A federal bankruptcy judge has thrown out a crumbling southwestern Illinois village's pursuit of court protection from creditors, ruling that the municipality best known for its strip clubs does not have authority under state law for such relief.
U.S. Bankruptcy Judge Pamela Peppers' ruling Dec. 23 leaves 5,300-resident Washington Park scrambling to sort out how it can cover its mounting debt, which the village listed as more than $1 million when it filed for Chapter 9 protection in July 2009. It was the St. Clair County community's second bankruptcy filing in five years.
At that time, Washington Park listed assets of less than $50,000 and said its two largest creditors were the Illinois Department of Employment Security, which was owed $448,793.29, and John "Chico" Matt, the village's former public safety chief, who was owed $300,000.
In 2000, Matt won a court award of $165,000 for emotional distress and humiliation, which a judge said was caused by village trustees who tried to fire him.
Washington Park also owed trash haulers, the police pension fund and even one of its many topless nightclubs.
Messages left Monday with the village's attorney, Donald Samson, and Mayor James Jones seeking comment about Washington Park's pursuit of Chapter 9 protection, which allows governmental units to restructure, were not immediately returned.
"If that bankruptcy doesn't go through and the debtors come back to Washington Park, it definitely will be devastating for the village," Jones told the Belleville News-Democrat for a story Sunday. "We're going to do whatever it takes to get the village back in order," including perhaps bringing in an oversight committee.
In her ruling, Peppers found that Washington Park did not qualify for Chapter 9 protection because it was not specifically authorized by an Illinois law, governmental officer or other requisite state-empowered organization to file for such relief.
When it filed for such protection in 2009, then-Mayor John Thornton insisted that "creditors and lawsuits have been steadily coming after us," leaving the village unable to meet its payroll while trying to appease creditors.
"We had no choice but to file for bankruptcy," Thornton said at the time. In April 2010, Thorton was gunned down during a suspected robbery as he sat in his car in the village. A suspect has been charged with first-degree murder and awaits trial.
Washington Park, with a median household income roughly half the national average at just $21,132 according to the 2000 Census, made a similar filing in 2004, claiming a $1.6 million debt. But that case was dismissed because the village emerged from insolvency, albeit only briefly.
Since then, thefts from the village's coffers didn't help its financial troubles.
In September 2009, former Thornton aide Linda Connor was sentenced to three years in federal prison and ordered to repay the village nearly $370,000 that she admitted she had embezzled or intentionally misapplied from April 2005 through 2007, causing the employees' pension funds to be underfunded. Connor also was ordered to pay the Internal Revenue Service $60,000.
In March 2009, former payroll clerk Dorothy Triplett was sentenced to a year and a half in prison for stealing nearly $144,000 from the village in 2006 and 2007. A judge has ordered her to repay the money. The charges followed a March 2008 raid of the village hall by federal agents, who hauled off 63 boxes of records.
And in October 2006, a woman was sentenced to nearly three years in federal prison and ordered to repay the more than $170,000 she pilfered from the village to cover personal expenses for herself and others. Takisha Walker admitted she obtained Washington Park's bank name and account routing numbers from a campaign flier left at her home in 2002.
That scam was aided by a lack of oversight at the village hall, where no one questioned the multiple payments made electronically month after month, even though the village didn't pay any of its bills by electronically transferring funds.