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People v. Tepper

Court of Appeals of Illinois, Second District

September 23, 2016

DAVID M. TEPPER, Defendant-Appellant.

         Appeal from the Circuit Court of Du Page County, No. 12-CF-1736; the Hon. Liam C. Brennan, Judge, presiding.

         Affirmed in part and vacated in part.

          Terry A. Ekl and Tracy L. Stanker, both of Ekl Williams & Provenzale LLC, of Lisle, for appellant.

          Robert B. Berlin, State's Attorney, of Wheaton (Lisa A. Hoffman, Assistant State's Attorney, of counsel), for the People.

          Panel JUSTICE HUTCHINSON delivered the judgment of the court, with opinion. Justices McLaren and Zenoff concurred in the judgment and opinion.



         ¶ 1 This appeal from a judgment of conviction raises questions of first impression concerning section 33E-17 of the Criminal Code of 1961 (Code) (720 ILCS 5/33E-17 (West 2012)). This statute criminalizes a local government employee's "unlawful participation" in a contract with his or her government employer without the employer's informed consent. Enacted in 1999 (see Pub. Act 90-800, § 5 (eff. Jan. 1, 1999)), the statute provides as follows:

"Whoever, being an officer, director, agent, or employee of, or affiliated in any capacity with any unit of local government or school district participates, shares in, or receiv[es][1] directly or indirectly any money, profit, property, or benefit through any contract with the unit of local government or school district, with the intent to defraud the unit of local government or school district is guilty of a Class 3 felony." Id.

         Although this is a question of first impression with respect to section 33E-17, we note that there are similar prohibitions in other Illinois statutes (see 50 ILCS 105/3 (West 2012); 65 ILCS 5/3.1-55-10 (West 2012)), as well as a rich history of precedent addressing undisclosed conflicts of interest by government officials. See, e.g., People v. Scharlau, 141 Ill.2d 180 (1990); Miller v. County of Lake, 79 Ill.2d 481 (1980); People v. Savaiano, 66 Ill.2d 7 (1976). With that in mind, we turn to the facts of this case, which may be stated simply.

         ¶ 2 In 2005, defendant, David M. Tepper, began working as the manager of the information technology (IT) department of the Forest Preserve District of Du Page County (the District). Defendant was the second-highest-ranking person in the District's IT department. The director of the IT department, and defendant's immediate superior, was Mark McDonald. Like most government agencies, the District has regulations in place that prohibit its employees from obtaining supplemental employment without prior authorization from the District. See Du Page County Forest Preserve District Ordinance No. 92-255 (approved Aug. 4, 1992). The purpose of such rules is to protect against conflicts of interest or other forms of employment that might reflect adversely on the government as an employer. See Miller, 79 Ill.2d at 490. In September 2005, defendant signed a form acknowledging that he had received an employee handbook and was aware of and would abide by the District's regulations, including the prohibition on unauthorized supplemental employment.

         ¶ 3 In June 2008, defendant became an "independent sales agent" for USA Digital, an Oklahoma-based company that sells equipment and services for wide area networks. Wide area networks, or WANs, are discrete telecommunications and broadband networks, which provide phone service as well as Internet access. USA Digital's agents earn commissions by closing sales contracts for USA Digital's bandwidth and services. In his agent agreement with USA Digital, defendant directed USA Digital to pay his sales commissions not to him directly but instead to a corporation named "Integrated Design Solutions" (IDS), which defendant had established some years earlier. It is undisputed that defendant never disclosed his relationship with USA Digital or IDS to the District.

         ¶ 4 In January 2009, the District Board held a planning meeting. There, McDonald introduced defendant to the Board. Defendant then gave a presentation in which he told the Board that the District's three-year contract with its then-current WAN provider, Qwest, would be expiring. Minutes from that meeting indicate that defendant told the Board that the District's network was around 0.8 megabytes per second and that "[s]taff would like to increase this speed to 2.515 megabytes per second to accommodate [the] increased growth of *** applications and requirements." The minutes are ambiguous as to whether it was defendant or McDonald who recommended that, in a new contract with Qwest, the District should seek to increase its network speed by roughly 300%. The minutes indicate that "staff" would, at the Board's next meeting, propose a three-year contract with Qwest costing approximately $21, 500 per month.

         ¶ 5 Inexplicably, the WAN contract was not competitively bid, even though, at the time, competitive bidding was required under state law for all of the District's contracts worth over $20, 000. See 70 ILCS 805/8(b) (West 2012). (The limit was recently raised to $25, 000. See Pub. Act 99-771, § 10 (eff. Aug. 12, 2016).) At any rate, in March 2009, McDonald and "staff" submitted to the Board a draft resolution seeking to enter into a contract with USA Digital-not Qwest. The Board approved the resolution and in May 2009 the District executed a contract with USA Digital, which ran from September 2009 to October 2012. Under the agreement, the District would pay USA Digital around $28, 600 a month, or $1, 030, 000, for three years of broadband service. The Board's president and a commissioner both testified that the resolution would not have been adopted and the contract would not have been executed had the District known of defendant's connection to IDS or USA Digital.

         ¶ 6 Once the deal was closed with the District, USA Digital began to pay commissions to IDS, including a $12, 000 bonus for the contract itself and approximately $2000 per month for each month of the contract. A few months into the contract, a vice president from USA Digital came to Du Page County to meet with defendant (who was "USA Digital's sales agent") and "the client, " i.e., McDonald, who was the District's "representative." The vice president did not know that defendant worked for the District, or that defendant worked with McDonald, or that McDonald ...

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