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AG objects to East Chicago settlement

April 12, 2010

The Indiana Attorney General has filed an objection to a City of East Chicago deal with Second Century, a for-profit company that has received casino money, that would settle a lawsuit between the parties.

Attorney General Greg Zoeller took the legal action Friday to prevent the settlement between East Chicago administration and Second Century Inc. from taking effect. Mayor George Pabey wants to settle the lawsuit - in which the AG is also a party - with Second Century that would require the for-profit company to account for $16 million in casino revenue it's received from the East Chicago riverboat casino since the company was created during former Mayor Robert Pastrick's administration. Nearly $8 million is currently in an escrow account. Second Century hasn't divulged how the money has been used.

The settlement would release the money in escrow, with 54 percent going to city administration and 46 percent to Second Century's owners. It wouldn't include accounting of casino revenue that has been spent so far nor any transparency in the future.

East Chicago City Council rejected the settlement last month, but the Pabey administration and Second Century jointly filed an agreed stipulation of dismissal with prejudice of the lawsuit April 6 in Marion Superior Court, purporting to dismiss the city's claims without the council's approval.

The court granted East Chicago and Second Century's stipulation of dismissal with prejudice. Zoeller objects to the settlement because as a plaintiff in the suit, the attorney general's office wasn't consulted about the settlement and does not agree with it. He claims the dismissal will allow the escrow funds to be distributed to Second Century, which would severely prejudice the claims that form the basis of the AG's action.

The court has yet to rule on the attorney general's motions.

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