Trustee: Pastrick’s bankruptcy not an abuse

Reversing her decision from a month ago, a federal trustee has determined that former East Chicago Mayor Robert Pastrick’s income is not too high to qualify for Chapter 7 bankruptcy and his filing should not be considered to be an abuse of the process.

The Monday decision by trustee Nancy Gargula comes in an ongoing legal battle between the ex-mayor and state of Indiana, which is trying to collect a $108 million judgment issued last year against the former political titan in a racketeering judgment. The trustee had ruled Feb. 7 that based on an initial review of documents, there was presumed abuse in Pastrick’s bankruptcy case he filed in December. She had 30 days to file a motion to dismiss the Chapter 7 case or convert it to a category that required repayment, but she changed her stance after reviewing the case material and other documents filed since then.

“Based on this review, the United States Trustee has determined that the Debtor's case is NOT presumed to be an abuse," states Monday's filing in the U.S. Bankruptcy Court for the Northern District of Indiana, meaning that his bankruptcy doesn’t require payments to debtors and will proceed without being converted to another bankruptcy category with a repayment plan.

Responding to the trustee’s finding, the Indiana Attorney General’s Office issued a statement saying this doesn’t change the state’s position that the full racketeering judgment isn’t dischargeable by bankruptcy. Details haven’t been finalized on what would happen to any funds collected in this case, spokesman Bryan Corbin said, but he noted the AG’s office routinely collects debts and judgment amounts on behalf of government clients and has a process for handling that money.

The $108 million judgment stems from a sidewalks-for-votes scheme that played out in the 1999 Democratic mayoral primary election, to which Pastrick and two of his top aides admitted. U.S. Senior Judge James Moody a year ago issued a ruling in State of Indiana and City of East Chicago v. Robert A. Pastrick, et al., No. 3:04-CV-506, ordering the $108 million in damages. That collection activity has been put on hold by these bankruptcy proceedings.

"Attorney General Zoeller is committed to seeking accountability from former Mayor Pastrick for the citizens of East Chicago for Pastrick's squandering of the treasury on a scheme to enhance Pastrick's own re-election chances, and our goal is to seek to resume collection of the $108 million civil judgment Pastrick owes," Corbin said.