to defraud" covers acts to bring financial gain to oneself regardless of actual loss |
| Sufficiency of evidence for intent to defraud | State: evidence of undisclosed agency, IDS account, commission routing, and conduct at meetings supported intent | Tepper: lacked affirmative deception; District suffered no loss | Court: Evidence (silence, bank records, split commissions, staged lunch meeting) supported finding of intent to defraud |
| Unit of prosecution under §33E-17 (one-act, one-crime) | State: each commission payment is a separate unlawful-participation offense | Tepper: unlawful participation completed once contract induced District to pay indirectly | Court: Statute ambiguous; apply lenity — contract is the unit of prosecution, so multiple counts for multiple payments vacated; one conviction for the contract affirmed |
Key Cases Cited
- People v. Savaiano, 66 Ill. 2d 7 (discusses influence of undisclosed interest in public contracts)
- People v. Yarbrough, 128 Ill. 2d 460 (fraud elements include false representation and intent to induce action)
- People v. Carter, 213 Ill. 2d 295 (one-act, one-crime and unit-of-prosecution principles)
- People v. Cardamone, 232 Ill. 2d 504 (statutory interpretation reviewed de novo)
- People v. Grever, 222 Ill. 2d 321 (distinguishing duties in official-misconduct contexts)
- People v. Haycraft, 3 Ill. App. 3d 974 (knowledge of deposits in account can show active wrongdoing in fraud schemes)
- People v. Houston, 288 Ill. App. 3d 90 (refused to treat recurring billing as separate fraud counts absent new fraudulent act)
- People v. Patrick, 406 Ill. App. 3d 548 (single physical act can support only one conviction under one-act, one-crime)
- Skilling v. United States, 561 U.S. 358 (discusses public-corruption/fraud principles)
- United States v. Blagojevich, 794 F.3d 729 (public-official corruption and fraud context)
- United States v. Bush, 522 F.2d 641 (conflict-of-interest profits could have been negotiated for the public entity)