Embezzlement allegations involving Lake County Prosecutor Bernard Carter's niece now will be handled by the federal government.
Virlissa Crenshaw, Carter's niece through marriage, used her position as a Merrillville court clerk to pocket about $310,000 from the town court between 2006 and 2011, according to a State Board of Accounts audit.
Carter did not return calls or emails for comment on his niece's situation as of 6 p.m. Monday. Representatives from his office said they did not have an update on the case. Carter recused himself from the investigation in June 2011, after Crenshaw was fired that April.
LaPorte County Prosecutor Bob Szilagyi, who was appointed as a special prosecutor, said there was an agreement the U.S. attorney's office would prosecute the case — which was why his office had not brought forth charges.
"If the U.S. attorney's office is going to take over the case, we're going to let them," Szilagyi said. "I don't like to duplicate efforts."
The Indiana attorney general's office filed a state civil suit against Crenshaw in October in an attempt to collect the hundreds of thousands of dollars she is accused of stealing. But those proceedings have stalled because Crenshaw recently filed for bankruptcy — for the fourth time.
Court records show Crenshaw filed for bankruptcy once in 1999 and twice in 2004. In January, she and her husband, Raymond Edward Crenshaw, filed again. The East Chicago couple are claiming more than $117,000 in liabilities, listing creditors ranging from Verizon to St. Catherine Hospital.
Court records filed in February list Crenshaw as unemployed and her husband as making about $3,400 a month working in maintenance for the School City of East Chicago. The couple's home — which Carter sold to his nephew's family about five years ago — was valued at about $40,000 without an exemption deduction, according to the bankruptcy filings.
Bryan Corbin, public information officer for the attorney general's office, said the state's civil case has been placed on temporary hold because of the bankruptcy filing. Last month, his office filed a complaint in bankruptcy court arguing she still is obligated to repay the money she allegedly siphoned from Merrillville Town Court.
"The attorney general's office diligently pursues such lawsuits to recover public funds that have been misappropriated and to reimburse the public treasury," Corbin said.
It was not clear Monday whether Crenshaw was going to try to have the alleged town court debt discharged under bankruptcy. Crenshaw's bankruptcy attorney, Seth Buitendorp, did not respond to calls or emails for comment. According to his automatic email response, he was out of the office at a seminar.
A number listed for Crenshaw had been disconnected.