Melrose Park Mayor’s Conflict-Of-Interest Question

Mayor Ron Serpico’s administration taps local bank to handle municipal finances, bank taps Serpico to work as lawyer. Are taxpayer interests being well served?

Melrose Park Mayor Ronald Serpico, an attorney who runs his own law firm, does legal work for a suburban bank that holds millions of dollars in deposits from the municipal government he runs.

What’s more, Serpico doesn’t reveal this business relationship on economic disclosure reports that public officials fill out so taxpayers have an idea of potential conflicts of interest and outside income streams for government officials.

Those were the findings of a months-long Better Government Association/FOX 32 investigation that also determined the same financial institution, Pan American Bank, hired the son of Bellwood’s mayor and the daughter of Bellwood’s village clerk while doing business with that municipality.

Bank officials said no one exerted pressure to hire the politically connected people, and that the bank was not trying to curry favor with those local governments.

Frank Pasquale Jr., son and namesake of Bellwood’s mayor, and Janel Moreland, daughter of Bellwood Village Clerk Lena Moreland, were brought on board "solely on the high-quality services we anticipated they would provide to our customers. . . . Nearly 60 percent of our employees live in the neighborhoods we serve, Mr. Pasquale and Ms. Moreland are just two examples, and we are proud of their service to our customers," according to written statements from the bank.

As for Serpico, the bank relayed that his "law firm performs loan reviews and its fees are a small percentage of the bank’s annual legal fees."

Serpico said he’s worked as a contract lawyer for Pan American – earning up to about $1,500 a month – since 2007 or thereabouts. (A bank representative said Serpico started in 2009.) Either way, bank executive Frank Cerrone – described by village spokesman Gary Mack as a long-time friend of Serpico – started working for Pan American in November 2007. The village started doing business with the bank in December 2007, according to the bank representative.

Melrose Park’s municipal government, run by Serpico since his 1997 election, had more than $27 million at Pan American as of late last year, according to village records.

So how did Melrose Park come to hire Pan American in the first place?

Serpico indicated a former village finance official made the choice. However, that official, former Melrose Park Comptroller John Gregor, told the BGA Serpico actually made the decision on placing the village’s banking business with Pan American, which handles the majority of the village’s deposits.

"It was the mayor’s choice," Gregor said of Serpico.

Either way, Gregor reported directly to Serpico.

Village deposits to the bank come from money generated by parking tickets, water bills and motor fuel taxes, among other sources. The village also uses accounts from the bank to pay vendors and employees – and it has borrowed money from the bank, too, according to records and interviews.

Banks make their money off clients by charging interest on loans, and fees on transactions and services.

Melrose Park has paid the bank more than $270,000 to process water bills and parking tickets alone since 2009, village records show.

Since 2008, the bank has donated more than $13,000 to Serpico’s campaign fund, according to the Illinois State Board of Elections.

Serpico released a written statement saying, "Like many municipalities, we always strive to do work with companies that are located here. The Village values its strong ties with Pan American Bank just as it values its ties with dozens of other vendors who make their homes in Melrose Park. As to my law firm, we have done work for Pan American Bank for nearly a decade. None of this work is related to the village nor is any of it in conflict with my official duties."

The BGA and FOX asked the village for copies of agreements between the bank and Melrose Park, but village officials said they couldn’t find any such records relating to bill processing. A bank representative said there are written agreements that, following a reporter’s questions, are now being supplied to the village.

Meanwhile, local government officials are required by state law to fill out an economic disclosure form on which they’re supposed to reveal outside income annually.

One line on the form asks about outside income for "professional services," such as legal work. Serpico does not mention Pan American in any of the forms he has filed since at least 2011.

While that may violate the spirit of the forms, experts said the reality is the questions on the documents are so poorly worded that such omissions probably don’t amount to a legal violation.

State Sen. Dan Kotowski (D-Park Ridge) has drafted legislation to clarify wording on the forms and toughen up penalties for failing to answer questions accurately or fully.

Melrose Park has a policy barring village employees from working for village vendors, but the policy exempts top village officials such as Serpico.

In Bellwood, there’s no rule barring the children of village officials from working for village vendors, said Peter Tsiolis, Bellwood’s chief of staff.

The younger Pasquale and younger Moreland wouldn’t comment for this story. Bellwood’s mayor didn’t return calls.

The bank’s relationship with Bellwood is similar to that with Melrose Park.

Bellwood has used Pan American to process water bills, vehicle stickers and the like since at least 2009. From 2009 through late 2014 Bellwood paid Pan American more than $310,000 in fees.

The younger Pasquale was hired by Pan American to work in loan operations in April 2011, while the younger Moreland was hired in September 2008, according to the bank.

Bellwood had loans from the bank dating to at least 2007, village records show.

Pan American has branches in Melrose Park and Bellwood.

Tsiolis said: "It is the hope that any new business will create new job opportunities for the residents of the community. When Pan American opened its Bellwood branch such an opportunity was presented to our residents."

The BGA and FOX also found that the elder Moreland – Bellwood’s clerk – sat on the bank’s board of directors for a short time in or about 2009.

Lena Moreland resigned because village officials thought it was a conflict of interest to hold both posts.

"At this point I don’t have anything to say," Lena Moreland said. "I was on the board . . . I attended two meetings. . . . I was told it was a conflict of interest. Then I resigned."

Full disclosure: Pan American Bank is owned by a holding company in which BGA board member Daniel Goodwin is a major shareholder.