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Ex-mayor argues $108 million judgment can be discharged in bankruptcy

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The ex-East Chicago mayor hit with a $108 million racketeering judgment because of public corruption wants a federal bankruptcy court to dismiss a civil complaint against him that questions whether the judgment is dischargeable under bankruptcy code.

In a brief filed earlier this week, former mayor Robert Pastrick contends that the Indiana attorney general’s adverse action doesn’t prove that he acted willfully or maliciously as required to make the multi-million dollar judgment nondischargeable.

On March 25, the state agency filed a 22-page complaint against Pastrick in the U.S. Bankruptcy Court for the Northern District of Indiana, alleging that five provisions of the federal bankruptcy law exempt this debt from being eligible for discharge through bankruptcy. This came in response to the 2010 judgment against Pastrick and his former aids, who admitted their roles in a “sidewalk for votes” scheme that funneled $24 million in public money to pay for sidewalks and concrete paving in exchange for votes in the city’s 1999 primary election. The AG’s office has been trying to collect that money for the past year, but Pastrick in December filed for bankruptcy to avoid paying the amount.

In the civil complaint, the AG’s office contends that Pastrick’s theft, abuse of power while in office, and federal racketeering means the $108 million can’t be dismissed through bankruptcy proceedings. The five counts spell out the arguments that the debt shouldn’t be discharged because of Bankruptcy Code sections 523(a)(6), 523(a)(4), 523(a)(7), 523(a)(13), and 523(a)(2)(A).

But Pastrick argues that bankruptcy code requires his conduct have been “willful” or “malicious,” and that isn’t the case here.

“There is a clear distinction between an act that is intentional and an act that is intentional and ‘malicious,’” the brief says. “The Plaintiff’s response did not address this distinction and relies on the findings and suggestion that Defendant’s actions were ‘intentional.’”

Pastrick also argues that he didn’t receive any financial benefit from the alleged activities, and that’s a requirement under bankruptcy code in classifying the debt as nondischargeable. He also points out the judgment was compensatory as well as punitive, and that it doesn’t include any specific restitution order so the debt can be written off.

“The mere allegations or findings of morally repugnant activity does not guarantee that any civil judgment resulting therefrom would qualify as nondischargeable,” Pastrick’s brief says.

How the court decides this issue of dismissal could determine how the underlying bankruptcy case proceeds against Pastrick, and ultimately how the AG’s office is able to pursue collecting the $108 million judgment.

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  1. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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