Zoeller seeks to block East Chicago settlement

Nick Rees Apr. 12, 2010, 2:24pm


Zoeller

INDIANAPOLIS (Legal Newsline) - Indiana Attorney General Greg Zoeller has officially objected to a deal to settle a lawsuit between East Chicago and a company that made millions of dollars in casino money.

Zoeller has taken legal action as a means of preventing the settlement between the city's administration and East Chicago Second Century, Inc., from going into effect.

"For the Mayor of East Chicago (George Pabey) to file this settlement after the City Council already rejected it smacks of emboldened arrogance and should not stand," Zoeller said.

"By circumventing the very ratification process that they themselves instituted, the Mayor and his administration have defied both the elected council representatives and the public. I have moved to undo the Mayor's actions."

Zoeller's office and the city of East Chicago are both plaintiffs in the long-running lawsuit against Second Century, which seeks to require the for-profit company to account for $16 million in casino revenue it received from the East Chicago riverboat casino in the 10 years since the company's creation.

Grants from the casino revenue, meant to benefit the people of East Chicago, have not been publicly disclosed nor has how the money been used been divulged. As much as $10 million of revenue remains in escrow.

Zoeller took action this winter when he learned that Pabey intended to settle the lawsuit with Second Century, ending litigation in exchange for a payout to the city. Zoeller attended a meeting of the East Chicago City Council to urge members to reject the deal.

The council deadlocked 4-4 at the meeting, later defeating the settlement proposal 5-4 at their March 3 meeting.

The proposed settlement would have released the funds in escrow, giving 54 percent of the funds to the city and 46 percent to Second Century's owners. The casino's 0.75 percent revenue stream would have gone to the city in the future under the proposal, which also included no accounting of how casino revenue had been spent so far or any requirement for transparency in the future.

The Pabey administration and Second Century, despite the council's rejection of the settlement, filed a notice in the lawsuit last week to dismiss the city's claims against the company without the council's approval.

"The State of Indiana is also a plaintiff in the City's lawsuit against Second Century, yet my office was not consulted about this purported settlement, I certainly did not agree to it and I am asking the court to reconsider and reject it," Zoeller said.

"The Mayor and his allies appear unconcerned that millions of dollars originally intended to benefit city residents instead would be paid out as a wholly undeserved jackpot to Second Century, if this settlement went through."

The dismissal was subsequently granted by the Marion County Superior Court.

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