Zoeller proposes plan for $8M

Keith Loria Jan. 24, 2011, 11:00am


INDIANAPOLIS (Legal Newsline) - Indiana Attorney General Greg Zoeller announced on Thursday that he has reached out to the Northwest Indiana Regional Development Authority to ask it to serve as trustee for East Chicago development funds.

Zoeller wants the RDA to control the $8 million, which is currently held in escrow, that was generated through a local development agreement with casinos. The RDA would supervise the money for 10 years under Zoeller's plan.

If the city government wants to fund economic development projects, Zoeller's plan would require it to apply to the RDA for use of the money. The RDA could then decide if a grant should be awarded.

Zoeller's office has also looked into alleged political corruption and misuse of casino revenues by the former city administration of ex-mayor Robert Pastrick in East Chicago.

A federal court ordered Pastrick to pay more than $108 million in damages last year after the former mayor defaulted in a federal racketeering lawsuit.

Mediation is expected soon in other lawsuits involving gambling revenue and the city of East Chicago, the state of Indiana, the Ameristar Casino, the for-profit Second Century, the nonprofit Foundations of East Chicago and other parties locked in litigation.

Zoeller said that the RDA already exists to manage economic development funds on a regional basis in Northwest Indiana and issue grants to facilitate local projects. Because of its solid track record, Zoeller said it is well suited in evaluating economic development proposals.

"My view is, the purse strings should be controlled by a group already known for its transparency, accountability and professionalism-an entity that follows the example of the RDA," Zoeller said.

"This would serve to restore public trust while serving the economic development needs of the people of East Chicago."

Zoeller further outlined the legal position that his office would be involved in with court mediation.

Currently at issue is the $16 million in casino revenue paid over 10 years to East Chicago Second Century Inc., a for-profit entity engineered by Pastrick and run by his political allies under a local development agreement, Zoeller says.

Legal action was taken to cancel the Pastrick-era LDA and escrow the remaining $8 million, which is the money that the RDA would be responsible for.

Zoeller's proposal would renegotiate the local development agreement, with no casino revenue going to the city of East Chicago or any other entity directly. All old funds would be escrowed under the old agreement and all new funds would be transferred to an RDA trust.

Any new local development agreement would first need the approval of the Indiana Gaming Commission.

By issuing grants, the RDA would oversee the payments and provide all necessary audits of the projects.

"I recognize that the city of East Chicago is unaccustomed to asking a multi-jurisdictional regional entity for economic development grants," Zoeller said. "The new city leadership is not at fault for the corruption of the Pastrick era, and my hope is that they will see the desirability of having grant requests screened and approved by a well-respected panel of experts to filter out any appearance of corruption or cronyism and lead the city into a new era of leadership."

Zoeller also proposed that Second Century not be eligible to apply for grants or receive any further funding from the casino because of its ties to Pastrick.

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