The East Chicago Housing Authority built the West Calumet Housing Complex in the early 1970s with little fanfare, as the authority’s director quietly took more than $100,000 in kickbacks for helping to steer various contracts related to the project to friends and associates, the director later testified.
One of the alleged bribes was for the demolition of a shuttered lead factory at the site, but it’s unclear from the many documents The Times reviewed whether former East Chicago Housing Authority Executive Director Benjamin Lesniak Jr. and other officials understood the health risks associated with the project.
What is clear is that city officials needed to build more public housing to keep millions of dollars in federal urban renewal money flowing into East Chicago, and industrial sites were not off limits.
Data released last summer showing lead concentrations of up to 237 times the Environmental Protection Agency’s allowable limit for residential use in the soil at the complex have raised serious questions about why the complex was built at all on the former Anaconda factory site at East 151st Street and McCook Avenue. More than 1,000 residents at the complex, including some 680 children, have been ordered to relocate.
The future also remains uncertain for the hundreds of residents who own homes in the middle and eastern parts of the Calumet neighborhood, many of whom face health problems and the possibility of falling property values.
The EPA last summer began a cleanup in those sections of the neighborhood, which were built in the shadow of industries that started operations as long as 100 years ago.
$126,000 in bribes alleged
John B. Nicosia ranked urban renewal among his top priorities during his 1963 campaign for mayor, but by 1969 — after criticizing the slow pace of redevelopment — his administration ended a 15-year relationship with a nonprofit foundation established to oversee the program.
The nonprofit Purdue-Calumet Development Foundation continued working on housing plans after the split, but the city charted a new course.
Part of that course, with regard to construction of public housing, was fraught with corruption, Lesniak testified at the 1976 trial of West Calumet Housing Complex builders Lawrence Bursten and Solomon Seidel.
Lesniak first discussed specific payoff amounts for the West Calumet Housing Complex contract with the East Chicago Development Corp. in December 1969. Bursten was a partner in the company at the time, and Seidel became a partner in 1970, records show.
Lesniak testified that Nicosia in December 1969 arranged for a $60,000 kickback from the builders, and asked Lesniak to act as a conduit for the payoff. Nicosia met the builders through a Milwaukee businessman involved in urban renewal.
After discussing the $60,000 payoff with then-City Attorney Jay Given, Lesniak and Given agreed Lesniak should go back to the builders to ask for an additional $40,000, according to a trial transcript. Given urged Lesniak to seek the additional money, because Given feared Nicosia wouldn’t give him his “fair share” of the $60,000 payoff, Lesniak testified.
The builders paid $20,000 of the agreed-on $100,000 payoff in cash in May 1970, a month before the East Chicago Housing Authority, U.S. Department of Housing and Urban Development and East Chicago Development Corp. signed a contract for the West Calumet project, Lesniak alleged. Construction began that fall.
Lesniak testified he divided $8,000 from that first payment between himself and Given, and gave the remaining $12,000 — $4,000 each for himself, then-City Controller Robert Pastrick and Given — to an associate to start a travel agency called Travel Associates. Lesniak said Given and Pastrick knew it was bribe money.
Nicosia, Given and Pastrick all took the stand and said they neither discussed soliciting bribes with Lesniak, nor took any money from him. Given admitted he owned 50 percent of Travel Associates, and Pastrick admitted he initially was listed as an officer of the company. Both denied taking any money out of the business.
Lesniak said he received the rest of the $100,000 cash bribe in seven more payments, and went back to Bursten and Seidel two more times in 1971 to secure another $26,000 in kickbacks for himself.
He also testified he took a $5,000 bribe on behalf of himself and Given for steering a contract to demolish the abandoned factory buildings at the West Calumet site.
Jack Slaboski, one of the owners of Industrial Development Corp., told the jury he didn’t pay Lesniak bribes for the demolition contract. However, Slaboski did offer a description of the site.
“Our contract read we were to demolish everything that was visible, and as fate would have it, we were digging through and we came across, in the dirt, we came across a stone slab that was 6 feet deep, I don’t know how big around, 20 feet across, it ran 200 feet in one direction.
“It was an old lead plant, somebody said —,” he continued, before U.S. District Judge Allen Sharp cut him off by saying, “Whoa. Whoa. Let’s get on with the lawsuit.”
GALLERY: Key figures in East Chicago lead crisis
Former East Chicago Housing Authority Executive Director Benjamin Lesniak Jr. testified at the 1976 bribery trial of two of the West Calumet Housing Complex builders that he took $126,000 in bribes on behalf of himself and three other city officials. Here's a look at who they are:
Housing plans speed up
The site of the West Calumet Complex had been eyed for public housing perhaps as early as 1963, Nicosia’s first year in office, according to Purdue-Calumet Development Foundation records.
In addition to Indiana Harbor, the foundation had set its sights on eliminating blight in West Calumet and planned about 50 units of nonprofit or public housing at the site of the old Garfield School, according to the foundation’s annual reports. A fire in 1959 destroyed Garfield School, and the city anticipated counting the cost of the new Carrie Gosch School, three blocks to the west, toward its required one-third share of urban renewal funding for the neighborhood.
The foundation's 1963 report said, “The development of the (Garfield School) site and that of a substantially vacant area in the southwest corner of the project will provide adequate relocation resources in advance of displacement of families in the rest of the neighborhood.”
Nicosia appointed Lesniak executive director of the newly formed East Chicago Housing Authority in March 1965. The following month, then-City Controller Pastrick told the Chicago Tribune the city planned to speed up urban renewal in the Harbor and begin construction of public housing.
The city’s first relocation site — the Cal-View Apartments — became tied up in court, delaying the Harbor project. Nicosia told the Chicago Tribune in April 1965 that urban renewal in West Calumet would be more organized than the Harbor project, because he didn’t want another “battlefield.”
In 1966, questions arose about a possible conflict of interest as Lesniak sought re-election to a third two-year term in the Indiana House of Representatives, while also acting as housing authority director.
Latin-American and African-American leaders contended Lesniak was violating federal law by holding both posts, and Republicans pushed for an investigation, according to several 1966 Hammond Times stories.
Lesniak told a Times reporter he had legal opinions saying he could hold both posts but would give up his $10,000 salary as housing authority director.
Lesniak was seated in the House that year after the state’s attorney general issued an opinion concluding the duality was not illegal.
Industrial sites targeted
In October 1966, Lesniak revealed to the Chicago Tribune the city’s apparent mindset on public housing.
East Chicago needed to build more public housing because of relocation problems caused by urban renewal in the Harbor, but land was scarce, he told the newspaper. He said the city could either tear down existing structures, leading to the displacement of even more people, or build public housing in “vacant areas which are surrounded by industries, and undesirable residential areas.”
Many of the public housing occupants probably would be African-American or of Latin-American descent, because “the public housing projects are being built in areas which are predominantly Negro and Latin,” he told the paper.
During the builders’ 1976 trial, FBI agent Dean R. Crabbs testified on cross-examination that Lesniak at one point told him the developers of the West Calumet Housing Complex initially decided to take an option on 15 acres of land owned by the Sinclair Refinery on Columbus Drive, just west of Roosevelt High School. That site was zoned single-family residential in late 1969, according to the trial transcript.
Lesniak told Crabbs that Nicosia — a medical doctor — became upset after learning the builders selected the Sinclair site and instead arranged for them to take an option on the West Calumet property, which was owned by Blaw-Knox Co. at the time, Crabbs testified.
The builders’ option on the West Calumet site was about to run out in early 1970 when HUD pulled the plug on a plan for 600 units, and the East Chicago Housing Authority ended up buying the property to keep the project moving, records show. HUD quickly approved a new plan for 346 units, according to trial testimony.
On the take
Because of the need for more public housing, Lesniak oversaw several of the city’s major projects before resigning from the ECHA in 1973.
Lesniak pleaded guilty in 1975 to charges alleging he first conspired in July 1969 to take bribes from John Telander, whose company built the Nicosia Senior Building, 4720 Railroad Ave. The 10-story building sits on the site of one of East Chicago's first industries, the former Famous Manufacturing plant.
In exchange for the plea deal in the 1975 case against him, Lesniak agreed to testify against the builders in the 1976 West Calumet bribery case.
Besides taking kickbacks for the construction and demolition contracts, Lesniak testified he took money from several people permitted by East Chicago Development Corp. to salvage scrap iron and copper from the abandoned factory buildings. Lesniak told federal investigators he received $5,000 from salvagers and took a prefabricated metal building from the site.
He pleaded guilty to a tax fraud charge in the 1975 Telander case alleging, in part, that he failed to report on his 1971 tax return ”income from the sale of a portable office building in the form of a short-term capital gain in the amount of $1,405,” records show.
In addition to the $100,000 cash bribe for the construction contract, Lesniak testified he received the $26,000 he later solicited for himself in checks, which he funneled through several unindicted co-conspirators.
Federal prosecutors presented evidence of the checks at trial, along with two lists — one written by Bursten and another with Seidel’s fingerprints on it — showing dates and payoff amounts.
Bursten and Seidel testified their signatures appeared on checks because they merely were loaning Lesniak money, but a jury didn’t buy their story and convicted them in May 1976. They were released from prison in 1978.
Lack of hard evidence?
The government presented no written evidence, such as the Bursten and Seidel lists, related to the alleged cash payoffs shared with Nicosia, Pastrick and Given.
John Leonardo, who tried the case as an assistant U.S. attorney and now serves as the U.S. attorney for Arizona, said Nov. 28 he couldn’t recall details about the 30-year-old case. When asked why Nicosia, Given and Pastrick were never indicted in connection with the West Calumet case, Leonardo said it could have been that the government didn’t think it had enough evidence to win convictions.
Lesniak served a short prison sentence in the Telander case, and his whereabouts have remained unknown since he entered the witness protection program after pleading guilty in 1975. Some in political circles said he died several years ago. A spokeswoman for the U.S. Marshals Service, which oversees the federal program, declined to comment on Lesniak's status.
Though federal prosecutors never charged Given, the controversial attorney at one point faced the loss of his law license in part because of Lesniak’s testimony in the West Calumet case, Indiana Supreme Court records show. After Lesniak twice failed to show up for Given’s disciplinary hearings in 1980, two of the three counts against Given were dropped.
Given was shot to death in 1981 at a political fundraiser in East Chicago; at the time, he was fighting a recommendation for a public or private reprimand related to advice he gave to a Sanitary District director convicted in 1977 in an illegal political gift-buying scheme, records show.
No charges were ever filed in Given's murder, despite a lengthy investigation.
A federal judge ordered Nicosia to prison after his 1979 conviction on perjury and tax charges related to a different kickback scheme, but he died before serving time.
East Chicago voters first elected Pastrick mayor in 1971. He never faced criminal charges in the West Calumet case, nor any case. His administration in 1999 spent more than $24 million to pour new concrete sidewalks, driveways and patios to curry favor with voters; six city officials later were convicted in the “sidewalks-for-votes” scandal.
Pastrick remained in office until 2004, after he lost a special election ordered because of vote fraud. A federal judge in a civil racketeering case later labeled him and his administration corrupt, and ordered them in 2011 to pay $108 million. Pastrick declared bankruptcy. When he died last month at age 88, many remembered him as a leader and political legend.