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Sergeants dealt setback in effort to collect money stolen from union

John Pallohusky, former president of the Chicago Police Sergeants' Association leaves Cook County Jail in 2009. | Chicago Sun-Times

The Chicago Police Sergeants Association will have to do more digging to recover hundreds of thousands of dollars stolen from the union by its convicted former president to support a lavish lifestyle filled with gambling sprees and steak dinners.

In a decision finalized this week, the Illinois Appellate Court ruled that the $1,829-a-month “widow’s pension” that John Pallohusky has received since the 2010 death of his wife, former Chicago Police Officer Mary O’Toole, is exempt from the association’s $690,215 judgment against Pallohusky and cannot be garnished or collected.

The court cited the Illinois Pension Code, which states: “All pensions, annuities, refunds or disability benefits granted under this article … are exempt from attachment or garnishment processes and shall not be seized, taken, subjected to, detained or levied upon by virtue of any judgment … for the payment and satisfaction … of any debt, damage, claim, demand or judgment against pensioner, annuitant, refund applicant or other beneficiary.”

Tom Pleines, an attorney representing the sergeants association, strongly disagreed with the ruling.

He argued that “public policy as set forth in the pension code” is clear that “people who committed felonies related to their public service should not benefit from that.”

Pleines said the union has already collected “quite a bit” from Pallohusky — somewhere in the $200,000-to-$300,000 range. But the decision to declare Pallohusky’s widow’s pension off limits is particularly offensive given the circumstances surrounding Pallohusky’s stewardship of the association at a time when O’Toole was treasurer, Pleines said.

“He didn’t tell anybody they were married. He kept it secret. Nobody knows or will ever know what complicity she had in this crime [or whether] he secretly named her as a step in the commission of a felony,” the attorney said.

Pallohusky pleaded guilty in April 2012 to stealing $1.1 million from the sergeants association he ran for years, crippling the organization and nearly driving it into bankruptcy.

Prosecutors said Pallohusky duped the 1,200 sergeants who entrusted him with their money, using their hard-earned dues to help pay off a half-dozen credit cards, as well as funding lavish dinners, whirlwind gambling trips to Las Vegas and a down payment on a Northwest Side home.

Cook County Judge Diane Gordon Cannon initially imposed a 12-year prison sentence, telling him: “Mr. Pallohusky, it doesn’t get much lower than stealing from your fellow officers.”

Cannon subsequently reduced the sentence to eight years after Pallohusky’s attorneys told the judge he could pay back $465,000 to the Chicago Police Sergeants Association — but so far, Pallohusky has fallen short.

Pleines acknowledged this week’s Appellate Court ruling is a setback in the union’s efforts to collect — but not the end.

“He has properties the sergeants’ association has put liens on. And he’s not collecting his own pension and hasn’t even applied for it because he knows that, if he does, the pension board will declare his pension forfeit,” Pleines said.

On the day Pallohusky pleaded guilty, union officer Paul Bilotta told the Sun-Times:

“He hurt his friends who trusted him, and he hurt his co-workers who believed in him. … We have begun putting the pieces back together again. We are not whole. We will not be whole for a very long time.”