States Attorney: No Felonies Committed in ‘Coffee Fund’ Case

Richard Schmack

DeKalb County State’s Attorney Richard Schmack announced today that his office has reached a plea agreement with Kenneth Pugh, former Director of the Materials Management Department at Northern Illinois University regarding his involvement in the so-called “Coffee Fund” case. Mr. Pugh was found guilty of one count of violating the State Property Control Act, a Class B Misdemeanor, and was placed on Court Supervision for a period of twelve months. He was ordered to pay a fine and costs totaling $825.00.

Richard Schmack
DeKalb County States Attorney Richard Schmack

The case relates to the deposit of the proceeds from metal recycling at the University into a departmental account controlled by the Materials Management Department. There was no evidence that the fund was used for anyone’s personal enrichment, but all proceeds from recycling by state agencies are to be directed to the Illinois Department of Central Management Services in accordance with the provisions of the State Property Control Act and the administrative rules of that Department. NIU has reimbursed the State for the diverted funds. Pugh was the last of the defendants whose case had not been resolved, so today’s disposition closes the criminal aspect of the Coffee Fund matter.

As was the case with all the other Defendants, felony charges of Official Misconduct and Theft were dismissed. After full analysis of the facts, it is the opinion of the State’s Attorney that neither Pugh nor any of the other defendants were guilty of those, or any other, felonies. The State’s Attorney explained his reasoning as follows, “The sole basis for the felony charge of Official Misconduct against each defendant was the commission of the misdemeanor charge of violating the State Property Control Act.

Since the State Legislature has declared this violation, which can be committed only by state employees, to be a Class B misdemeanor, it is improper to enhance the same conduct into a Class 3 felony, solely because it was committed by a state employee. I thought that was true from the very first day I read these charges, while I was still a candidate for State’s Attorney. The theft counts required more review after I took office, which I undertook along with Duke Harris, my First Assistant. It became clear to us that the Materials Management “coffee fund” was used entirely for activities which are routinely paid for out of public funds at many other departments at NIU. This money was indeed diverted, but it was diverted from one of the State’s pockets into another of the State’s pockets, when regulations said it should have gone instead into a third State pocket. However, when it came back out of the pocket, it was still used for a state purpose, not for personal gain. Some may disagree with the wisdom or prudence of governments using public funds for employee retirement luncheons, but until the State Legislature says otherwise, I do not think it is a crime. It is also not criminally wrong for an NIU department to maintain its own bank account, although it is certainly not a good accounting practice. Moreover, I do believe that the lack of any intent to steal is made clear by the precise and detailed records which were maintained by all those involved, regardless of who actually controlled the account.

The court supervision sentence imposed on Pugh is substantially the same is those imposed earlier on his co-defendants Lawrence Murray and Robert Albanese. Although the fines were somewhat higher than normal, the sentences are consistent with those typically imposed on non-violent first offenders in misdemeanor offenses in DeKalb County and throughout the State of Illinois. Illinois statutory sentencing structure makes court supervision the favored disposition for all misdemeanor defendants without extensive criminal histories, and a departure from this standard would have been inappropriate in this case.

The defendants, who did receive supervision, rather than having all charges dismissed, were in supervisory positions which had at least some degree of responsibility for ensuring that the State Property Control Act, and accompanying administrative regulations, was fully implemented at NIU. For this reason, the State’s Attorney’s Office viewed them as more culpable for the continuation of internal policies that contradicted the Act, and/or state regulations. In contrast, the defendants whose cases were dismissed merely complied with those established internal policies, without any criminal design, purpose, intent, or knowledge.

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