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Thursday, October 29, 2009

Ind. Courts - "Arguments completed in E.C. casino money lawsuit " [Updated]

So reports Dan Carden of the NWI Times in a story posted this afternoon. Some quotes:

INDIANAPOLIS | Oral arguments at the Indiana Supreme Court have concluded in a battle over who gets to control East Chicago casino money earmarked for local development.

Foundations of East Chicago is challenging a 2007 state law giving the City of East Chicago the power to decide how to distribute the development money.

Attorney Peter Rusthoven argued forcefully that Foundations of East Chicago, an independent nonprofit agency, should continue to receive the casino funds.

Rusthoven claimed the legislature went too far by writing a state law that only applies to East Chicago. The state constitution requires laws to apply to everyone.

Solicitor General Thomas Fisher, representing the state and supporting the city in the case, didn't deny the General Assembly wrote special legislation.

But Fisher said the East Chicago situation -- giving casino money to several private foundations and the city's accompanying record of official corruption -- was so unique the legislation was appropriate.

Justice Frank Sullivan Jr. seemed doubtful of that claim and challenged Fisher several times to explain how special legislation is ever justified.

The city's attorney, William Bock III, took a different tack and argued Foundations of East Chicago isn't entitled to the money, because it's not named specifically in the 1995 agreement between the city and the casino operator.

Foundations of East Chicago was created in 2007 through the merger of two nonprofit foundations named in the local development agreement.

In April, the Indiana Court of Appeals ruled the law giving East Chicago the power to redirect casino money is constitutional. The appeals court claimed the city is entitled to control the distribution of the money even without the law.

A decision from the Indiana Supreme Court is expected early next year.

The oral arguments lasted 45 minutes before the five justices in the ornate Supreme Court chamber on the third floor of the Statehouse.

A brief story from the Gary Post-Tribune staff reports:
The state Supreme Court this morning in Indianapolis heard oral arguments in the continuing legal battle between the East Chicago administration of Mayor George Pabey and a for-profit foundation that has received millions in city casino revenues for more than a decade.

Attorneys for the foundation argued it was unconstitutional for the City Council to end a deal with the Foundations of East Chicago that has steered more than $43 million to the group under an agreement with the city reached 12 years ago under former mayor Robert Pastrick.

The city has maintained that little money has made it back into the community in the form of economic development, while board members appointed by Pastrick have soaked up much of the money with administrative costs.

State law adopted in 2007 seemed to give the council that authority, but foundations attorney Peter J. Rusthoven said the law was unconstitutional special legislation targeting his clients.

"If this is not special legislation, I do not know what is," he said. "There is no evidence offered (of any misuse of funds). There are newspaper articles."

The case is the third time issues related to the foundations have reached the high court in five years, as Pabey has tried to wrest control of the additional casino millions from foundations controlled by Pastrick appointees.

Some quotes from a press release from the Indiana Attorney General's office:
In a case before the Indiana Supreme Court today, the Indiana Attorney General’s Office argued the General Assembly can allow city of East Chicago to decide for itself how to direct millions of dollars in casino revenue – so that the city is not locked into a deal brokered by a former mayor investigated for racketeering.

At issue is whether the new city leadership in East Chicago could, by law, cancel an agreement engineered by former Mayor Robert Pastrick in 1995 that steered millions of dollars in casino revenue into two nonprofit foundations led by Pastrick allies.

The State of Indiana – through Attorney General Greg Zoeller – contends the current city leadership had the legal ability to cancel the Pastrick-era deal with the two foundations in 2007, so that the annual payment from the former Showboat casino (now Ameristar) would be redirected to city management.

The two nonprofits, which have now merged into an entity known as Foundations of East Chicago Inc., each received a one percent cut of casino revenue annually to spend on local development projects. The two foundations received a combined $43.5 million in casino revenue over 10 years.

The Indiana General Assembly passed a law in 2007 giving the new leadership in East Chicago the authority to cancel Pastrick’s 1995 local development agreement with Foundations. Contending the state law was unconstitutional, Foundations sued the city to undo the cancellation and restore the annual payments. The Attorney General’s office joined the case as an intervenor-defendant supporting the city’s argument. The trial court sided with the state and city, as did the Indiana Court of Appeals.

Foundations appealed and today the Indiana Supreme Court heard arguments in the case.

The ILB has had a number of entries on the case, Foundations of East Chicago v. City of East Chicago and the Attorney General of Indiana, including this one from Oct. 26th with all the filings in the appeal.

[Updated early on 10/30/09] Here is a statement the ILB has just received from the Foundations of East Chicago:

Foundations of East Chicago Press Release

October 29, 2009

The Foundations of East Chicago, Inc. are pleased that the Indiana Supreme Court is addressing the legal issues related to the passage of a statute that would remove the City of East Chicago development agreements from the regulatory authority under which they were approved, and instead periodically subject them to the whims of the East Chicago political process with no oversight or regulation. When gaming arrived in East Chicago, the citizens were clear that a condition was that some money was to be spent in the community in a manner insulated from the political issues of the day in order to provide long-term and consistent benefits to the citizens of East Chicago. Every entity that has reviewed the Foundations, including its governmental regulators, has determined they have acted in a manner consistent with these original expectations. The irony is not lost on the Foundations that the entity that seeks this money (the City) defends this statute on the basis that the City used to be corrupt. Yet, if the City has its way, should the " corruption" the City asserts return, that same "corrupt" City will have these additional funds at its disposal.

Among those supporting the Foundations are churches, an alliance of ministers, and numerous other individuals who both lack the political motivation to attack the Foundations and independently recognize the valuable community services they provide. For them and the citizens of East Chicago, the Foundations are hopeful that the Court will address and affirm the constitutional safeguards and regulatory framework as it exists, thereby allowing the Foundations to continue their work both now and in the future.

Posted by Marcia Oddi on October 29, 2009 04:23 PM
Posted to Indiana Courts