By KEVIN NEVERS

The Lake Erie Land Company (LEL) is looking to reach a settlement with the Northwest Indiana Regional Council of Carpenters Pension Fund Trust (PFT), before the PFT’s lawsuit against LEL goes to trial next month.

On May 11 LEL and the PFT filed a joint motion with U.S. District Court Judge Robert Miller seeking to strike and continue the final pre-trial conference scheduled for May 22 and the actual trial scheduled for June 4, on the grounds that LEL and the PFT have reached “an agreement in principle to resolve all claims between and among them.”

“(I)t appears that no trial will be required in this case,” the motion states. It does not, however, reveal any of the terms of the agreement in principle.

“While Lake Erie and plaintiffs are agreed on the essential terms of the settlement among themselves,” the motion reads, “the nature of the settlement makes it probable that a final settlement agreement will not be in place by May 22, 2007, the date for which the final pre-trial conference is currently scheduled. Plaintiffs and Lake Erie expect that such an agreement can be entered, and their claims and counterclaims dismissed, by June 15, 2007.”

LEL Vice-president Tom Godfrey referred all questions about the potential settlement to LEL’s parent company, NiSource Inc.

NiSource Vice-president of Communications Karl Brack declined to comment at this point. “Litigation is still pending,” he said.

The lawsuit, in which LEL was named a co-defendant in August 2004, stems from the PFT’s purchase in 1999 of 55 acres at Coffee Creek Center for $10 million, in a deal subsequently tainted by a kickback and cover-up scandal which sent former PFT trustee Gerry Nannenga, attorney Peter Manous, and Sand Creek Sales & Development (SCSD) brokers Kevin Pastrick and C. Paul Ihle Jr. to federal prison.

The scandal in a nutshell: soon after the closure of the deal, Pastrick gave Manous, from the $600,000 commission which LEL paid to SCDC, a “finder’s fee” of $200,000, and then funneled through a dummy corporation $30,000 to Nannenga. Manous paid Nannenga a further $15,000 from his share. Following an investigation by the U.S. Department of Labor, Pastrick and Manous pleaded guilty to a number of counts, including making payments to a union official to influence the operation of a pension plan. Nannenga pleaded guilty to conspiracy and fraud. Ihle was convicted of falsifying records and making false statements to investigators as part of the cover-up after the fact. All four served prison terms.

The goal of the lawsuit has been to demonstrate LEL’s liability in the scandal and to that end has advanced two premises: that LEL principals had knowledge before closure of Pastrick’s intended payment to Manous; and that LEL defrauded the PFT by knowingly selling it significantly overvalued property.

Among other things, the lawsuit has sought actual damages, estimated at more than $5 million; threefold actual damages, as provided by the Indiana Crime Victims Relief Act and the Racketeer Influence and Corrupt Organizations Act, under whose aegis the PFT has pursued its claims against LEL; and the rescission of the original land deal, under which the PFT would return the 55 acres to LEL in exchange for the $10 million purchase price plus 8 percent annual interest from the date of the sale.

Meanwhile, the PFT has separately reached a settlement with Pastrick, also a co-defendant. On May 10 the PFT filed a motion with Judge Miller seeking a partial consent order and judgment under which it would voluntarily dismiss all of its claims against Pastrick in exchange for a $150,000 cashier’s check.

Posted 5/17/2007