ILNews

Judge orders law firms to repay city $453,282

Back to TopE-mailPrintBookmark and Share

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.”
 

ADVERTISEMENT

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Im very happy for you, getting ready to go down that dirt road myself, and im praying for the same outcome, because it IS sometimes in the childs best interest to have visitation with grandparents. Thanks for sharing, needed to hear some positive posts for once.

  2. Been there 4 months with 1 paycheck what can i do

  3. our hoa has not communicated any thing that takes place in their "executive meetings" not executive session. They make decisions in these meetings, do not have an agenda, do not notify association memebers and do not keep general meetings minutes. They do not communicate info of any kind to the member, except annual meeting, nobody attends or votes because they think the board is self serving. They keep a deposit fee from club house rental for inspection after someone uses it, there is no inspection I know becausee I rented it, they did not disclose to members that board memebers would be keeping this money, I know it is only 10 dollars but still it is not their money, they hire from within the board for paid positions, no advertising and no request for bids from anyone else, I atteended last annual meeting, went into executive session to elect officers in that session the president brought up the motion to give the secretary a raise of course they all agreed they hired her in, then the minutes stated that a diffeerent board member motioned to give this raise. This board is very clickish and has done things anyway they pleased for over 5 years, what recourse to members have to make changes in the boards conduct

  4. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  5. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

ADVERTISEMENT