ILNews

RICO case against former East Chicago mayor nets $108M in damages

Back to TopCommentsE-mailPrintBookmark and Share


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

In issuing his 53-page decision in State of Indiana and City of East Chicago v. Robert A. Pastrick, et al., No. 3:04-CV-506, March 11, U.S. District Court 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 law regarding civil racketeering offenses.

But attorney experts specializing in racketeering law say that the recent ruling is one of first impression that's clearly a victory for the state and East Chicago, and it will be imitated nationally in cases targeting public corruption.

"We now know how much the corrupt administration cost the city, and I am confident that the litigation will be a precedent for other suits by other AG's," said G. Robert Blakely, a Notre Dame Law School professor who was an attorney on this case based on his experience as the nation's foremost expert on the Racketeer Influenced Corrupt Organizations Act. "To my knowledge, no other AG anywhere has successfully used federal RICO and his state RICO to sue a corrupt city administration and corrupt businesses to recover for the damages inflicted on the city."

The ruling comes in a 6-year-old case involving the decade-old "sidewalks-for-votes" scandal that helped end a Lake County titan's 33-year political career. The civil racketeering case went after the former mayor Robert Pastrick and his top aides for misusing $24 million in public money to pave sidewalks and driveways to gain votes in the 1999 Democratic primary.

While criminal cases ensnared most involved, former Attorney General Steve Carter in 2004 sued Pastrick and allies using the federal and state RICO statutes. Most defendants eventually settled, except for Pastrick, former aide James Fife III, and the now missing former city councilman Frank Kollintzas who almost pushed the matter to trial last year. But in days before that trial was to happen, Pastrick and Fife waived that right and the court entered a default judgment against them for running a corrupt enterprise in East Chicago. Judge Moody held a damages hearing in June, and he's been considering the damages amount and remedy since then.

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 $8.7 million in prejudgment interest, which is four years worth at an 8 percent interest rate. With treble damages that he determined was allowed through his interpretation of state and federal law, the total came to $108,007,584.33. The judge also found that six corporations, all found liable for the sidewalk scheme in a separate decision by U.S. District Court Judge Allen Sharp, are now jointly liable with Pastrick and his aides for chunks of the $108 million.

But as current AG Greg Zoeller has publicly explained in the past, this case wasn't as much about money as it was about weeding out public corruption and finding a remedy to provide transparency and confidence for those in East Chicago. On that front, the AG's Office didn't get the judge's support.

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 spots 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 those 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 wouldn't 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 about a forensic audit. "These core, intertwined due process issues prevent the court from ordering the remedy plaintiffs seek in this case."

Chicago attorney Howard Foster, who runs a two-person firm specializing in civil RICO cases, said the 7th Circuit Court of Appeals hasn't set precedent on various aspects of RICO law raised by the Indiana AG and so the judge's rulings were consistent with what other District Courts have done. He described this as an impressive victory for Indiana, and this was how both the federal and state RICO statutes were meant to be used.

In the days following the decision, the Attorney General's Office was still reviewing the judge's ruling and declined to comment about specifics or whether it might be appealed on any points, spokesman Bryan Corbin said. But Zoeller described the decision 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," he said in a statement.

The state will now focus on collecting that judgment, which defense attorney Michael Bosch described as being mostly uncollectable - last year he'd dismissed the state's damages request and mocked the AG about treble damages, saying the judge should award $1 in damages and triple that amount.

Corbin said a bill of costs will be filed this month, which will include the $581,038 total invoiced by Chicago law firm Perkins Coie that represented the state; attorney Patrick Collins there served as a special deputy attorney general on this case. The AG now can file its brief outlining attorney fees and costs associated with the case.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Ah yes... Echoes of 1963 as a ghostly George Wallace makes his stand at the Schoolhouse door. We now know about the stand of personal belief over service to all constituents at the Carter County Clerk door. The results are the same, bigotry unable to follow the directions of the courts and the courts win. Interesting to watch the personal belief take a back seat rather than resign from a perception of local power to make the statement.

  2. An oath of office, does it override the conscience? That is the defense of overall soldier who violates higher laws, isnt it? "I was just following orders" and "I swore an oath of loyalty to der Fuhrer" etc. So this is an interesting case of swearing a false oath and then knowing that it was wrong and doing the right thing. Maybe they should chop her head off too like the "king's good servant-- but God's first" like St Thomas More. ...... We wont hold our breath waiting for the aclu or other "civil liberterians" to come to her defense since they are all arrayed on the gay side, to a man or should I say to a man and womyn?

  3. Perhaps we should also convene a panel of independent anthropological experts to study the issues surrounding this little-known branch of human sacrifice?

  4. I'm going to court the beginning of Oct. 2015 to establish visitation and request my daughters visits while she is in jail. I raised my grandchild for the first two and half years. She was born out of wedlock and the father and his adopted mother wantwd her aborted, they went as far as sueing my daughter for abortion money back 5mo. After my grandchild was born. Now because of depression and drug abuse my daughter lost custody 2 and a half years ago. Everyting went wrong in court when i went for custody my lawyer was thrown out and a replacment could only stay 45 min. The judge would not allow a postponement. So the father won. Now he is aleinating me and my daughter. No matter the amount of time spent getting help for my daughter and her doing better he runs her in the ground to the point of suicide because he wants her to be in a relationship with him. It is a sick game of using my grandchild as a pawn to make my daughter suffer for not wanting to be with him. I became the intervener in the case when my daughter first got into trouble. Because of this they gave me her visitation. Im hoping to get it again there is questions of abuse on his part and I want to make sure my grandchild is doing alright. I really dont understand how the parents have rights to walk in and do whatever they want when the refuse to stand up and raise the child at first . Why should it take two and a half years to decide you want to raise your child.The father used me so he could finish college get a job and stop paying support by getting custody. Support he was paying my daughter that I never saw.

  5. Pence said when he ordered the investigation that Indiana residents should be troubled by the allegations after the video went viral. Planned Parenthood has asked the government s top health scientists at the National Institutes of Health to convene a panel of independent experts to study the issues surrounding the little-known branch of medicine.

ADVERTISEMENT