Conflict of interest with Epperson and police pension fund?

A question about conflicts of interest involving Rockford Police Relief Association’s investments has been raised. RBC Dain Rauscher Broker Rita Pirrello Epperson—wife of new Rockford Chief of Police Chet Epperson—is one of the Association’s securities managers.

“I feel really uncomfortable commenting about business that she’s involved in,” Epperson said.

Pirrello Epperson, according to Association Treasurer Rich Cunningham, told members at an annual meeting that her involvement presented no conflict of interest, since Epperson wouldn’t benefit until after he retired. Cunningham said Pirrello Epperson was responding to a retiree’s question who was in the meeting that night.

She said April 10—after her husband’s selection was announced at a press conference—she had resigned as manager of the account. Pirrello Epperson said her boss submitted a letter to the Association this morning. But she still stressed her involvement posed no conflict of interest.

Western Illinois University Criminologist Michael Hazlett said the reality isn’t dire. “It’s not a major conflict of interest,” Hazlett said, adding, “it’s one of those gray areas.” But he said that doesn’t mean it’s necessarily kosher, “It could be seen by some as improprietous.”

University of Illinois Police Training Institute Police Trainer Cora Beem said a first glance at the situation, leaves the same impression.

But because it’s a private organization, Beem said she didn’t feel there was a problem with Pirrello Epperson’s involvement.

“I don’t really think that there’s a conflict of interest,” she said.

According to Beem, the Police Relief Association is a private organization similar to clubs immigrants have created to offer financial assistance to each other.

But, she said, even though the association is private, its actions can be publicly questioned.

“(It) all falls back on the community. Does the community have a problem with that,” Beem said.

If the commu nity does have a problem with that, it’s something the chief should deal with.

Association President Pat Hoey said Deputy Chief Epperson had nothing to do with selecting Dain Rauscher as the organization’s new investment firm.

Hoey said the decision was made solely by the board of directors. He noted Epperson isn’t a board member.

In reference to whether Cunningham had been consulted, Hoey reiterated the decision required support of all those on the board.

“He’s only one voice on the board,” he said.

But Hoey said Cunningham agreed to the move. According to Hoey, Cunningham was among the Association officers who signed the necessary documents to move its investments from Smith Barney to Dain Rauscher in 2005.

Smith Barney Broker Bob Pressman refused to comment about his former clients.

“I’ll stop you right now. That’s private information. Thank you,” Pressman said.

According to an Association source, the organization received an anonymous gift of $2.5 million about eight years ago.

The bequest has been invested, and the interest has been divided among retirees to help offset their insurance costs, Cunningham said. According to Cunningham, retirees currently pay $1,200 a month for family insurance coverage.

Hoey said Bank One first managed the investments. Cunningham said the Association stayed with Bank One for two years, before moving to Smith Barney.

The investment was transferred to RBC Dain Rauscher, after annual review of investment’s performance. Cunningham said the company offered the Association a more economical deal. Switching to the new firm yielded a good return—about $100,000—last year.

From the April 12-18, 2006, issue

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