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
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
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.