Ex-Chicago State finance chief settles whistleblower lawsuit for $1.3 million

Jan. 05--Already facing the prospect of owing nearly $5 million in an ongoing whistleblower case, Chicago State University has agreed to pay more than $1 million to end a separate lawsuit brought by another former high-ranking administrator.

The latest $1.3 million settlement marks the second time in recent years that the university has either lost or settled costly disputes by former employees who claimed they were fired after reporting alleged misconduct by the school's former president, Wayne Watson.

The university agreed to the settlement in late December as the case was nearing a Jan. 9 trial date, court records show. It was paid by the university's insurance carrier after the university met an unspecified deductible.

As part of the agreement, Glenn Meeks, the university's former chief financial officer, will receive $847,000 in back pay and other compensation. Meeks' attorneys will get $453,000. The payments are to be completed by next week, said Meeks' attorney, Dave Heilmann.

"We still believe Mr. Meeks should not have been terminated," Heilmann said. "A seven-figure settlement offer is substantial. We felt they finally came up to a number that was acceptable to Mr. Meeks so the parties could go their separate ways and move on."

The settlement is another stain on Watson's legacy and the reputation of Chicago State, which already faces rising damages in another whistleblower case. In that case, a jury awarded more than $3 million to former university attorney James Crowley, who alleged he was fired for reporting questionable contracts and refusing to withhold records pertaining to Watson's employment in response to a public records request.

The verdict, in 2014, was the first resulting from a whistleblower claim filed under the state ethics act. The Illinois Appellate Court upheld the decision last year and sent the case back to the trial for a final judgment on damages. There was a hearing Dec. 20, and the judge is expected to rule soon on the exact amount of money owed to Crowley.

With interest and additional fees, Crowley could be owed more than $5 million.

But in contrast with Meeks' settlement -- which attorneys said was paid by insurance -- the university's insurance carrier is arguing that it's not responsible for paying the damages owed to Crowley, according to a letter obtained by the Tribune.

The insurance underwriter, Illinois National Insurance Co., is arguing the university's policy does not cover claims stemming from a "fraudulent or dishonest act or a willful violation of any statute, rule or law," according to the letter, sent to Chicago State last year on behalf of the insurance company.

The jury, trial judge and appellate court determined that Chicago State leaders had "committed a number of willful and dishonest acts in an attempt to advantage themselves ..." and therefore "no (insurance) coverage is available," the letter states.

The insurance carrier is seeking nonbinding mediation with the university.

Crowley's attorney, Anthony Pinelli, criticized Chicago State's board of trustees for not holding Watson accountable, instead making him president emeritus after he stepped down last year.

"Nothing seems to have gotten through to them. ... Does it ever end the money they are willing to spend? Doesn't anyone say 'Enough is enough. We have to fix this,'" Pinelli said. "If this were a TV movie, you would probably change the channel. I never saw anything like this."

Crowley and Meeks alleged they were fired in violation of whistleblower protections for employees who disclose activities they believe violate the state's ethics act, a 2003 law that laid out guidelines for behavior by state employees.

A Chicago State spokeswoman did not respond to requests for comment but later issued a news release announcing the settlement. The university did not admit any liability and said it resolved the case to minimize costs and distractions at the school, which has been beset by financial woes and low enrollment.

Chicago State "met its (insurance) deductible," according to the university, but did not respond to questions asking about the amount of the deductible.

"CSU believes that many individuals faced unfair, public criticism as this case worked its way through the process, including our employees and the Board of Trustees," according to the statement. "The University and these individuals have handled the situation with integrity and patience."

In the recent settlement, Meeks, the former finance chief, accused Chicago State leaders of firing him in 2013 in retaliation for complaining of possible ethical violations by then-president Watson.

In his lawsuit, filed in March 2014, Meeks alleged he was fired after reporting concerns about Watson's personal relationship with an employee, who he alleged was hired and promoted after submitting a falsified resume. Meeks also said he complained about administrative salaries, rising legal expenses, and an increase in staff and expenses in the enrollment management department even as enrollment had been declining.

When the lawsuit was filed, Chicago State officials called Meeks "a disgruntled former employee" who was "given a list of the multiple valid reasons for his dismissal."

Cook County Court records show the two sides engaged in mediation in October and agreed to the $1.3 million settlement.

The parties continued to clash for several weeks, however, as the university demanded as a condition of the settlement that Meeks provide a sworn affidavit with the names of employees who provided him documents during the lawsuit.

During a deposition in September, Meeks acknowledged that current university employees had provided him with internal documents related to his case. School attorneys alleged that he had improperly obtained the records "outside of the discovery process," but Meeks' attorney argued the university should have turned over the documents and had violated court rules, according to court records.

As part of the settlement, Meeks agreed to provide a sworn affidavit with the names of employees who provided information.

Meeks declined to comment.

Chicago State still faces a third whistleblower lawsuit brought by former interim vice president of enrollment Lashondra Peebles, who was fired in June 2014. She alleges she was fired after refusing Watson's directive to file a sexual harassment claim against an outspoken professor, even though she said she was never harassed. She also alleged she was fired for refusing to backdate a contract.

She sued in March 2015. Months later, she was charged by Cook County prosecutors with numerous felonies for allegedly hiring her mother in a ghost payroll scheme and awarding a family friend an unauthorized consulting contract.

That case is pending.

drhodes@chicagotribune.com

jscohen@chicagotribune.com

Twitter @jodiscohen

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