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Judge orders law firms to repay city $453,282

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A Merrillville attorney and three law firms must repay East Chicago a total $453,282 in legal fees they collected for defending former city officials in the Sidewalk Six scandal.

Lake Superior Judge John Pera on Wednesday issued a 10-page order in the case City of East Chicago and George Pabey v. Edwardo Maldonado, et al., No. 45D10-0503-PL-32, ruling that former city controller Edwardo Maldonado illegally paid four law firms that amount in 2004 for defending him and former city councilmen Frank Kollintzas and Joe De La Cruz against federal public corruption charges.

The judge ordered Merrillville practitioner Kevin Milner to repay $47,250; Valparaiso law firm Tsoutsouris & Bertig to repay $51,444; and Chicago law firms Cotsirilos Tighe & Streicker, and Mayer Brown Rowe & Maw to repay $63,923 and $290,665 respectively.

The foundation of this case filed five years ago dates back to 1999, when city officials illegally spent $25.5 million in public funds to repave sidewalks, curbs, and make other improvements in exchange for re-election votes favoring former East Chicago Mayor Robert Pastrick and his allies. That led to the federal criminal convictions of Maldonado, Kollintzas, and De La Cruz in 2004 for misappropriating public money, as well as a civil racketeering suit that resulted in a $108 million judgment against Pastrick and two supporters.

Following the verdict, Maldonado pleaded guilty in federal court that making the payments was a crime and he was ordered to pay $453,282 in restitution; but that money hasn’t been collected as he remains incarcerated until 2014. Kollintzas disappeared prior to his sentencing in 2005 and is believed to be in Greece, while De La Cruz has only recently been released from prison.

On this case, Judge Pera noted that the issue before him was: “Given the clear illegality of the payments, is it appropriate to require those receiving them to give the money back to the City? The city is silent as to any duty of attorneys retained by accused officials to return fees that the city may have paid, and is further silent as to any recourse the City might have against attorneys in such event.”

The judge noted that the Indiana General Assembly hasn’t specifically spoken on this issue, but that he can turn to common law for guidance. He relied on the current draft of the Restatement (Third) of Restitution, as well as caselaw dating back more than a century from inside and outside Indiana.

But Judge Pera wrote that the lawyers who accepted the money from Maldonado “almost before the ink was dry on a U.S. District Court jury verdict” should have realized a city ordinance forbid the payments once the officials were convicted of wrongdoing.

“Their suspicion should have been excited, by appearance and circumstances, that Maldonado was committing a breach of his fiduciary duty as agent for the City,” Judge Pera wrote. “Despite this knowledge, they accepted the payments when they should have refused them. Having notice of the circumstances in which the payments were made, the Attorney Defendants cannot claim protection as innocent third-party creditors.”
 

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  1. The $320,000 is the amount the school spent in litigating two lawsuits: One to release the report involving John Trimble (as noted in the story above) and one defending the discrimination lawsuit. The story above does not mention the amount spent to defend the discrimination suit, that's why the numbers don't match. Thanks for reading.

  2. $160k? Yesterday the figure was $320k. Which is it Indiana Lawyer. And even more interesting, which well connected law firm got the (I am guessing) $320k, six time was the fired chancellor received. LOL. (From yesterday's story, which I guess we were expected to forget overnight ... "According to records obtained by the Journal & Courier, Purdue spent $161,812, beginning in July 2012, in a state open records lawsuit and $168,312, beginning in April 2013, for defense in a federal lawsuit. Much of those fees were spent battling court orders to release an independent investigation by attorney John Trimble that found Purdue could have handled the forced retirement better")

  3. The numbers are harsh; 66 - 24 in the House, 40 - 10 in the Senate. And it is an idea pushed by the Democrats. Dead end? Ummm not necessarily. Just need to go big rather than go home. Nuclear option. Give it to the federal courts, the federal courts will ram this down our throats. Like that other invented right of the modern age, feticide. Rights too precious to be held up by 2000 years of civilization hang in the balance. Onward!

  4. I'm currently seeing someone who has a charge of child pornography possession, he didn't know he had it because it was attached to a music video file he downloaded when he was 19/20 yrs old and fought it for years until he couldn't handle it and plead guilty of possession. He's been convicted in Illinois and now lives in Indiana. Wouldn't it be better to give them a chance to prove to the community and their families that they pose no threat? He's so young and now because he was being a kid and downloaded music at a younger age, he has to pay for it the rest of his life? It's unfair, he can't live a normal life, and has to live in fear of what people can say and do to him because of something that happened 10 years ago? No one deserves that, and no one deserves to be labeled for one mistake, he got labeled even though there was no intent to obtain and use the said content. It makes me so sad to see someone I love go through this and it makes me holds me back a lot because I don't know how people around me will accept him...second chances should be given to those under the age of 21 at least so they can be given a chance to live a normal life as a productive member of society.

  5. It's just an ill considered remark. The Sup Ct is inherently political, as it is a core part of government, and Marbury V Madison guaranteed that it would become ever more so Supremely thus. So her remark is meaningless and she just should have not made it.... what she could have said is that Congress is a bunch of lazys and cowards who wont do their jobs so the hard work of making laws clear, oftentimes stops with the Sups sorting things out that could have been resolved by more competent legislation. That would have been a more worthwhile remark and maybe would have had some relevance to what voters do, since voters cant affect who gets appointed to the supremely un-democratic art III courts.

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