EAST CHICAGO | Indiana Attorney General Greg Zoeller returned more than $331,000 to East Chicago on Thursday, collected from former Mayor Robert Pastrick and his co-defendants in the landmark civil prosecution racketeering lawsuit over the 1999 sidewalks-for-votes scheme.
The money is a partial payment toward the approximately $24 million in taxpayer money Pastrick and his associates “illegally squandered in the sidewalk paving scheme intended to influence the 1999 mayoral primary election,” Zoeller said during a news conference. Others at the news conference included current Mayor Anthony Copeland, former Attorney General Steve Carter and City Council President Lenny Franciski.
“This is a milestone in restoring the public’s trust in government,” Zoeller said. “It’s a new chapter in East Chicago’s history ... new opportunities and optimism.”
Copeland said the money will be used to upgrade parks throughout the city.
“Our parks are in dire need of new park equipment,” the mayor said. “The public goes to the parks. We’ll put the money in the parks so the greater good can be accomplished.”
The distribution includes $145,416 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 scheme, Zoeller said.
The attorney general distributed an additional $186,250 collected from settlements and judgments paid by Pastrick’s co-defendants. All were named in then-Attorney General Carter’s original lawsuit brought under the RICO, or federal Racketeer Influenced and Corrupt Organizations, statute.
“It’s not everything we would have wanted,” Zoeller said.
However, this concludes the state’s direct participation in this part of the case, and the judgment remains in effect.
The only way more money could be obtained would be “if one of the defendants won the lottery,” he said.
The lawsuit made legal history, because it was the first time the RICO statute had been used to prosecute government representatives, Carter and Zoeller said. The decision by the U.S. Bankruptcy Court to not exempt Pastrick’s assets from the federal court judgment in the RICO case also was historic, they said.
“The U.S. Bankruptcy Court ruled that fraud is nondischargeable,” Zoeller said, which means money obtained through fraud must be paid back, if possible, and may not be lumped together with debts that are rendered not collectible.
Zoeller credited the “patience and persistence” of the attorney general’s office, starting with Carter’s original pursuit of Pastrick and his cronies in 2004 after a State Board of Accounts audit. The auditors asked the attorney general's office to recover the $24 million drained from the city treasury to influence the 1999 election.
Representing Indiana and East Chicago, Carter filed suit in 2004 against the former mayor and 27 co-defendants in U.S. District Court in Hammond. The court ruled the state could recover $108 million.
During the next five years, the state reached civil settlements with many of the defendants. One defendant, former Councilman Frank Kollinztas, fled to Greece.
Money from the settlements was used to continue pursuing the case, including hiring outside legal help, bankruptcy experts and forensic auditors, Carter said.
“There was a conscious decision to expend resources to fix problems (in East Chicago),” he said, adding that Zoeller picked up the case and pursued it when elected attorney general.
“It sends a message that corruption will not be overlooked,” Carter said.
Zoeller also credited Copeland and the East Chicago City Council for instituting new ethical measures at all levels of government.
Those changes include ethics training for municipal employees through the city’s Shared Ethics Advisory Commission membership, stringent bid requirements, standardized accounting procedures and a nepotism law that exceeds what is required by the state, Copeland said.
“We’re moving from the darkness into the light,” the mayor said.