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. Hello everyone am precious from the united state of America am here to testify in the name of this great man who has brought back happiness into my family after my lover Chris left me for 3years for another woman,i really loved Chris because he was my first love i tried everything within my power to get Chris back to my life but people i met just kept on scamming me and lying to me,Then normally on Saturdays i do go out to make my hair and get some stuff,Then i had people discussing at the saloon if they do listen to there radio well,That there is a program (how i got back my ex)And started talking much about Dr EDDY how this man has helped lots of people in bringing back there lover,So immediately i went close to those ladies i met at the saloon and i explained things to them they said i should try and contact Dr EDDY that he has been the talk of the town and people are really contacting him for help immediately we searched on the internet and read great things about Dr EDDY i now got all Dr EDDY contact instantly at the saloon i gave Dr EDDY a call and i shared my problem with him he just told me not to worry that i should just be happy,He just told me to send him some few details which i did,And then he got back to me that everything would be okay within 36hours i was so happy then Dr EDDY did his work and he did not fail me,My lover Chris came to me in tears and apologized to me for leaving me in deep pain for good 3years,So he decided to prove that he will never leave me for any reason he made me had access to his account and made me his next of kin on all his will,Now the most perfect thing is that he can't spend a minute without seeing me or calling me,Am so grateful to Dr EDDY for bringing back the happiness which i lack for years,Please contact Dr EDDY for help he is a trustworthy man in email is dreddyspiritualtemple@gmail.com or you can call him or whatsapp him with this number...+23408160830324 (1)If you want your ex back. (2) if you always have bad dreams. (3)You want to be promoted in your office. (4)You want women/men to run after you. (5)If you want a child. (6)[You want to be rich. (7)You want to tie your husband/wife to be yours forever. (8)If you need financial assistance. (9)If you want to stop your Divorce. 10)Help bringing people out of prison. (11)Marriage Spells (12)Miracle Spells (13)Beauty Spells (14)PROPHECY CHARM (15)Attraction Spells (16)Evil Eye Spells. (17)Kissing Spell (18)Remove Sickness Spells. (19)ELECTION WINNING SPELLS. (20)SUCCESS IN EXAMS SPELLS. (21) Charm to get who to love you. CONTACT:dreddyspiritualtemple@gmail.com

  2. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  3. MELISA EVA VALUE INVESTMENT Greetings to you from Melisa Eva Value Investment. We offer Business and Personal loans, it is quick and easy and hence can be availed without any hassle. We do not ask for any collateral or guarantors while approving these loans and hence these loans require minimum documentation. We offer great and competitive interest rates of 2% which do not weigh you down too much. These loans have a comfortable pay-back period. Apply today by contacting us on E-mail: melisaeva9@gmail.com WE DO NOT ASK FOR AN UPFRONT FEE. BEWARE OF SCAMMERS AND ONLINE FRAUD.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

ADVERTISEMENT