EAST CHICAGO | This steel town's most blighted residents should be holding the house advantage at their glittering lakefront casino.
Ameristar Casino and Hotel and its previous owners have paid more than $6 million annually into community development funds meant to advance charitable and educational programs as well as renew the community's aging housing stock and infrastructure.
But tens of millions of dollars have been tied up the past four years in a court battle between Mayor George Pabey and two groups -- Foundations of East Chicago and Second Century -- created under former Mayor Robert Pastrick's administration that were supposed to carry out those social missions.
The Indiana Court of Appeals and Supreme Court recently issued rulings that, though celebrated as victories by East Chicago officials, likely will prolong the end of litigation for months more.
The Rev. Darnell Johnson, of the Twin City Ministerial Association of more than 15 local churches, has been demanding an immediate out-of-court settlement.
"The focus should be on food pantries, the heating assistance program, afterschool tutoring, public transportation, Healthy East Chicago assistance to seniors that could all go away if this decision is upheld in the Supreme Court. That would be very disheartening to us."
Pabey and city officials respond the Foundations of East Chicago and Second Century only benefited select churches and ministries while they will improve the whole city, opening larger stretches of the city's lakefront for new private development and rehabilitate the city's crumbling housing stock and sewer system.
Peter Rusthoven, an attorney for the Foundations of East Chicago, and J. Lee McNeely, an attorney for Second Century, said their client organizations were created in the late 1990s to keep millions of dollars out of the hands of City Hall's corruption-stained inhabitants.
McNeely said, "Somebody needs to keep an eye on what the city is doing with the tens of millions it is currently receiving and the additional money he (Pabey) hopes to receive."
Pabey and the Indiana attorney general's office, which is fighting to make Second Century disclose what its officials have done with $16 million in casino cash over the years, respond that the Foundations of East Chicago and Second Century never have been independent or efficient.
They argue Pastrick cronies helped create and run the Foundations of East Chicago from the start. A 2006 Times investigation indicated the Foundations of East Chicago paid its board of directors and staff $1.9 million in salaries, benefits, self-promoting publications as well as other administrative costs that accounted for a third of its entire 2004 income, despite having no need to raise income. It gave hundreds of educational and charitable grants and also banked millions of dollars now being fought over in court.
The attorney general's office said in a 2007 report, "The city of East Chicago has little to show -- 61 low-income apartments, 32 homes and a dozen townhouses built during the decade Second Century drew $16 million (of) the casino dollars." He said the private for-profit firm has paid its chief officers Thomas Cappas and Michael Pannos and their family members "enormous" fees.
McNeely said Second Century built more new development in the city than all other developers combined.
Indiana Attorney General Greg Zoeller recently told The Times that Second Century can settle with his office only one way. "It can do a preliminary public accounting ... a full airing. I'm never gong to give up on this thing," he said.
Zoeller's office will go on the offensive next month when its racketeering suit against Pastrick and former special assistants James Fife III and Timothy Raykovich go to trial in federal court.
