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Racketeering case nets $108 million in damages

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A federal judge has ordered an ex-mayor and top allies to pay more than $108 million in damages on a civil racketeering case, but in doing so he's rejected the Indiana Attorney General's most novel and far-reaching legal arguments centered on public corruption in East Chicago.

In issuing his 53-page decision late Thursday afternoon, U.S. Senior Judge James Moody criticized the state's top attorney for failing to flush out legal arguments or provide enough rationale, trying to basically bypass due process in targeting non-parties, and going beyond the scope of federal and state Racketeer Influenced Corrupt Organizations (RICO) statutes.

The ruling comes in State of Indiana and City of East Chicago v. Robert A. Pastrick, et al, No. 3:04-CV-506, a 6-year-old case that AG Greg Zoeller inherited when he took office and involves the decade-old "sidewalks-for-votes" scandal that helped bring down a Lake County political titan. The civil racketeering case went after former mayor Robert Pastrick, and his top aides James Fife III and missing councilman Frank Kollintzas, for misusing $24 million in public money to pave sidewalks and driveways to gain votes in the 1999 Democratic primary.

In assessing the damages, Judge Moody counted the $27.3 million originally totaled from the sidewalks-for-votes scheme - $24 million plus legal fees and other financial costs - and added on $8.7 million in prejudgment interest, which is four years worth at an 8 percent interest rate. With treble damages that he determined were allowed through his interpretation of state and federal law, the total came to $108,007,584.33.

But in the legal points the AG made beyond the misused public money, Judge Moody rejected those proposed remedies and essentially told the state agency it was overstepping its authority. Most of the second-half of his order focuses on this, pointing out in multiple stops that the AG has failed to offer authority or missed the point of caselaw.

Judge Moody determined that the city couldn't recover salary or compensation from Pastrick or the aides because that isn't allowed by the civil RICO statute, that plaintiffs couldn't recover money paid to Fife's consulting firms, and that the court didn't have the authority to issue an injunction banning the defendants from holding any public office anywhere in the U.S. He also admonished the AG for trying to open up the finances of for-profit and non-profit organizations - non-parties - that received casino money and provided some of that for local development projects. The AG had offered possible remedies the court might impose, such as civil forfeiture, a state-ordered "forensic audit" of non-party organizations, and having the court serve as a receiver if any money might be recouped from them.

"The obvious and most critical problem with plaintiffs' request is that it cannot be reconciled with principles of due process," Judge Moody wrote, relating to one of the AG's proposed remedies - a forensic audit. "These core, intertwined due process issues prevent the court from ordering the remedy plaintiffs seek in this case."

Zoeller wasn't available for comment by Indiana Lawyer deadline about the legal aspects of the judge's decision, but his office released a statement describing this as a victory for the state.

"I am enormously pleased that the federal judge awarded triple damages against former Mayor Pastrick and the other remaining defendants as a symbol of how brazen and shameless the public corruption was in the municipal government of East Chicago during the Pastrick regime," Zoeller said in the statement.

The statement says the AG will now dedicate all necessary efforts to collect that judgment, which attorneys involved say is largely uncollectable because of the amount and the defendants' little money available to put toward it. The AG's office now can file its brief outlining attorney fees and costs associated with the case.

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  1. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  2. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  3. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  4. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  5. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

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