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Wednesday, July 01, 2009

Ind. Decisions - "Supreme Court won't shift casino funds to E.C."

The Supreme Court's decision yesterday in the case of East Chicago v. East Chicago Second Century, Inc. (ILB summary here), is the subject of two stories today in the Lake County papers.

Dan Hinkel reports in the NWI Tmes:

The Indiana Supreme Court has denied the city of East Chicago's bid for a court order to route millions of casino dollars back to the city. The justices also ruled the Indiana Gaming Commission can alter the agreement that funnels riverboat gambling money to two private groups.

Lawyers for Second Century and the Foundations of East Chicago declared the court's 21-page mixed decision Tuesday a victory in the long-running war over casino funds.

The fight centers on a deal sealed by former East Chicago Mayor Robert Pastrick to route casino money to the nonprofit Foundations and Second Century, a for-profit company run by Pastrick allies. Current Mayor George Pabey wants those economic-development funds back under city control.

The court's decision not to order the funds shifted to the city means the Pabey administration was "the big loser" in Tuesday's decision, said J. Lee McNeely, a lawyer for Second Century.

"The court agreed with us," McNeely said. "In fact, the supervisory authority over this agreement is the Gaming Commission, and we're comfortable with that." * * *

The decision's centerpiece is the ruling that the Gaming Commission can alter the agreement that sends cash to the controversial groups. Under the deal signed in 1994, 3.75 percent of the casino's annual revenue goes to economic development. The city gets 1 percent. The two nonprofit Foundations of East Chicago each take a 1 percent cut, and a 0.75 percent subsidy goes to Second Century, a firm created to build affordable housing.

Peter Rusthoven, a lawyer for the Foundations, said Tuesday his clients are "fine" with the Gaming Commission's overseeing the agreements. Second Century's lawyer, McNeely, said the for-profit -- run by Pastrick allies Thomas Cappas and Michael Pannos -- is "perfectly prepared" to address the agreements with the Gaming Commission.

"Every penny is accounted for. There's nothing mysterious there," he said.

Gaming officials could not be reached Tuesday to explain what the ruling might mean for the commission.

The justices also ruled on a series of lower-court decisions from the case's Byzantine legal history. In its decision Tuesday, the Supreme Court remanded several counts to be heard in the Marion County trial court. The justices ruled that lower courts erred in using statutes of limitations to dismiss several of the city's claims against Second Century and the Foundations.

McNeely predicted a "lot more litigation" in the case.

Here is a Gary Post-Tribune staff report that begins:
The legal arrangement that pays the for-profit East Chicago Second Century Inc., and two other not-for-profit entities a portion of East Chicago casino gambling revenue can be modified under Indiana Gaming Commission rules, the Indiana Supreme Court ruled.

In a 21-page opinion, the court found that the letter agreement that provides for 0.75 percent of the gross receipts paid by the East Chicago casino to East Chicago Second Century Inc., could be subject to modification through the gaming commission administrative process with input from city officials.

The city receives 1 percent, as do two not-for-profit organizations, Twin City Education Foundation, and the East Chicago Community Foundation.

East Chicago's casino license has changed ownership several times from 1996 when Showboat first began operations. Harrah's Entertainment Inc., took over the license in 1999, and in 2005, after the commission approved transfer of the license to Resorts East Chicago, it asked the attorney general's office to investigate the financial operations of Second Century.

Posted by Marcia Oddi on July 1, 2009 10:28 AM
Posted to Ind. Sup.Ct. Decisions