Chesterton Tribune

Kevin Pastrick gets 37 months in Coffee Creek case

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Kevin Pastrick was hoping for a prison sentence of not more than 24 months.

Instead, on Thursday in South Bend, U.S. District Court Judge Robert Miller Jr. sentenced Pastrick to 37 months, for his role in the kickback and cover-up scheme which greased the sale of 55 acres at Coffee Creek Center to the Northwest Indiana Regional Council of Carpenters Pension Fund Trust.

Miller also ordered Pastrick to pay a fine of $177,000, U.S. Attorney Joe Van Bokkelen told the Chesterton Tribune today: essentially a disgorgement of his split of the $600,000 commission which his firm, Sand Creek Sales & Development, earned for brokering the $10 million deal, less the amount paid by Pastrick to pension fund trustee Gerry Nannenga in exchange for Nannenga’s vote in favor of the investment.

Pastrick’s sentence is 10 months harsher than the one which Miller imposed in November 2004 on Peter Manous, former chair of the Indiana Democrat Party and an attorney for the pension fund trust who accepted a $200,000 kickback himself from that $600,000 commission.

But then Manous cooperated with investigators, Van Bokkelen said. Not only did he testify at the trial of Carl Paul Ihle Jr.—Pastrick’s partner in Sand Creek Sales & Development and the only one of the four indicted in connection with the scheme who did not accept a plea bargain but was found guilty by a jury—but Manous’ decision to plead guilty to all counts in the first place may also have prompted Pastrick to do the same, Van Bokkelen noted.

Pastrick must surrender to authorities on May 2.

Although, under the terms of his plea agreement, Pastrick is obliged to maintain “a continuing demonstration of acceptance and responsibility,” he was granted one small area of wriggle room in which to make a case for leniency before Miller, Van Bokkelen said: on the issue of whether the money paid Nannenga was a bribe before the fact—made to influence Nannenga’s vote—or a “gratuity” after the fact—almost like a tip—still illegal but under federal sentencing guidelines less severe a crime than a bribe by something like 13 months.

Pastrick indeed made that argument in a sentencing memorandum filed on Monday, in which his attorney argues that the question of payments arose only after Nannenga had voted in favor of the transaction and only because Manous had asked him to help Nannenga with expenses to be incurred in an impending move to Indianapolis. “Manous relayed that request to defendant (Pastrick),” the memorandum reads, “and defendant and Manous agreed that they would help Nannenga out with those payments because Nannenga had been helpful in approving the land sale. But there was no prior understanding. Certainly, defendant was not aware of any prior understanding, if there had been one, between Nannenga and Manous.”

Miller didn’t buy it.

Pastrick’s memorandum, though, is interesting for another reason, in its discussion of one of the key contentions of the civil lawsuit filed by the pension fund trust against Pastrick, Manous, Ihle, the Lake Erie Land Company, and others: that the $10 million which the pension fund trust paid Lake Erie Land was roughly twice as much as the property is worth. According to that memorandum, the pension fund trust commissioned Professional Appraisal Services LLC to conduct an appraisal of the land in each of three years after the sale, and subsequently reported those valuations to the U.S. Department of Labor: $10,355,000 on Oct. 11, 2000; $10,560,000 on Sept. 5, 2001; and $10,560,000 on Oct. 8, 2002.

“Significantly,” the memorandum reads, “the Pension Fund has never sought to amend its reports to the Department of Labor regarding the valuation of the land. Other than the Pension Fund’s current litigation claim for losses, defendant is not aware of the Pension Fund ever having taken issue with those appraisals. Indeed, the Pension Fund has not included Professional Appraisal Services as a defendant in the civil litigation or any other case for providing what it must now claim to be grossly negligent appraisals.”

Meanwhile, while Pastrick’s attorney was trying to sort out the difference between a bribe and a gratuity, Lake Erie Land President Jerry Mobley filed an affidavit of his own with the court on Wednesday. In that document Mobley similarly states that, when the deal closed in March 1999, “I believed the land to be purchased by the Pension Fund was worth at least $10 million.”

Mobley also states that he “was personally involved in every stage of the improvement and marketing of Coffee Creek and made all significant decisions relating thereto,” that neither Pastrick nor Ihle “had any authority to negotiate any terms involving the prospective deal with the Pension Fund,” and that neither of them “made the decision regarding how much land to offer or the location of the land being offered.”


Posted 3/18/2005