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Settlement resolves casino money cases

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Indiana Lawyer Rehearing

The six-year casino revenue litigation that sparked multiple lawsuits statewide, went to Indiana’s appellate courts multiple times, and led to legislative initiatives is coming to a close.

Under an executed settlement agreement, most of the litigation involving how East Chicago and various entities used the casino money will be resolved. East Chicago will receive $11.7 million originally designated for the for-profit East Chicago Second Century Inc. – which is now being dissolved. Payments to Second Century were halted by the Indiana Gaming Commission in 2006 after an investigation found the corporation was spending its small percentage of casino revenue on non-economic development, which went against the local development agreement enacted in the 1990s and was at the heart of this litigation.

Now, the 31 city properties that Second City owns will be transferred to the nonprofit Foundations of East Chicago, according to the settlement. The Foundations will receive $20 million, which is its share of the 2 percent of casino revenues under the 1994 Local Development Agreement. Those payments had been put on hold in 2007 after Foundations filed a lawsuit challenging the legitimacy of that deal.

A new local development agreement enacted in June following a settlement in that suit gives both the city and Foundations a percentage of the casino revenues to be spent on economic development, infrastructure, or public safety.

Second Century attorney J. Lee McNeely will receive $1.2 million for his years of work representing the entity, the agreement states.

According to the settlement, a total of five pending lawsuits will be resolved – Foundations v. East Chicago, No. 9D13-0705-PL-019348; Second Century v. Resorts, No. 49D01-0504-PL-014394; Second Century v. Indiana Gaming Commission, et al, No. 49D01-0606-CC-025440; Second Century v. Resorts, No. 49D01-0706-PL-022673; and City of East Chicago v. Indiana Gaming Commission, No. 49D05-1106-PL-022283.

In the past two years, the lines of litigation have gone up to the Court of Appeals several times – including two pending appeals – and the Indiana Supreme Court has issued three decisions delving into these local development agreement and casino-revenue related issues - Zoeller v. Second Century in April 13, 2009, City of East Chicago v. Second Century in June 2009, and Foundations of East Chicago v. East Chicago and State in May 2010.

With this settlement, the only outstanding claim will be one brought by the Indiana attorney general. The AG praised the agreement and said all the blame for the years of court battles fall onto former East Chicago Mayor Robert Pastrick and his administration for allowing economic development money to be paid to the for-profit Second Century. This litigation is not directly connected to the federal civil racketeering suit against Pastrick that last year resulted in a $108 million judgment against the former mayor and his top allies, but how the casino revenue agreements and how that money was spent became a part of those court arguments and led the AG to push for legislation seeking more transparency in how local development agreements are reached.

Rehearing "Second Century suit can proceed" IL Nov. 10-23, 2010

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  2. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  3. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  4. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  5. 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.

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