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Zoeller details casino millions funneled to E. Chicago pols

October 22, 2014

A former Indiana Democratic Party chairman and a longtime Lake County political activist enriched themselves with millions of dollars in casino revenue, Indiana Attorney General Greg Zoeller announced Wednesday, closing the book on long-running litigation that resulted in a $154,042 settlement payment to the city of East Chicago.

The settlement also records the nearly $2 million paid from 1997-2008 to ex-Democratic Party Chairman Michael A. Pannos and nearly $1.9 million to Thomas Cappas. Both were allies of former East Chicago Mayor Robert Pastrick, whose administration crumbled amid corruption including a racketeering case in which Cappas and Pannos were ordered to pay $108 million in damages.

Cappas and Pannos were partners in East Chicago Second Century Inc., established as a for-profit entity that collected casino revenue that was to be used for the benefit of the community. But about $6 million instead went to the two principals and seven family members and associates, according to the AG’s office.

In coming months, the office plans to post online about 300,000 pages of the financial documents Second Century was required to disclose as a result of discovery in a lawsuit in Marion Superior Court. Litigation against Second Century dates to Zoeller’s predecessor, former Attorney General Steve Carter.

“It is a shame the Second Century defendants exploited a weakness in the local development agreement law and steered casino revenue to their own personal benefit with no transparency rather than to the benefit of the community, and a shame that the State ever approved this arrangement in 1996,” Zoeller said, noting subsequent legislation forbids the practice.

“My office vowed to pursue this lawsuit for as long as it took to provide the public an accounting of the money that was intended to uplift residents of East Chicago.  Now that we have succeeded in obtaining transparency, it is hoped that this sad chapter in East Chicago’s history can be closed and a new, more hopeful chapter can move forward,” he said.

Zoeller joined East Chicago Mayor Anthony Copeland in announcing that the $154,042 settlement payment. Copeland said the settlement funds would serve a crime-deterrent purpose in the city.

 “Now that the past has been laid to rest, let today’s guardians keep watch. We will use the settlement money to establish a motion detector light program called ‘Bright Lite’ to aid in deterring crime in our community,” he said.

This is the second such settlement payment by defendants the state has collected that the attorney general has turned over to the city.  In June 2013, Zoeller’s office conveyed to the city a similar $331,000 payment, the proceeds from combined settlements arising from a related lawsuit:  Zoeller’s civil racketeering case against former East Chicago Mayor Robert Pastrick, who was removed from office in 2004, and Pastrick’s co-defendants. Copeland announced in June 2013 that the city would use the RICO settlement funds for park equipment as part of improvements to East Chicago’s eight parks to benefit the public.

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