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By The Associated Press | Friday, August 15, 2008 | (No comments posted.)
EAST CHICAGO | The Indiana Supreme Court agreed Friday to hear a lawsuit filed by the state attorney general seeking to force a development group that has received $16 million in casino subsidies to open its books.
The Indiana Court of Appeals and Marion Circuit Court earlier ruled in favor of East Chicago Second Century Inc., finding the private company does not have to account for the casino money it has received since 1997.
"The public deserves to know what happened to this money," Attorney General Steve Carter said in a news release. "There is little evidence that these funds, intended for economic development, have not been wasted."
Carter's office last year filed for a public accounting of funds disbursed to Second Century from the state-licensed East Chicago riverboat.
Second Century was created to develop affordable housing and other economic development projects. For a decade, it received 0.75 percent of the casino's annual profits under a 1994 side deal that then-Mayor Robert Pastrick brokered to bring the casino to the Lake Michigan city.
Current Mayor George Pabey wants the Second Century payments redirected to the city, and the two sides remain locked in a court battle. Roughly $4 million is being held in escrow pending a resolution.
A message seeking comment was left Friday with an attorney for Second Century, J. Lee McNeely. In April, when Carter petitioned the Supreme Court for review, McNeely called it an attempt to use taxpayer funds to prolong the legal battle in hopes of bankrupting Second Century.
A state attorney general's office investigation suggested that the money should have paid for more economic development activities. The review also said the agreement may violate industry integrity because it directs money intended for public benefit to a private company that has used its for-profit status to resist public oversight of its activities.
The Indiana Gaming Commission, citing the investigation, terminated Second Century's more than $2 million annual casino subsidy in June 2006. But the subsidy remains mired in litigation.
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