John O'Brien Apr. 16, 2008, 4:00pm
INDIANAPOLIS (Legal Newsline) - Outgoing Indiana Attorney General Steve Carter is asking for help from the state Supreme Court in his suit against a private development firm that has received millions of dollars from riverboat casino revenues.
Carter filed a Petition to Transfer with the Court, asking permission to review the financial records of Second Century, Inc. He has already failed twice, in the Marion County Circuit Court and the state's Court of Appeals.
"There is a strong basis for moving forward and continuing to present the arguments that this entity should be accountable for $16 million that appears to have vanished," Carter said. "There has been no proof that these funds intended for economic development have not been wasted. The public is left to wonder how the $16 million has actually helped them."
In the 1990s, the City of East Chicago and the Showboat Marina Partnership entered into a pair of agreements that allowed Showboat to operate the East Chicago riverboat casino in exchange for some of its gaming revenue.
To get the gaming license, East Chicago agreed to support the Showboat application if the company would fund economic development with 3 percent of its future adjusted gross receipts. In 1997, Showboat earned the application, coming to a second agreement that it would fund Second Century with .75 percent of the receipts from its casino operation.
In 1999, the license was transferred to Harrah's, which continued to make the payments to Second Century. Five years later, RIH Acquisitions, doing business as Resorts East Chicago, applied to have Harrah's license transfer to it. The state Gaming Commission approved the transfer without addressing the Second Century agreement.
Second Century asked for a declaratory judgment requiring RIH to continue the payments. Carter intervened, seeking a constructive trust on the money paid to Second Century.
Second Century would not provide an accounting of where the money had been spent, and the Marion court ruled that it did not have to and dismissed Carter's claims. The Court of Appeals affirmed, saying the economic development provision of the agreements made no mention of Second Century.
"The Court should grant transfer in this case to update Indiana law concerning constructive trusts, and in particular to decide whether a constructive trust is warranted to remedy the injustice of a deal siphoning millions of dollars of casino gambling revenue to associates of a public official," Carter wrote in his Petition to Transfer.
Another suit, East Chicago's against Second Century, has resulted more than $4 million of casino revenues being placed in escrow. Carter has given his support to East Chicago and feels the 1994 agreement should be voided as a matter of public policy.
Carter is not seeking re-election and is serving his last year in office.
From Legal Newsline: Reach reporter John O'Brien by e-mail at email@example.com