Law Firm Enmeshed In Lake County Sleaze

The Northwest Indiana Times' Marc Chase has a revealing story about how Indianapolis' Barnes & Thornburg managed to work on both sides of a trash-to-ethanol facility in Lake County. The firm represented both the county's waste management district and the winning bidder for the project, World Net Capital 1, LLC. The story gets more interesting when you learn that controversial Lake County attorney Michael Pannos had a role in helping Wold Net Capital land the contract, which has led to speculation that he owns an interest in the company. Indiana Attorney General Greg Zoeller has been pursuing litigation against Pannos and others he claims have reaped millions of dollars in casino revenues from a non-profit established by East Chicago in connection with its riverboat gaming facility. Here's a few of Chase's observations on Barnes & Thornburg:

Through months of committee meetings, presentations and debates on the trash proposals, the waste management district used the Indianapolis office of Barnes & Thornburg to help analyze the companies proposing to consolidate county trash processing.

Powers, the winning bidder, acknowledges that same law firm represented his business interests for about 18 years prior to making his Lake County trash processing bid, including work to incorporate his financial firm, World Net Capital 1 LLC.

Langbehn said the county used Barnes & Thornburg as an additional set of legal eyes to complement the waste district's own attorney, Clifford Duggan. The county also hired a Wisconsin-based engineering firm and a separate consultant to analyze the financial plans and proposals of the three bidding companies.

"We stayed away from any conflict that anybody might have by not hiring anybody locally who might lean towards different people," Langbehn said. "We told Earl (Powers) this had to be the most honest thing he has ever done because this is Lake County, Ind. We set the standards right away."

During his second presentation to the full Lake County Solid Waste Management District board, Powers divulged that Barnes & Thornburg had served as his attorney.

Because the relationship was disclosed, no state ethics rules were violated, said Seth Pruden, interim executive secretary for the Indiana Supreme Court Disciplinary Commission.

Representatives from Barnes & Thornburg did not return calls from The Times seeking comment on the matter.

In a recent interview with The Times, Powers said he severed ties with the law firm six or seven months prior to signing a contract with the county. That contract was approved by the waste management district board in November 2008, more than a year after Powers disclosed his connection to Barnes & Thornburg to the board.

Both Powers and Langbehn deny that Powers Energy received any preferential treatment in the bidding process because of the connection between the district and Powers' company to Barnes & Thornburg.

Langbehn noted that Powers' specific attorney -- though within the same firm -- did not perform any of the legal work for the county.

Though very little was made of the Barnes & Thornburg connection throughout the bidding process, county officials concede that ties between the trash-to-ethanol plans and a well-known region political and business figure raised some eyebrows.

Here's what Chase had to say about Pannos' role in the deal (check out the photo in Chase's story of the the lake-front mansion owned by Pannos):

In a November 2009 interview with The Times, Powers said Northwest Indiana lawyer Michael Pannos did legal work to help secure the site in Schneider -- a small southern Lake County town -- where the trash-to-ethanol plant is to be built.

It was a revelation that sparked speculation throughout Lake County political circles that Pannos, a former Indiana Democratic Party chairman, had a financial stake in the trash-to-ethanol plan -- a contention Langbehn, Scheub and Powers all deny.

Repeated attempts by The Times to reach Pannos at his Merrillville home and by phone were unsuccessful.

In an unrelated matter, the Indiana attorney general and city of East Chicago have been locked in a legal battle with Pannos and fellow political insider Thomas Cappas, alleging they have reaped "enormous" salaries while at the helm of East Chicago Second Century Inc. The for-profit firm is accused of squandering millions in local casino revenue it received under an agreement brokered by the administration of former Mayor Robert Pastrick.

In a more recent interview with The Times, Powers acknowledged Pannos worked as a lawyer for a Merrillville financial firm that Powers was trying to use to aid in the financing of the Schneider trash-to-ethanol plant. However, he said the firm failed to deliver, and he severed ties with the company.

The questions came after The Times learned that Pannos had entertained Powers at Pannos' Culver, Ind., lake home sometime in mid-2009. Powers and Scheub both acknowledge that, during that visit, Pannos and Powers also visited Scheub at the commissioner's nearby Culver farm property.

"That was the first time I knew Mike Pannos had anything to do with this -- when Earl stopped by my house with him," Scheub said.

Following Pannos' name association with Powers' efforts, Langbehn said county officials told Powers he could not involve Pannos in any way with the project.

"Earl (Powers) was told on no uncertain terms Mike Pannos will have nothing to do with it," Langbehn said. "I don't care how far removed it is."

Langbehn, who in addition to Scheub remains one of the most staunch government supporters for the trash-to-ethanol plant, acknowledges his own ties with Pannos.

Langbehn described Pannos as among his "best of friends." Langbehn is godfather to Pannos' daughter, and the men's wives also are close friends, Langbehn said.

In an Aug. 21, 2008, district board meeting, Langbehn also revealed to the board that he had become aware of connections between Pannos' cousin and the second trash-to-ethanol bidder, Indiana Ethanol, the company Powers was affiliated with when he first spoke to Scheub about bringing such a plant to Lake County. Langbehn disclosed he had learned that the Pannos' cousin was an investor with Indiana Ethanol.

But Langbehn said none of those affiliations matters, and he dubbed those who attempt to link Pannos with the trash-to-ethanol project as sabotaging naysayers.

"You can spin anything negative on anything you want," Langbehn said. "If anyone had a problem with this plan, they had board meetings over a 3 1/2-year period in which they could have stepped forward and addressed these concerns."