Chesterton Tribune

LEL to repurchase 55 acres from carpenters union pension fund

Back to Front Page
 

 

 
 

 

Your Ad Here

 

By KEVIN NEVERS

The Lake Erie Land Company (LEL) will re-purchase all of the property sold in 1999 to the Indiana Regional Council of Carpenters Pension Trust Fund (PFT), under a settlement reached between the two parties.

That agreement will thus bring an end to nearly three years of litigation begun when the PFT named LEL a co-defendant in a civil lawsuit stemming from the PFT’s purchase 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.

According to a joint statement released on Friday by the PFT and LEL, “No party is admitting any fault or wrongdoing in connection with this settlement,” which U.S. District Court Judge Robert Miller approved earlier in the day.

Under that settlement, the only property which LEL will not re-purchase from the PFT is that acreage already developed and sold over the last eight years.

The PFT and LEL did not disclose the re-purchase price, nor did they reveal any other terms of the “confidential settlement.”

“Lake Erie’s counsel, John Martin of Schiff Hardin LLP in Chicago, commented that, although Lake Erie did nothing wrong in connection with the original sale and believe its own claims were supported by the evidence, the re-purchase of the property better serves the interests of all concerned and removes the impediment to further development of Coffee Creek posed by additional litigation,” the statement said.

“The (PFT’s) counsel, Drew Peel of Kirkland & Ellis LLP in Chicago, commented that, although the (PFT) and its limited liability company did nothing wrong in connection with the original purchase and believe their own claims were supported by the evidence, Lake Erie’s re-purchase of the property, coupled with settlement payments and benefits received from other defendants and the avoidance of further litigation costs and risks, made settlement with Lake Erie the prudent course for the (PFT) at this time,” the statement said.

The U.S. Department of Labor has expressed no objection to the settlement, the statement added.

The scandal in a nutshell: soon after the closure of the deal, Pastrick gave Manous, from the $600,000 commission which LEL paid to SCSD, 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 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 federal prison terms.

The goal of the PFT’s lawsuit had been to demonstrate LEL’s liability in the scandal and to that end 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 had sought actual damages, estimated at more than $5 million; three fold actual damages; 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.

 

Posted 7/9/2007