AG opposes East Chicago settlement terms

Back to TopE-mailPrintBookmark and Share

Indiana's Attorney General opposes a proposed settlement between the city of East Chicago and a developer regarding riverboat casino revenues because it would grant additional money to that developer at a time when the state is suing to open up the financial books.

East Chicago Mayor George Pabey announced Thursday he negotiated a settlement with East Chicago Second Century Inc. for all future riverboat casino revenues that would have otherwise been paid to Second Century to go directly to the city. East Chicago sued in 2005 to undo a local development agreement entered into by previous Mayor Robert Pastrick that gave a cut of casino money to the for-profit developer - approximately $1.5 million annually.

In 2007, the attorney general intervened, filing a counterclaim and cross-claim seeking imposition of a constructive trust for public benefit and an accounting of the money paid to Second Century. The trial court dismissed the AG's claims and the Indiana Court of Appeals affirmed. The Indiana Supreme Court last year reversed and remanded for further proceedings, allowing the case to proceed.

That led to the AG last summer requesting in a separate civil suit against former Mayor Pastrick that a federal judge, as part of an ongoing federal racketeering case, allow the state to look into the developer's finances and what has been given to officials in East Chicago. Last year, the nonprofit organization Foundations of East Chicago, which also received casino money and is a party to all this litigation, filed a motion to intervene in the federal case. U.S. Senior Judge James Moody hasn't issued a ruling yet in that case.

In a statement released Thursday, Attorney General Greg Zoeller said he opposed any result that would allow additional funds be given to Second Century, which has refused any public review of how it spent more than $16 million it received over 10 years. Zoeller is not involved in the settlement.

The issue for the attorney general is opening the for-profit developer's books and providing an accounting so that the public can see how the money has been spent.

"Forward-looking disclosure is not enough; there must be disclosure going back to the founding of Second Century, created by the Pastrick organization during the period that is subject of our RICO investigation," Zoeller said.

In addition to Second Century relinquishing its claims to future revenues paid from the riverboat, the proposed settlement allows for the city and Second Century to jointly petition the court to distribute funds - approximately $8 to 10 million - held in escrow since the beginning of the litigation. Of the escrowed funds, 54 percent would go to the city and 46 percent would go to Second Century. The settlement agreement will be submitted to the East Chicago Common Council on Monday for approval.

As a result of this litigation, the attorney general supports language in Senate Bill 405 in the General Assembly this session that would create transparency for local development agreement companies and LDA nonprofits that receive casino money. If passed, the bill would require either a for-profit or nonprofit LDA to publicly disclose to the state how it spends the money and who is awarded the funding. SB 405 is currently under consideration by the full House.


Sponsored by
Subscribe to Indiana Lawyer
  1. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  2. Paul Hartman of Burbank, Oh who is helping Sister Fuller with this Con Artist Kevin Bart McCarthy scares Sister Joseph Therese, Patricia Ann Fuller very much that McCarthy will try and hurt Patricia Ann Fuller and Paul Hartman of Burbank, Oh or any member of his family. Sister is very, very scared, (YES, I AM) This McCarthy guy is a real, real CON MAN and crook. I try to totall flatter Kevin Bart McCARTHY to keep him from hurting my best friends in this world which are Carolyn Rose and Paul Hartman. I Live in total fear of this man Kevin Bart McCarthy and try to praise him as a good man to keep us ALL from his bad deeds. This man could easy have some one cause us a very bad disability. You have to PRAISAE in order TO PROTECT yourself. He lies and makes up stories about people and then tries to steal if THEY OWN THRU THE COURTS A SPECIAL DEVOTION TO PROTECT, EX> Our Lady of America DEVOTION. EVERYONE who reads this, PLEASE BE CAREFUL of Kevin Bart McCarthy of Indianapolis, IN My Phone No. IS 419-435-3838.

  3. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  4. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  5. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.