Does former Illinois state representative Luis Arroyo lose his pension after his federal wire fraud conviction tied to sweepstakes legislation bribery?

Plain-English summary

Former Illinois House Representative Luis Arroyo (Twenty-Second District, served 2006-2019) pled guilty in November 2021 to one count of federal wire fraud under the honest-services theory (18 U.S.C. §§ 1343, 1346). He was sentenced in May 2022 to 57 months in federal prison. The Executive Secretary of the General Assembly Retirement System asked Attorney General Kwame Raoul whether the conviction triggers Section 2-156 of the Illinois Pension Code, the felony-forfeiture provision for the General Assembly Retirement System (GARS). The answer is yes.

The federal indictment told a clean and ugly story. Beginning in November 2018, Arroyo received bribes from a co-defendant in the form of checks issued by Collage LLC (the co-defendant's company) made payable to Spartacus 3 LLC (Arroyo's company). Total: $32,500 over about a year. In exchange, Arroyo voted for and promoted sweepstakes-industry legislation in the Illinois House, urged colleagues to do the same, and lobbied executive-branch officials. He concealed the income on his Statement of Economic Interests, falsely answering "N/A" to the question of whether he received income from any entity doing business in Illinois. When his initial advocacy efforts failed, he tried to recruit a state senator into the same scheme, offering to have the co-defendant pay the senator monthly bribes disguised as consulting fees.

The AG worked through the same three-test framework Illinois courts use to determine whether a felony "relates to or arises out of or in connection with" a member's service: the but-for test from Devoney, the substantial-factor test from Bloom, and the causal-connection test from Goff. Each was satisfied: but for being a House Representative, Arroyo could not have been the target of bribes paid for legislative votes, his official position was both a material element and substantial factor in the scheme, and his conviction is plainly connected to his service. Forfeiture follows.

This was the first formal opinion in the wave of pension-forfeiture opinions that followed Operation Spotlight, the federal investigation that also led to the Madigan and ComEd Four cases. The opinion's analysis became the template for AG Opinions 25-001 (Madigan) and others.

What this means for you

If you're a public official taking outside consulting work or lobbying fees

The opinion is a sharp reminder that the income side and the conduct side of public corruption are inseparable. Arroyo's company, Spartacus, was a real Illinois entity, but the payments to it were bribes for his official acts. Two related problems compounded each other: receiving the payments at all, and concealing them on the Statement of Economic Interests. If your official duties touch an industry from which you also draw consulting income, you need:

• A clear, written engagement scope unrelated to your legislative or executive duties.
• Full disclosure on the Statement of Economic Interests (5 ILCS 420/4A-101(a) requires legislators to file annually).
• A practice of recusal from votes, hearings, and advocacy on matters affecting that industry.

Failing those, you risk both federal prosecution and pension forfeiture under Section 2-156.

If you're a lobbyist

The opinion does not bind you, but the indictment's facts describe a scheme that started with consulting and lobbying retainers paid to Arroyo's company. The path from "consulting fee" to "bribe" runs through a quid pro quo: payment in exchange for specific official action. If you find yourself negotiating those terms with a sitting legislator, you are exposed to charges of federal program bribery and wire fraud. Document scope of work, scope of services, and the absence of any expected official action.

If you're a pension administrator

The procedural template is now well established (and was extended in Opinion 25-001). When a member of an Illinois pension system is convicted of a felony:

1. Get the indictment, plea agreement, judgment, and sentencing memorandum.
2. Identify the elements of each count of conviction. Federal program bribery (18 U.S.C. § 666) and honest-services wire fraud (18 U.S.C. §§ 1343, 1346) are particularly clear nexus indicators because both, by their elements, require the defendant to have been acting in an official or quasi-official capacity.
3. Apply the three-test framework. The opinion can be cited as persuasive authority for the proposition that a single test (any one of the three) is enough.
4. Document and issue a written forfeiture decision. The member can challenge it administratively and in court, but the Pension Code authority is on the retirement board's side.

If you're a member of GARS or another Illinois public retirement system

Pension forfeiture is service-specific. A felony unrelated to your work (a DUI, a personal tax matter not involving the office) does not automatically trigger forfeiture. But honest-services wire fraud, federal program bribery, and any state offense that requires misuse of office (official misconduct, bribery, theft of government services) all do. The opinion confirms what the courts have been saying since Kerner in 1978: the Pension Code treats your annuity as deferred compensation conditioned on honest service.

If you're a journalist or constituent

The opinion explains in plain terms why federal corruption convictions cost public officials their pensions. It is also the cleanest available explanation of the three-test framework, useful for any story about an Illinois pension forfeiture proceeding.

Common questions

Q: How is this different from the Madigan opinion (25-001)?
A: The legal framework is identical. The factual record is much smaller (one wire-fraud count plea versus a ten-count jury verdict against Madigan). Arroyo took $32,500 in bribes; Madigan was the beneficiary of multi-million-dollar schemes. But the Section 2-156 analysis is the same: each of the three nexus tests is satisfied, and forfeiture applies.

Q: Did Arroyo lose his pension contributions too?
A: The opinion addresses forfeiture of the pension annuity (the future stream of payments). Recovery of an employee's own contributions is governed by separate Pension Code provisions and is not addressed here.

Q: What is "honest services" wire fraud?
A: Wire fraud (18 U.S.C. § 1343) is a federal felony for using interstate wires to execute a scheme to defraud. Section 1346 expands "scheme to defraud" to include schemes "to deprive another of the intangible right of honest services." When a public official takes a bribe in exchange for official acts, the public is "deprived" of the honest services it was entitled to. After Skilling v. United States, 561 U.S. 358 (2010), honest-services prosecutions focus on bribery and kickback schemes.

Q: Did Arroyo's failure to disclose on his Statement of Economic Interests matter?
A: Yes. Article XIII, section 2, of the 1970 Illinois Constitution requires state officials to file an annual Statement of Economic Interests with the Secretary of State. Implementing legislation at 5 ILCS 420/4A-101(a) applies the requirement to legislators and candidates. Arroyo's false "N/A" answer concealing the Collage payments was central to the indictment's wire-fraud theory.

Q: What about the state senator Arroyo tried to recruit?
A: The opinion mentions the recruitment effort as part of the scheme. The state senator (referred to as "State Senator A" in the indictment) was Terry Link of the 30th District; he later cooperated with prosecutors. The recruitment scheme involved Arroyo offering Link monthly bribes disguised as consulting fees. The August and October 2019 payments are described in the indictment.

Q: Was the conviction final when this opinion issued?
A: Arroyo filed a notice of appeal on June 6, 2022, two weeks before the opinion. The opinion notes the pending appeal but explains that Section 2-156 forfeiture follows from conviction; reversal on appeal would change the analysis.

Background and statutory framework

Section 2-156

40 ILCS 5/2-156 is one of the parallel felony-forfeiture provisions in the Illinois Pension Code. Each retirement system (general assembly, judges, state employees, municipal employees, police, firefighters, teachers, and others) has substantially identical language: "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 or her service as a member."

The Operation Spotlight context

Arroyo was charged in October 2019 in the first major prosecution that grew out of Operation Spotlight, the federal investigation of public corruption in Illinois state government. That investigation later led to the ComEd Four trial (2023), the Madigan prosecution (2022-2025), and several other state-level prosecutions. The AG's pension-forfeiture opinions trace this arc: 21-002 (Wanzo, a non-Operation-Spotlight Secretary of State case in 2021), 22-001 (Arroyo, this opinion), and 25-001 (Madigan).

Statement of Economic Interests as the disclosure backbone

The Statement of Economic Interests is the public-facing disclosure required of every Illinois state official. The form asks officials to list entities doing business in the state from which they received income above $1,200. False answers concealing bribe income are independently prosecutable and can satisfy the materiality element of wire-fraud and honest-services charges. The Arroyo case is a textbook example.

Three nexus tests, applied to a representative

For a member of the General Assembly:

• But-for test (Devoney): A bribe paid in exchange for a vote is by definition only available to a person whose vote can be exchanged. But for Arroyo's seat in the House, the bribery scheme could not have happened.
• Material element / substantial factor (Bloom): Arroyo's office was the substantive object of the bribery; the bribes paid for the use of his official influence. The position was a material element and a substantial factor in the conduct.
• Causal connection (Goff): The conviction is "in some way connected" with his service, and indeed the offense conduct is his service, misused.

Each test is independently satisfied.

Citations and references

Statutes:
- 40 ILCS 5/2-156 (Illinois Pension Code, GARS felony forfeiture)
- 18 U.S.C. § 1343 (wire fraud)
- 18 U.S.C. § 1346 (honest services)
- 18 U.S.C. § 666 (federal program bribery)
- 5 ILCS 420/4A-101 (Statement of Economic Interests filing)

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/37b2682cda/2022%2022-001%20PENSIONS%20Felony%20Forfeiture%20of%20Pension%20Benefits.pdf

Original opinion text

OFFICE OF THE ATTORNEY GENERAL
STATE OF ILLINOIS

KWAME RAOUL
ATTORNEY GENERAL

June 21, 2022

FILE NO. 22-001

PENSIONS:
Felony Forfeiture
of Pension Benefits

Mr. Timothy Blair
Executive Secretary
General Assembly Retirement System
2101 South Veterans Parkway
P.O. Box 19255
Springfield, Illinois 62794-9255

Dear Mr. Blair:

I have your letter inquiring whether the charge to which former State Representative Luis Arroyo, a member of the General Assembly Retirement System (GARS), pled guilty is a "felony relating to or arising out of or in connection with his service as a member" as that phrase is used in section 2-156 of the Illinois Pension Code (the Pension Code) (40 ILCS 5/2-156 (West 2020)). For the reasons stated below, it is my opinion that Arroyo's felony conviction of the offense of fraud by wire, radio, or television (18 U.S.C. §§ 1343, 1346 (2012)) related to, arose out of, or was in connection with his official duties as a State Representative, thereby requiring the forfeiture of his pension benefits.

BACKGROUND

According to the records of the United States District Court for the Northern District of Illinois, on October 24, 2019, the United States filed a one-count criminal complaint against Arroyo. On October 1, 2020, a special grand jury returned an eight-count Superseding Indictment against Arroyo and a co-defendant. On November 3, 2021, Arroyo entered a "blind plea" of guilty to Count One of the Indictment for the offense of fraud by wire, radio, or television (18 U.S.C. §§ 1343, 1346 (2012)). On May 25, 2022, the court held a sentencing hearing. The court sentenced Arroyo to fifty-seven months of imprisonment and two years of supervised release, and ordered him to pay a monetary penalty of $100. The court also ordered Arroyo to forfeit funds in the amount of $32,500 that were obtained, directly or indirectly, as a result of his wire fraud violation. The offense of fraud by wire, radio, or television is a felony under federal law.

The Indictment, pursuant to which the conviction was entered, indicates that Arroyo and the co-defendant "knowingly devised, intended to devise, and participated in a scheme to defraud the people of Illinois of the intangible right to the honest services * * * through bribery and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises[.]" Specifically, the Indictment charges that between November 1, 2018, and October 1, 2019, the co-defendant paid bribes to Arroyo in the form of checks issued by Collage LLC (Collage), a company managed by the co-defendant, and made payable to Spartacus 3 LLC (Spartacus), a company controlled by Arroyo. In exchange for these payments, Arroyo: (a) agreed to vote for and promote legislation in the Illinois House of Representatives related to the sweepstakes industry; (b) promoted the enactment of legislation related to the sweepstakes industry by advising other members of the Illinois General Assembly to induce those people to sponsor and vote for such legislation; (c) promoted the enactment of legislation related to the sweepstakes industry by advising representatives of Illinois' executive branch to induce those individuals to support the enactment of legislation; and (d) spoke in favor of the legislation during proceedings in the Illinois House of Representatives, including during a committee hearing.

To conceal the aforementioned scheme, the Indictment further alleges that Arroyo caused to be filed a Statement of Economic Interests form with the Office of the Illinois Secretary of State that falsely stated "N/A" in response to the directive, "[l]ist the name of any entity doing business in the State of Illinois from which income in excess of $1,200 was derived during the preceding calendar year, other than for professional services[.]" Based on this scheme, Count One of the Indictment charges that on or about May 3, 2019, Arroyo and the co-defendant "knowingly caused to be transmitted by wire communication in interstate commerce certain writings, signs, signals, and sounds, namely, data relating to the negotiation of check number 2088 in the amount of $7,500 issued by Collage and made payable to Spartacus, which wire communication was routed across state lines[.]"

The Government's Sentencing Memorandum provides additional details regarding Arroyo's felonious scheme and the basis for the court's order of forfeiture. For example, the Government's Memorandum indicates that "[b]eginning on November 1, 2018, and continuing until October 1, 2019, which was the same month that Arroyo was charged by complaint, [the co-defendant] paid Arroyo a total of $32,500 in bribes through checks issued by Collage and made payable to Spartacus." Further, "[d]espite being required by law to file a Statement of Economic Interests that would disclose, among other things, income received during the prior year, Arroyo never disclosed that he or Spartacus had any relationship with or received any money from Collage." A number of officials confirmed that Arroyo began pushing for state legislation to legalize sweepstakes gaming machines beginning in the fall of 2018 and continuing into the spring and summer of 2019. Arroyo began advocating for sweepstakes interests at approximately the same time that the co-defendant first paid Arroyo's lobbying firm. In one instance, the co-defendant signed a check for Arroyo's lobbying firm the day after Arroyo publicly advocated for sweepstakes during a legislative committee hearing. After Arroyo's advocacy efforts failed, Arroyo and the co-defendant agreed to enlist State Senator A to promote the sweepstakes industry legislation during the fall 2019 veto session under a similar payment scheme. In his own words to State Senator A, "Arroyo said, 'I'm getting paid ... $2500 a month. And I've been looking to get a little bump from that because I've been really working my a** off.' In his own words, Arroyo tied the payments he received from [the co-defendant] to his efforts as an elected Representative in the General Assembly."

ANALYSIS

Section 2-156 of the Pension Code requires the forfeiture of retirement annuities and other pension benefits of a member of the GARS upon the member's 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 a member.

Arroyo became a member of the GARS as a result of his service as a member of the Illinois House of Representatives. 40 ILCS 5/2-101 et seq. (West 2020). Arroyo served as a State Representative from 2006 to 2019.

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 "relat[es] to or aris[es] out of or in connection with" service as a member is whether a nexus exists between the member'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).

Illinois courts have employed three alternative tests for evaluating whether the requisite nexus exists. A forfeiture of pension benefits occurs if the facts and circumstances establish that: (1) "but for" the fact that the pension claimant was a public official, he would not have been in a position to commit the felony in question (Devoney, 199 Ill. 2d at 423); (2) the pension claimant's service in public office "was a material element and a substantial factor" in bringing about the subsequent criminal offense (Bloom, 339 Ill. App. 3d at 815); or (3) the conviction is "in some way connected with the employment so that there is a causal connection" between the employment and the conviction (Goff, 305 Ill. App. 3d at 195).

Applying any of these tests, Arroyo's conviction satisfies the nexus requirement. But for his role as a State Representative, Arroyo would not have been in a position to accept bribes in exchange for his vote and influence on legislation related to the sweepstakes industry. Arroyo's status as a member of the Illinois House of Representatives uniquely positioned him to influence the legislative agenda and to use his position to enrich himself and his co-defendant. Arroyo's official position was a material element and a substantial factor in his criminal conduct: he agreed to vote for, promote, and speak in favor of sweepstakes legislation in the Illinois House in exchange for the bribes paid to his company. Arroyo "used and abused" his official status to perpetrate the scheme, and the conviction is plainly connected with his service in the General Assembly.

CONCLUSION

For the reasons stated above, it is my opinion that Arroyo's felony conviction of the offense of fraud by wire, radio, or television (18 U.S.C. §§ 1343, 1346 (2012)) related to, arose out of, and was in connection with his service as a member of the Illinois House of Representatives, thereby requiring the forfeiture of his pension benefits under section 2-156 of the Illinois Pension Code.

Sincerely,

KWAME RAOUL
ATTORNEY GENERAL