Former Orland Park village manager Joseph La Margo will pay $30,000 to his former employer to settle a legal fight launched over a secretive investigation La Margo commissioned, allegedly to look into accusations leveled against Mayor Keith Pekau, who had earlier defeated the former mayor who had originally given La Margo his job.
Pekau has characterized that investigation and the resulting litigation as politically motivated, and has noted both handed rhetorical ammunition to Pekau's political opponents to use against him.
"It's good to be fully exonerated, especially when dealing with these kinds of accusations, that were completely made up," said Pekau.
Last week, La Margo and the village of Orland Park agreed to settle the four-year-old court battle.
Under the deal, La Margo will pay $30,000 to the village and will drop his appeals of a Cook County judge's decision tossing his claims for defamation and other allegations against Pekau and the village.
The village, in turn, would drop its counterclaims against La Margo for alleged misconduct while he was still village manager, and fully end the litigation.
La Margo had initially filed suit in Cook County Circuit Court in 2020, asserting Pekau and others at the village had harmed his reputation in a press conference, in which Pekau asserted La Margo had exceeded his authority and misspent as much as $46,000 in village funds to conduct an investigation into allegations against Pekau, which the mayor asserted were politically motivated.
That press conference, in turn, came days after Pekau said he and Orland Park village trustees first learned of the investigation and its costs, shortly after La Margo resigned in May 2019.
According to court documents, La Margo claimed Pekau "forced" him to resign after Pekau's political allies won a majority of seats on the board, and Pekau could assert more control over village business and policy.
La Margo had been hired as village manager by Pekau's predecessor, Dan McLaughlin. He had previously worked as assistant village manager. La Margo's promotion came in the time between Pekau's defeat of McLaughlin in Orland Park's municipal elections in 2017, and when Pekau was sworn into office.
According to information shared by Pekau, La Margo had served in leadership in the local Democratic Party with McLaughlin years earlier. Pekau is a Republican, and in 2022, unsuccessfully ran for Congress as a Republican.
La Margo also served on the District 135 school board with Michael Carroll, a former Orland Park village trustee who allegedly aided La Margo in the investigation at the heart of the lawsuit.
From 2017-2019, Pekau lacked the political power to remove La Margo, as his allies did not yet hold a majority on the board.
According to court documents, La Margo had launched an investigation in January 2019, allegedly to investigate accusations of potential bid rigging and collusion against the village and Pekau. According to court documents, publicly unidentified public works employees in Orland Park allegedly approached La Margo, asserting village officials may have colluded to award work at taxpayer expense for a company owned by Pekau since 2012.
The investigation further looked into allegations concerning Orland Park's decision to award insurance business to a company associated with Pekau. According to Pekau, he repeatedly recused himself from votes on matters related to his companies.
Rather than bringing the matter to the attention of the board, however, La Margo asserted he used his executive authority as village manager to hire lawyers from the Chicago firm of Jones Day to investigate the allegations.
The report, completed in March 2019, determined investigators could not find evidence to prove the allegations.
In spring 2019, Pekau's slate of candidates for village board won the majority of seats, and La Margo resigned. He was quickly hired as a
At that point, Pekau said he first learned of the investigation, when his interim village manager received an invoice from Jones Day billing the village $46,000 to pay for the investigation.
After discussing the surprise legal bill with the board in closed session at a May village board meeting, Pekau then held a press conference to reveal and publicly discuss the investigation for the first time. At the press conference, Pekau said La Margo had exceeded his authority by spending more than $20,000 on the project without village board approval. Further, Pekau asserted at that time La Margo had "conducted a clandestine investigation ... for political purposes."
Pekau has noted campaign mailers against him and his allies included information that could only have been obtained by people closely familiar with the investigation.
In response to Pekau's statements, La Margo then filed his defamation action, accusing Pekau and the village of harming his personal and professional reputation.
The village then followed with counterclaims against La Margo, including allegations that La Margo had improperly authorized the payment of $9,125 in sick pay for former Assistant Village Manager and Director of Development Services Karie Friling.
In June 2023, Cook County Judge John Curry ruled in favor of the village on La Margo's claims, granting the village summary judgment in the dispute. The judge further denied La Margo's attempt to end the village's counterclaims.
In that ruling, Curry said statements , against La Margo from Pekau and William Healy, one of Pekau's political allies on the village board, were protected statements of opinion "concerning public, governmental, and political matters by public officials against another public official."
Further, Curry said the statements made by Pekau and Healy were grounded in fact.
"... Any alleged statement that La Margo violated Village ordinance with respect to the Jones Day investigation work and violated Village Police with respect to authorizing sick time payout would not be defamatory because the statements were not false," Curry wrote.
Following the ruling, La Margo appealed. Those appeals will be withdrawn under the settlement agreement.
In a sworn statement filed at the same time as the settlement agreement, La Margo explained the investigation by stating he believed the accusations against Pekau left him in a "tough spot," that would expose him to criticism no matter which route he chose.
"After weighing these competing interests, I determined I had a responsibility to conduct a thorough investigation but to do so discreetly to avoid the allegations from taking on a life of their own," La Margo wrote.
La Margo said the investigation ultimately included a host of village staffers, including the assistant village manager, finance director, contract administrator, labor attorney, general counsel and police chief, as well as one trustee, Carole Ruzich, who had served on the board under McLaughlin since 2011, and lost in 2019 to Pekau's trustee candidates.
La Margo acknowledged the total bill was $46,000. But he said he "was unaware at the time that the total amount exceeded the Village Manager spending authority even if it applied to this situation."
"I understand that some may disagree with the decisions that I made regarding the investigation and sick time payout, and I can look back and see that there may have been other courses of action I could have taken," I made judgment calls in these situations, and every decision I made was based on my best judgment and deliberation taking into account my understanding of the past practices in the Village, and what I believed to be in the best interest of the citizens of the Village of Orland Park."
After he resigned in Orland Park, La Margo was hired as village manager in Portage, Michigan. Later, La Margo reportedly hired Carroll as assistant village manager and has hired McLaughlin as a consultant for Portage.
Pekau, however, said La Margo's statements don't align with the facts of the case, noting he should have had knowledge of the village ordinance and of the lack of evidence implicating Pekau in the allegations that allegedly spurred the investigation.
"For four years, Bill Healy and I have had to deal with the lawsuit, depositions, attorney fees and constant attacks," Pekau said in an email. "For seven years, this garbage has gone on because a group of bullies didn’t like the result of an election. "
Pekau said the resolution of the legal action means he and Healy have been "completely vindicated yet again, as we knew we would be."