FROM THE ARCHIVES: Feds probing E.C. engineering department

EAST CHICAGO | City officials confirmed Tuesday that federal agents are investigating East Chicago's city engineering department.

But city spokesman Damian Rico said Mayor George Pabey did nothing wrong when he hired contractors and friends -- who also are East Chicago city workers -- to work on a house Pabey and his daughter Maria own in Gary's Miller neighborhood.

Agents did not interview Pabey, and they spoke only with engineering department employees, Rico said. The agents came during work hours without warrants or court orders, he said. Rico called the interviews "a bit disruptive."

"I know the city was very cooperative," Rico said.

Federal authorities would not comment on the matter Tuesday.

Pabey lives with his daughter on Hidalgo Lane in East Chicago, Rico said. George and Maria Pabey have stayed nights at the home in Gary, Rico said. Pabey and his daughter are listed in county property records as owners of the Miller home.

"It's basically used as an investment for summer recreation or use," Rico said. "They might have stayed there, but it's not their home."

Neighbors to the one-story red brick house in the semi-rural Miller neighborhood said they saw workers putting in a driveway during the summer, and the driveway and walkway appear to have been recently added. A Gary city car crawled past the house Tuesday, and two men parked and pointed at the house. One man identified himself as a building inspector.

Gary Building Department Director Benjamin Robinson said no one has applied recently for a construction permit at the house. A driveway installation likely would require a permit, Robinson said, because permits are required for projects that cost more than $300. But Robinson said he is not looking into any possible code violation at the house. Building inspectors would have investigated a code violation at the house if a neighbor had called the department while construction was happening, Robinson said.

"We'd have been out there," Robinson said.

Asked whether Pabey or his daughter obtained Gary city permits for work on the house, Rico said he thought it was the contractors' responsibility to get permits.

Meanwhile, Lake County Auditor Peggy Holinga Katona gave The Times a copy of a letter she sent to Pabey Tuesday. The letter refutes the idea that Pabey received a $45,000 homestead exemption for both the Miller home and his East Chicago home. Pabey bought the house in December 2007, and an exemption for the previous owner remained on the home's 2007-08 taxes, Katona said. Pabey never applied for the exemption, never benefitted from the exemption and won't receive the exemption on future tax bills, Katona said.

Rico said Pabey would not talk about the investigation Tuesday. Pabey "feels really good" about his cooperation with the investigation, Rico said.

A city official who spoke to The Times on condition of anonymity said it was "well known" that federal agents have been investigating the city. He said the investigation appears to point at Pabey.

"I'm assuming that this is all geared toward the leader of the City of East Chicago," the official said.