Prazen v. Shoop
2013 IL 115035
| Ill. | 2013Background
- Prazen retired Dec 31, 1998 under the ERI program and purchased age credits to base pension on 32.833 years.
- Two weeks before retirement, Prazen formed Electrical Consultants, Ltd. (ECL) with the city’s then-mayor as a related venture.
- ECL and the City entered into a management and supervision agreement effective Jan 1, 1999 to operate the electrical department; Prazen was president/secretary of ECL.
- The City paid ECL for services; ECL employed Prazen, his wife, and daughter; ECL remained independent from Prazen personally.
- IMRF later determined Prazen violated 7-141.1(g) by a continued relationship with the City through ECL; restitution of $307,100.50.
- Appellate Court reversed, holding Board lacked authority to find that the corporate arrangement was a guise to evade forfeiture.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Board could deem ECL a guise to evade forfeiture | Prazen argued only two conditions apply; no guise analysis provided by statute. | Board can interpret arrangements to carry out the statute and prevent fraud. | Board had no authority to find a guise under the statute. |
| Whether 'employment with' or 'personal services contract with' IMRF employer is met here | Prazen was not employed with City after retirement; ECL contract with City did not bind him personally. | Interpret broader to include ongoing arrangements via corporate contracting. | Neither condition was met; no forfeiture under §7-141.1(g). |
| Whether the Board may create additional forfeiture grounds beyond the statute | Forfeiture is limited to the two enumerated conditions; no new grounds. | Board may consider broader fiduciary duties to prevent fraud. | Statute unambiguously limits forfeiture to two conditions; no new grounds. |
| Do the statutory findings and purpose support a guise-based forfeiture | Legislative text shows encouragement of ERI with some flexibility, not a guise doctrine. | Legislative goals to curb cost, thus authorize broader Board action. | No legislative intent to authorize guise-based forfeiture; not supported. |
Key Cases Cited
- Roselle Police Pension Board v. Village of Roselle, 232 Ill. 2d 546 (2009) (pension statutes liberally construed in favor of pensioners; interpretive guidance)
- Taddeo v. Board of Trustees of the Illinois Municipal Retirement Fund, 216 Ill. 2d 590 (2005) (liberal construction of pension statutes; fiduciary duties)
- Shields v. Judges’ Retirement System of Illinois, 204 Ill. 2d 488 (2003) (liberal construction; legislative intent governs pension statutes)
- Marconi v. Chicago Heights Police Pension Board, 225 Ill. 2d 497 (2006) (fiduciary duties; screening fraudulent claims; board authority)
- County of Knox ex rel. Masterson v. The Highlands, LLC, 188 Ill. 2d 546 (1999) (agency power limited to statute creating it; interpretation of agency authority)