A number of extramarital affairs and an ailing father are highlighted as possible reasons why former Metra CEO Phil Pagano skimmed hundreds of thousands of dollars from the agency, according to Pagano’s newly released FBI file.
The 116-page report, obtained by the Better Government Association, does not come to any concrete conclusions and consists mostly of interviews of field agents with names and other identifying information redacted, often heavily. But it offers a glimpse into the possible motives of Pagano, who committed suicide in 2010 by stepping in front of a Metra train near his rural Crystal Lake home hours before he was set to be fired.
The BGA’s release of the file also coincides with a task force’s scathing report on waste, inefficiency and corruption on the Chicago area’s four mass-transit boards. The Northeastern Illinois Public Transit Task Force was convened last year following a second scandal at Metra – this one surrounding the dismissal of the director brought in to clean up the agency after Pagano.
Pagano, who ran the commuter rail service for 20 years, was suspended after confessing that he forged former Metra Board Chairwoman Carole Doris’ signature on at least two occasions to get his full year’s vacation payouts. An investigation commissioned by Metra after Pagano’s death concluded that he improperly collected at least $475,000 on top of his $269,625 annual salary.
Pagano died owing Metra an additional $127,000 from loans he took out against his executive compensation package – he had accrued more than $700,000 he could access upon turning 60, but borrowed almost $840,000 against it. He also refinanced his home at least three times between 2005 and his 2010 death.
His FBI file contains interviews with several women who said they had affairs with Pagano, all of which started on the dating website eHarmony. All of them in their interviews said that Pagano bought them gifts and took them to restaurants and on vacations.
All of them also had a common theme – Pagano’s profile said he was single and his girlfriends not only discovered otherwise, but also found evidence suggesting that he was seeing other women, as well.
“In an effort to identify possible co-conspirators who might have been associated with the alleged embezzlement and potential fraud against the government, the case agent identified and interviewed at least four women with whom Pagano was engaging in extramarital affairs. It is now believed that Pagano was using the embezzled funds to pay for the multiple affairs,” one report states.
One of the women told the FBI she suspected Pagano needed the money because he was being blackmailed over his multiple extramarital affairs. While having no evidence to support the claim, she said she “ ... believes that Pagano was having affairs with other women and that one of them may have found out he was married and wasn’t as forgiving about it.”
The FBI file also reveals that Pagano maintained a blog, which still exists and includes references to his family and a woman he called at the time “my partner in life.” The woman is not Pagano’s wife.
The report does not shed light on statements made in court during bankruptcy proceedings by Pagano’s widow that he was maintaining two other households besides his own.
Other FBI interviews with Metra employees and people who knew Pagano suggest other motives. After he was caught. Pagano told one person that his father had been diagnosed with Alzheimer’s disease, and told another that he had moved his father into a private assisted living home and was paying for that on top of paying his father’s mortgage.
When asked by another Metra employee why he needed all of the money he was borrowing, Pagano allegedly said he was investing in a family member’s business, which he described as a “cheese-themed franchise restaurant.”
Pagano did not offer the Metra Board any precise explanation as to why he needed the money, but told members in a closed-session meeting that his “one mistake” was made for a “personal reason” that did not involve alcohol, drugs or gambling, according to a transcript of his remarks contained in the file.
“I hope that, uh, you all know who Phil Pagano truly is. This mistake that I made in my life is my mistake. Unfortunately, you, the people on Metra who I loved all these many years, and in particular my family ... to tell my wife and daughters that the person they thought I was may not be all that type of person,” Pagano said.
The FBI report also reveals that the suicide notes that Pagano left for his family did not state what he was doing with the money. But at least one stated that his family “... would find out things about him that would make them hate him.”
Several people interviewed disputed Pagano’s claim that he did not gamble, with one saying he held a VIP pass with at least one out-of-state casino. In another interview, a BGA employee alleged that “the McHenry County government is corrupt and is heavily involved with Metra.”
The Metra Board replaced Pagano in 2011 with CEO Alex Clifford in an attempt to clean up the agency. But Clifford was forced out in 2013 – when pressed by state lawmakers about the generous severance package he was receiving, Clifford alleged several board members wanted him out because he would not play along with patronage requests.
Among the recommendations in the 95-page report released Monday by the Northeastern Illinois Public Transit Task Force is that the service boards of Metra, Pace and the Chicago Transit Authority be merged into one entity. The Regional Transportation Authority, the umbrella board that has financial oversight of the others, should be eliminated altogether, the report concludes.