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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. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  2. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  3. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

  4. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  5. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

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