Does an Illinois Secretary of State employee who stole title and registration fees and vehicle sales tax payments lose her state pension?

Plain-English summary

Candace Wanzo worked at the Illinois Secretary of State's Department of Vehicle Services from December 1999 through April 2018. She was promoted to Administrator of the Specialty Plates Section in 2004 and Supervisor of Vehicle Services Plates in 2009. In those positions she ran the Public Service Center in Springfield and supervised the mobile units that the Secretary of State sent to locations around Illinois to issue license plates and registrations.

The federal indictment described a long-running theft scheme. Beginning before March 2015 and continuing into 2017, Wanzo took cash title and registration fees and sales tax payments out of the office. To cover the gap, she directed her staff to give her cash payments at the end of the day in a yellow envelope, and she replaced stolen funds with fees received from later customers (kiting). She also instructed her staff to begin accepting cash for vehicle sales tax payments on behalf of the Illinois Department of Revenue, even though the SOS had stopped accepting cash sales-tax payments in 2007. To slow down complaints, she had license plates sent by UPS rather than U.S. mail to the customers whose plates were delayed by her thefts, and she ordered staff to route any complaint about title or registration fees to her personally.

The total: about $303,649 in misapplied title and registration fees used to conceal the thefts, and roughly $40,102 in stolen vehicle sales tax payments. Wanzo pled guilty to one count of mail fraud (18 U.S.C. § 1341), one count of intentional misapplication of Secretary of State property (18 U.S.C. § 666(a)(1)(A)), and one count of theft of Illinois Department of Revenue vehicle sales tax payments (18 U.S.C. § 666(a)(1)(A)). She was sentenced in May 2021 to 18 months in prison on each count (concurrent), three years of supervised release, and ordered to pay $72,588 in restitution.

Attorney General Kwame Raoul's opinion is straightforward. Section 14-149 of the Illinois Pension Code applies the same felony-forfeiture rule to State Employees' Retirement System (SERS) members that Section 2-156 applies to GARS members. Two of Wanzo's three counts of conviction (the § 666 counts) are predicated by their text on her acting as an "agent" of state government in connection with state business. Her thefts could not have occurred but for her supervisory position, the position was a material element and substantial factor in the scheme, and the convictions are causally connected to her service. Forfeiture follows under any of the three tests Illinois courts apply.

What this means for you

If you're a state agency employee with cash-handling responsibility

The opinion is a clear warning about three things at once: criminal exposure, pension exposure, and restitution exposure. Wanzo's thefts were small in any single transaction (a few hundred dollars at a time) but compounded over more than a decade into hundreds of thousands of dollars, with $72,588 in court-ordered restitution. She also lost her SERS pension. If you handle cash for the State, the right answer to "can I borrow this for a day, I'll put it back" is always no. The kiting pattern Wanzo used was the federal prosecutors' clearest evidence of intent.

If you're a state agency manager or supervisor

Wanzo's thefts were detected in part because of customer complaints about delayed plates and the unusual cash-handling pattern (yellow envelopes at end of day, cash for sales tax payments that should have been check-only since 2007). Internal controls that would have caught the scheme earlier:

• A separation-of-duties rule between the person collecting fees and the person reconciling the daily totals.
• A policy that complaints from the public about a specific function go to a different supervisor, not the one running that function.
• Independent audit of cash totals against electronic records of plates issued.
• A prohibition on accepting cash for any payment type the agency has formally moved off cash (here, sales tax since 2007).

Most of these are standard fraud-detection controls but require active enforcement. The Wanzo case was not an exotic scheme; it was elementary fraud that escaped routine detection for years.

If you're a state pension administrator

Section 14-149 (SERS) and Section 2-156 (GARS) use parallel language and parallel analysis. The opinion is one of two AG opinions on the SERS provision; the other large body of pension-forfeiture jurisprudence is on Section 2-156. The procedural workflow is the same: get the indictment, plea, and judgment; identify the elements; apply the three-test framework; document the decision in writing; suspend benefits.

A § 666 conviction is particularly clear-cut for SERS forfeiture purposes. By statute, § 666(a)(1) applies to "an agent of [a State or local government] that receives more than $10,000 in federal funding," and § 666(a)(1)(A) requires that the property "embezzled, stolen, obtained by fraud, or otherwise without authority knowingly converted" be in the agent's "care, custody, or control." The federal court's finding of guilt on a § 666 count is essentially a finding that the defendant was acting as a state agent in a state-business capacity. That maps onto the Section 14-149 nexus requirement directly.

If you're a defendant or counsel for a state employee facing federal theft charges

Pension forfeiture is a quiet but serious collateral consequence of a § 666 or mail-fraud plea. Where the underlying conduct is plainly tied to the office, no plea structure preserves the pension. Where some counts are tied to the office and others are not, you might consider whether a plea limited to the office-unrelated counts could change the analysis. Be aware that retirement boards apply the three tests independently for each count, and forfeiture can be triggered by any one count that satisfies the nexus.

If you're a journalist or constituent

The Wanzo case is the boring-but-instructive end of the public-corruption spectrum. Not headline corruption like the Madigan case, just a long-running theft from a state office where internal controls failed. The opinion is the cleanest summary of the SERS forfeiture rule available, useful when explaining why a convicted state employee does not retire on the public's dime.

Common questions

Q: How is Section 14-149 different from Section 2-156?
A: Section 14-149 governs the State Employees' Retirement System (SERS), which covers most state agency employees. Section 2-156 governs the General Assembly Retirement System (GARS), which covers state legislators. Both contain substantially identical felony-forfeiture language. The same three-test analysis (but-for, substantial factor, causal connection) applies to both.

Q: Why are there two § 666 counts?
A: Section 666(a)(1)(A) creates two related offenses for an agent of a state government: intentional misapplication and theft. Wanzo pled to both. Count Four (intentional misapplication) covered checks and money orders representing title, registration, and SOS fees totaling $13,196. Count Five (theft) covered vehicle sales tax payments she stole between October 2015 and August 2016.

Q: What's the difference between misapplication and theft?
A: Theft is taking property for one's own use without authority. Misapplication is using government property for an unauthorized purpose, even if the agent does not personally benefit. Wanzo's kiting (replacing stolen funds with fees received from later customers) was both a misapplication of the later customers' fees and a theft of the earlier customers' fees.

Q: How does the restitution figure relate to the total stolen?
A: The court ordered $72,588 in restitution: $32,486 to the Office of the Secretary of State and $40,102 to the Illinois Department of Revenue. Court-ordered restitution generally reflects what the prosecutor was able to prove was stolen with reasonable certainty, not necessarily the full universe of suspected losses.

Q: Did Wanzo lose her own employee contributions?
A: The opinion addresses forfeiture of the pension annuity (the future stream of payments). Whether a former employee can recover their own contributions is governed by separate Pension Code provisions, not addressed here.

Q: Could a state employee be convicted of a felony unrelated to work and keep their pension?
A: Yes. Pension forfeiture is service-specific. A felony unrelated to the job (for example, a DUI causing death after work hours, or a domestic-violence conviction) does not automatically trigger forfeiture under Section 14-149. The retirement board has to find that the felony "relates to or arises out of or in connection with" the member's service. The three-test framework gives the board some latitude, but the connection has to be more than coincidental.

Background and statutory framework

Section 14-149

40 ILCS 5/14-149 is the felony-forfeiture provision for the State Employees' Retirement System. It uses substantially the same language as the parallel provisions in the Illinois Pension Code: "None of the benefits herein provided for shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his service as an employee."

How federal program theft works (18 U.S.C. § 666)

Section 666(a)(1)(A) makes it a federal crime for an agent of a state or local government that receives more than $10,000 in federal funds in a year to embezzle, steal, obtain by fraud, or intentionally misapply property valued at $5,000 or more in the agent's care, custody, or control. The statute is broad on purpose: Congress wanted to reach corruption affecting federally funded state programs without having to prove a direct effect on federal money. Wanzo's position at the SOS Department of Vehicle Services satisfied the agent-of-the-state element, and the cash and check fees she controlled satisfied the care-and-custody element.

How mail fraud works in this kind of case

Section 1341 makes it a felony to use the U.S. mail in furtherance of a scheme to defraud. Wanzo's mail-fraud count was based on causing license plates to be sent by United Parcel Service (a private commercial interstate carrier, which is also covered by § 1341 after a 1994 amendment) to vehicle owners whose payments she had stolen and concealed. The mailing was the "in furtherance" element; the scheme was the long-running theft and concealment.

The three nexus tests, applied to a state employee

For a non-elected state employee, the analysis is even cleaner than for a legislator. A supervisor's authority over cash, fees, and staff is the entire mechanism by which an office-based theft can occur. But for the supervisory position, the theft would not have been possible (Devoney). The position was a material element and substantial factor (Bloom). And the conviction is causally connected to the employment (Goff). The opinion notes that two of Wanzo's three counts (§ 666 counts) are by their elements predicated on her acting as a state agent; the nexus is essentially admitted in the plea.

Citations and references

Statutes:
- 40 ILCS 5/14-149 (Illinois Pension Code, SERS felony forfeiture)
- 18 U.S.C. § 1341 (mail fraud)
- 18 U.S.C. § 666 (federal program theft and bribery)

Key cases:
- Devoney v. Retirement Bd. of the Policemen's Annuity & Benefit Fund, 199 Ill. 2d 414 (2002)
- Bloom v. Municipal Employees' Annuity & Benefit Fund of Chicago, 339 Ill. App. 3d 807 (2003)
- Goff v. Teachers' Retirement System, 305 Ill. App. 3d 190 (1999)
- Ryan v. Board of Trustees of the General Assembly Retirement System, 236 Ill. 2d 315 (2010)
- Kerner v. State Employees' Retirement System, 72 Ill. 2d 507 (1978)

Source

• Index page: https://illinoisattorneygeneral.gov/opinions/
• Original PDF: https://illinoisattorneygeneral.gov/dA/2fbc859c35/2021%2021-002_PENSIONS%20Felony%20Forfeiture%20of%20Pension%20Benefits.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

OFFICE OF THE ATTORNEY GENERAL
STATE OF ILLINOIS

KWAME RAOUL
ATTORNEY GENERAL

July 13, 2021

FILE NO. 21-002

PENSIONS:
Felony Forfeiture
of Pension Benefits

Mr. Timothy Blair
Executive Secretary
State Employees' Retirement System
2101 South Veterans Parkway
Springfield, Illinois 62794

Dear Mr. Blair:

I have your letter inquiring whether, pursuant to section 14-149 of the Illinois Pension Code (the Pension Code) (40 ILCS 5/14-149 (West 2018)), Candace Wanzo, a member of the State Employees' Retirement System, has forfeited her pension benefits as a result of her conviction of mail fraud (18 U.S.C. § 1341 (2012)), intentional misapplication of Secretary of State fees (18 U.S.C. § 666(a)(1)(A) (2012)), and theft of Illinois Department of Revenue vehicle sales tax payments (18 U.S.C. § 666(a)(1)(A) (2012)). For the reasons stated below, it is my opinion that Candace Wanzo's criminal conviction requires the forfeiture of her pension benefits.

BACKGROUND

According to records of the United States District Court for the Central District of Illinois, on June 3, 2020, the United States filed a five-count Indictment against Wanzo. Wanzo subsequently pled guilty to one count of mail fraud, one count of intentional misapplication of Secretary of State fees, and one count of theft of Illinois Department of Revenue vehicle sales tax payments. The court sentenced Wanzo to a term of imprisonment of eighteen months on each of the three counts, all to run concurrently, and a three-year term of supervised release on each of the counts, to run concurrently. Wanzo was also ordered to make restitution to the State in the amount of $72,588 ($32,486 to the Office of the Secretary of State and $40,102 to the Illinois Department of Revenue). The offenses of mail fraud, intentional misapplication of Secretary of State fees, and theft of Illinois Department of Revenue vehicle sales tax payments are felonies under federal law.

The Indictment, pursuant to which the conviction was entered, indicates that from December 8, 1999, until April 6, 2018, Wanzo was employed in the Department of Vehicle Services of the Office of the Illinois Secretary of State (SOS). Beginning on March 1, 2004, Wanzo held the position of Administrator of the Specialty Plates Section, and on April 1, 2009, Wanzo was promoted to the position of Supervisor of Vehicle Services Plates. In these supervisory positions, Wanzo was responsible for the operation of the Public Service Center, located in Springfield, Illinois, and for the operation of the mobile units throughout the State of Illinois that were set up at various locations to conduct SOS business. The Public Service Center and the mobile units were a means by which vehicle owners could apply for a license plate and vehicle registration in person. As a result of her position, Wanzo had access to title and registration fees and sales tax payments in the possession and custody of the SOS.

According to the Indictment, prior to March 6, 2015, Wanzo began stealing title and registration fees and sales tax payments in the possession and custody of the SOS. Additionally, from March 6, 2015, until April 17, 2017, Wanzo directed her staff to give her any cash title and registration fees and sales tax payments, and to conceal her theft, she replaced the funds she had stolen with title and registration fees received from other vehicle owners. Further, without the permission or knowledge of her supervisors at the SOS and in contravention of SOS policy, Wanzo directed her staff at the Public Service Center to begin accepting cash for the payment of sales tax on behalf of the Illinois Department of Revenue and to deliver the cash payments to her in a yellow envelope at the end of the business day. (The SOS had discontinued the practice of accepting cash for sales tax payments in April 2007.)

In addition, Wanzo instructed her staff that any complaints from vehicle owners regarding title, registration, and other SOS fees were to be given to her and no one else at the SOS. In an effort to conceal her scheme, Wanzo caused license plates to be sent through the United Parcel Service, rather than by the United States mail, to vehicle owners who experienced delays in receiving their plates as a result of her actions. The total amount of misapplied title and registration fees used to conceal the stolen title and registration fees was approximately $303,649. Additionally, between December 19, 2008, and April 10, 2017, Wanzo stole approximately $40,102 in sales tax payments from the Public Service Center and mobile units.

Based on the above-described scheme, Count One of the Indictment alleged that, on May 16, 2016, for the purpose of executing or attempting to execute a scheme to defraud, Wanzo "knowingly caused to be sent and delivered by a private and commercial interstate carrier[,]" license plates to a vehicle owner in Chicago, Illinois. Count Four of the Indictment alleged that Wanzo "intentionally misapplied property worth at least $5,000 and owned by and under the care, custody and control of [the SOS, a] government agency[.]" Specifically, she misapplied "checks and money orders in the total amount of $13,196 representing title, registration, and other SOS fees." Count Five of the Indictment alleged that Wanzo, between October 14, 2015, and August 17, 2016, "stole property worth at least $5,000 and owned by and under the care, custody and control of [a] government agency" that were "vehicle sales tax payments."

ANALYSIS

Section 14-149 of the Pension Code requires the forfeiture of a participant's retirement annuities and other pension benefits upon his or her conviction of a service-related felony and provides, in pertinent part:

Felony conviction. None of the benefits herein provided for shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his service as an employee.

The purpose of the felony forfeiture provisions in the Pension Code is to discourage official misconduct and to implement the public's right to conscientious service from those in governmental positions by denying retirement benefits to public servants convicted of violating the public's trust. Ryan v. Board of Trustees of the General Assembly Retirement System, 236 Ill. 2d 315, 322 (2010); Kerner v. State Employees' Retirement System, 72 Ill. 2d 507, 513 (1978). The critical inquiry in determining if a felony is "relat[ed] to or ar[ose] out of or in connection with" service as an employee is whether a nexus existed between the employee's criminal wrongdoing and the performance of his or her official duties. Devoney v. Retirement Board of the Policemen's Annuity & Benefit Fund for the City of Chicago, 199 Ill. 2d 414, 419 (2002); Bauer v. State Employees' Retirement System, 366 Ill. App. 3d 1007, 1015-16 (2006).

Wanzo's conviction clearly related to, arose out of, and was in connection with her service as an employee of the SOS. Indeed, two of the offenses to which Wanzo pled guilty are predicated on the fact that she was acting in her capacity as a State government employee when the offenses occurred. (Counts Four and Five of the Indictment alleged violations of 18 U.S.C. § 666 (2012), which provides that an individual is guilty of the federal felony offense of embezzlement of government-held funds when, being an agent of a State government or any agency thereof, the person embezzles, steals, obtains by fraud, or otherwise without authority knowingly converts to the use of any person other than the rightful owner or intentionally misapplies, property valued at $5,000 or more.)

If not for her position as an Administrator of the Specialty Plates Section and a Supervisor of Vehicle Services Plates at the SOS, Wanzo would not have been in a position to steal title and registration fees and vehicle sales tax payments from the SOS or the Illinois Department of Revenue. She used her supervisory authority to direct staff to give her cash payments at the end of the day, to conceal the thefts by accepting cash for sales tax payments contrary to SOS policy, to route customer complaints to her personally, and to cause license plates to be delivered by private interstate carrier to vehicle owners affected by her scheme. Each of the elements of her conduct depended on the supervisory position she held in the SOS Department of Vehicle Services.

Applying any of the tests employed by Illinois courts (the "but for" test from Devoney, the "material element and substantial factor" test from Bloom v. Municipal Employees' Annuity & Benefit Fund of Chicago, 339 Ill. App. 3d 807, 815 (2003), and the "causal connection" test from Goff v. Teachers' Retirement System, 305 Ill. App. 3d 190, 195 (1999)), the requisite nexus between Wanzo's felony convictions and her service to the State as an SOS employee is clearly satisfied.

CONCLUSION

For the reasons stated above, it is my opinion that Candace Wanzo's felony convictions of mail fraud (18 U.S.C. § 1341 (2012)), intentional misapplication of Secretary of State fees (18 U.S.C. § 666(a)(1)(A) (2012)), and theft of Illinois Department of Revenue vehicle sales tax payments (18 U.S.C. § 666(a)(1)(A) (2012)) are felonies that relate to, arose out of, or were in connection with her service as an employee of the SOS, thereby requiring the forfeiture of her pension benefits under section 14-149 of the Illinois Pension Code.

Sincerely,

KWAME RAOUL
ATTORNEY GENERAL