Attorney General Zoeller, Mayor Copeland
Indiana Attorney General Greg Zoeller and East Chicago Mayor Anthony Copeland held a news conference at the mayor's office this morning to release an update on the Indiana Attorney General's civil prosecution of a racketeering lawsuit filed nearly a decade ago. Zoeller today turned over to the City of East Chicago over 331-thousand dollars, collected from former longtime Mayor Robert Pastrick and his co-defendants, Zoeller saying today's conclusion of this lawsuit regarding the so-called "sidewalks for votes" scheme marked 'a milestone in restoring public trust'. Pastrick served as mayor of East Chicago for more than thirty years.
Here is more information from today's news release from the Indiana Attorney General's office:
The distribution to the City of East Chicago facilitated by the Attorney General includes $145,416.70, the amount liquidated from Pastrick after the U.S. Bankruptcy Court ruled March 25 that his assets were not exempt from a separate federal court judgment in the civil racketeering case.
Zoeller also distributed to the City $186,250, the amount remaining from settlements and judgments paid by Pastrick’s co-defendants who were named in the Attorney General’s original lawsuit brought under RICO, the federal Racketeer Influenced Corrupt Organizations statute.
Zoelle said the money turned over to the city today was a partial payment toward the approximately $24 million squandered in the sidewalk paving scheme intended to influence the 1999 mayoral primary election. Zoeller announced the distribution today with current Mayor Anthony Copeland.
Starting with a State Board of Accounts audit that asked the Attorney General’s Office to recover the $24 million, then-Attorney General Steve Carter in 2004 filed suit against Pastrick and co-defendants in U.S. District Court under RICO seeking repayment and treble damages. The same year, Pastrick was defeated in a special election ordered by the Indiana Supreme Court when it found the 2003 mayoral election had been tainted by fraud. (It was through the intervention of the Attorney General’s Office in challenging the 2003 election that the results were overturned and a special election ordered.)
In the RICO lawsuit, a federal district court in June 2009 entered a judgment against Pastrick on every racketeering count the State alleged. The judgment was the first time a U.S. court had found that a municipal government – the Pastrick administration – was a corrupt enterprise under federal racketeering law. In March 2010, U.S. District Court Judge James Moody ordered a treble damages award of $108 million against Pastrick. After Attorney General Zoeller started collection efforts through Rubin & Levin, a collection law firm, Pastrick filed a Chapter 7 bankruptcy petition to avoid consequences of the judgment. Initially the ex-mayor claimed the judgment could be discharged, or avoided, through bankruptcy.
The State, represented by Attorney General Zoeller’s office, objected, contending Pastrick’s civil judgment could not be legally discharged through bankruptcy due to the underlying theft and statutory penalties imposed. The State filed a motion for partial summary judgment in U.S. Bankruptcy Court and ultimately, Pastrick conceded: On August 16, 2012, Pastrick filed an amended answer, admitting liability on one of the counts the State alleged – that the debt is not dischargeable – and consenting to an entry of judgment for the full amount. On March 25, the U.S. Bankruptcy Court in South Bend ruled in the State’s favor and found that Pastrick can’t use bankruptcy to avoid the judgment.
The ruling by Judge Harry C. Dees marked the end of the State’s adversary proceeding in U.S. Bankruptcy Court. In the remaining case, under the court’s supervision, the bankruptcy trustee already had collected and sold for payment what portion remained of Pastrick’s assets that legally were considered non-exempt. The City of East Chicago and the State of Indiana were the only creditors. The State received the trustee’s distribution of $145,416.70 and Zoeller said the payment was turned over entirely to the city treasury, under the new management of current Mayor Copeland.
In litigating the original RICO suit, the Attorney General’s Office previously obtained judgments against or settlements with co-defendants of Pastrick who were political associates or contractors who benefited from Pastrick’s “sidewalks for votes” scheme. Zoeller also turned over the remaining unallocated funds paid by those co-defendants, $186,250 after legal expenses, to the City.