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AG wants disclosure of riverboat casino money

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Non-profit and for-profit companies that receive riverboat casino revenue through economic development agreements should have to disclose how they spend the money, the Indiana Attorney General told lawmakers at a legislative committee meeting on Monday.

At its third meeting of the year, the interim Gaming Study Committee met to discuss several issues relating to gambling in Indiana, including a topic that ties in directly with ongoing litigation in both state and federal courts. Where riverboat casinos operate, state law requires that a local development agreement be set up so a portion of casino revenue is set aside and directed to fund local economic development projects to boost tourism. But disclosure for how that money is spent isn't currently required.

Attorney General Greg Zoeller testified before the 11-person committee about his continued push to require public disclosure by any corporation receiving this revenue through a statutory agreement. Deputy Attorney General David Miller also appeared. The AG's support for the transparency stems from the case of East Chicago Second Century, in which a for-profit company received 0.75 percent of the revenue from the city's riverboat casino - or $16 million over 10 years. The 1995 agreement was put in place by former East Chicago Mayor Robert Pastrick, who is no longer in office.

New leadership in East Chicago canceled the Pastrick-era local development agreement, and the AG's office reports that approximately $6.3 million in revenue remained in escrow at the end of 2008. In the Pastrick case and the ongoing Second Century case in Marion Superior Court, the AG's office is trying to force open the books and impose a constructive trust over the corporation to create accountability.

Second Century got the case dismissed at the trial court and Indiana Court of Appeals levels, but in April the Indiana Supreme Court ruled in favor of the state and revived the case, sending it back to Marion Superior to decide whether Second Century must make a public disclosure of how it spent casino revenue. "Beyond asking the trial court to impose a constructive trust on the Second Century organization and reform its operation, we are trying to pry open the long-closed financial books to find out who benefited from the $16 million Second Century received," Zoeller said. "We are asking the trial court to do that with Second Century, and we are asking the legislature to require that same public disclosure wherever casinos have Local Development Agreements with outside entities, not just in East Chicago."

A disclosure provision was inserted into House Bill 1514 during the General Assembly's regular 2009 session, but it was removed during conference committee negotiations in the final days of the session last April. The committee didn't take a vote on Monday, but AG spokesman Bryan Corbin said Zoeller hopes to see the disclosure language introduced again during the upcoming session.

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