La Margo Vs. Pekau, Village Legal Battle: Judge Rules For Orland Park

ORLAND PARK, IL — A Cook County judge has ruled in favor of the Village of Orland Park and Mayor Keith Pekau in a lawsuit filed by former village manager Joseph La Margo. The lawsuit followed La Margo's departure from the role in 2019 amid a heated dispute over an investigation into potential bid rigging.

After he was reportedly pushed out of his role, La Margo subsequently sued the Village of Orland Park, Mayor Keith Pekau, Trustee Bill Healy, and the Keith Pekau for Mayor campaign on claims of breach of contract, defamation and intentional infliction of emotional distress. The Village promptly denied those claims, and slapped La Margo with counterclaims for breach of his employment agreement, breach of his resignation agreement, breach of fiduciary duty and loyalty to the Village, and unlawful conversion of Village funds.

Judge John J. Curry ruled in favor of the Village and its parties, also ruling that the Village could pursue its counterclaims, according to court documents.

"Although we’re disappointed and disagree with the judge’s decision, I’m in the process of discussing our options with my attorney and my family," La Margo told Patch Thursday.

In a statement released to media Thursday, Pekau applauded the judge's ruling.

"I have been fighting this battle since the day I took office," Pekau said in the release. "The previous board was still calling the shots and weaponizing La Margo in an attempt to tarnish my name and make it difficult to do my job and represent the people of Orland Park as they elected me to do.

"Since this lawsuit has been filed, I have been publicly saying that it was groundless and wholly devoid of any merit whatsoever and that the Village and the other parties would prevail on all counts. It has taken some time to get to this point but that is exactly what has happened."

The dispute stems from an earlier investigation spearheaded by La Margo into the Village's bid practices, specifically surrounding two vendors, Mid-America Tree of Mokena, and GroundsKeeper Landscape Care LLC. Both regularly came in as the lowest bidder with a margin of only $25 below competitors, Patch previously reported. Pekau owned GroundsKeeper Landscape Care LLC and contracted with the village until he sold the business in February 2019. La Margo hired an outside law firm called Jones Day to conduct the review.

Jones Day investigators at the time suggested that the Village continue looking into Pekau's former landscaping business and the financial interests he held with two village vendors. They also said the Village needed to fix its own flawed bidding, purchasing and ethics policies, as Patch previously reported.

Investigators added that they did not gather enough evidence to show whether the village broke state bidding or ethics laws in the cases they reviewed. What they found, they said, was that the incidents "raise questions," leading them to recommend that the Village continue its investigation.

To date, Pekau asserts the investigation proved no wrongdoing on his part, and previously alleged the investigation was politically charged and timed, subversive and secretive—statements he continues to stand by.

"I am happy to once again be fully exonerated from accusations brought forth by a former Village Manager who was hired to thwart the will of the people," Pekau said in a release. "It was an unfortunate waste of time and money that could have been avoided if former Village Manager La Margo had acted professionally instead of playing politics."

The Mayor's claims against La Margo include that he pursued the investigation "mere months before a trustee election in which the Mayor backed certain candidates, one of which was Bill Healy." He also claims that by approving an investigation that cost nearly $34,500, La Margo abused his role and violated Village ordinances limiting his authority to authorize expenditures only up to $20,000.

Pekau called La Margo's pursuit of the issue a "secret investigation." An earlier report from Patch said that several people knew about the investigation as it proceeded, including attorneys James Roche, Dennis Walsh and Kenneth Friker; trustees Carole Ruzich, Patricia Gira, Michael Carroll, Jim Dodge, Kathleen Fenton and Daniel Calandriello; former Assistant Village Manager John Keating; and the seven employees interviewed as part of the process.

Pekau has asserted that he should have been told of the investigation because he was the sitting mayor. But a previous Patch report said that ICMA, the leading association of professional city and county managers and other employees who serve local governments, disagrees.

"If the party of the investigation happens to be an elected official, you would not inform him until it was complete," Martha Perego, director of member services and ethics, told then-Patch reporter Erika Hobbs. "You don't talk to him until you get to the point in time when you need to talk to the individual. You wouldn't give that person a heads up."

La Margo told Patch Thursday that he did what he felt was best to pursue complaints employees had expressed to him about the matter.

"I always did my job with the highest integrity, to the best of my ability, with the best interest of the taxpayers, residents, and businesses of Orland Park in mind," La Margo told Patch Thursday.

La Margo's lawsuit claimed defamation by Pekau, who, after La Margo's departure, published email newsletters to campaign supporters that defended his actions and accused La Margo, who opened the investigation in 2018, of misconduct. He also held a news conference about the report, known as the Jones Day report, and made all its findings public.

The Village in its counterclaims also alleges that La Margo violated Village code by authorizing sick time payout to former assistant village manager Karie Frilling, following her resignation. Frilling, the Village said, did not qualify for the payout because she was not participating in the IMRF Early Retirement Program.

La Margo on Thursday disputed that to Patch, saying that he followed past practices.

Curry ruled that the Village's counterclaims may proceed to trial, going on to say that "The Village has shown the existence of proof that La Margo both breached his fiduciary duties and converted funds."

Pekau on Thursday spoke of the "baseless investigation" organized by La Margo, and the reportedly unwarranted $10,000 payout to Frilling. He stressed the importance of the village board as a means of "checks and balances on spending to prevent abuse of taxpayer funds like this.

"We are delighted that the Court has acknowledged that we were doing our jobs as elected public officials for the Village of Orland Park in denouncing La Margo’s illegal actions and has now entered a judgment in our favor on all of his frivolous claims," Pekau said. "In order to hold him accountable for the unauthorized actions he took as the former Village Manager and in the effort to recover the Village tax dollars that were spent on his illegal activities, the Village will now focus on its counterclaims against La Margo.

"I am confident the Village will be as successful in its pursuit of the counterclaims as it was in defending against La Margo’s politically motivated and utterly unjustifiable claims."

La Margo, who currently serves as Village Manager in Niles, stood by his actions in the investigation into the bidding practices, saying he felt he had an ethical and moral obligation to look into it.

"I did what I thought was the right thing to do," La Margo said.

Read the judgment in its entirety: