Sergeant accused of stealing from police fund

November 20, 2009 (CHICAGO) (WLS) -- A Chicago police sergeant is facing criminal charges after allegedly embezzling more than $600,000.

Prosecutors said he used the money to gamble and buy a house among other things.

"We have arrested the Bernie Madoff of the sergeant's union," said Chicago Police Superintendent Jody Weis.

Chicago Police Sergeant, John "J" Pallohusky, was arrested for allegedly stealing up to $600,000 from the police union he represented.

As the current president of the Chicago Police Sergeants' Association, investigators accuse Pallohusky of embezzling more than $600,000 over the last few years.

The joint investigation by the CPD and the Cook County State's Attorney began last month after a local bank issued a Suspicious Activity Report or SAR to authorities about potentially illegal activity involving the Area 4 police sergeant.

"The SAR went to the Chicago Police Department and obviously given the nature of the individual listed in it went to Internal Affairs and was immediately referred to us," said Jack Blakey, Special Prosecutions Bureau Chief, Cook County State's Attorney Office.

The 53-year-old Pallohusky faces felony charges of theft in excess of $100,000 and money laundering.

Prosecutors say he hatched a scheme to steal money from the sergeant's union by simply writing checks from its bank accounts to his own personal bank accounts.

"Palluhusky would then launder the proceeds of the thefts through his personal credit card and bank accounts and use the funds for personal purposes," said Anita Alvarez, Cook County State's Attorney.

According to court documents, he used the money to pay for trips to Las Vegas, buy a home in Chicago's upscale Sanuganash neighborhood, fund an Ameritrade account, lavish dinners and stays at well known downtown hotels and restaurants.

Friday afternoon, members of the sergeant's union declined comment as did union officials. Pallohusky was in the headlines last month when the sergeant's association voted not to accept a new 5-year contract that could have frozen sergeants pay through 2012.

Pallohusky first joined the Chicago police force in 1988 and was promoted to sergeant in 2000. As the investigation continues authorities plan to seize both of his homes, more than a dozen bank or brokerage accounts, his car, and the contents of a safe deposit box.

John "J" Pallohusky is being held on a no-bail warrant.

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