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11/1/2018 7:03:00 PM
Convicted felon from East Chicago political machine hired by Lake County

Bill Dolan, Times of Northwest Indiana

CROWN POINT — Lake County Commissioners have hired a woman with connections to the old East Chicago political machine and a felony conviction.

Karen L. Krahn-Fife, of East Chicago, began work this week in the Lake County Health Department as a food sanitarian to inspect restaurants and other food providers.

This happened despite top county health department officials preferring another internal candidate for the position. 

Krahn-Fife and her husband, James Fife, pleaded guilty 13 years ago to felony tax violations. James submitted false tax returns, and Karen assisted in preparing the forms at a time when James Fife was a special assistant to then-East Chicago Mayor Robert Pastrick.

Commissioners Mike Repay, a Hammond Democrat, and Kyle Allen, a Gary Democrat, said Thursday Krahn-Fife's conviction isn't a roadblock to county government employment and that patronage politics didn't play any role in her selection over four other candidates, including one who has worked 10 years in the health department.

Krahn-Fife said Thursday morning she was in the middle of work assignments and would comment later in the day or Friday.

Repay said he has been friends with the Fife family since childhood but didn't know Karen Krahn-Fife personally. Allen said Fife paid her debt to society, is a college graduate and was on a level playing field with the other applicants, including the health department employee.

Health Department Administrator Nick Doffin said he recommended his employee for the job over the other four.

"The next thing they are putting this lady in that job slot," Doffin said.

Commissioner Jerry Tippy, a Schererville Republican, said Thursday, "I am definitely not happy about it. I don't know anything about Mrs. Fife. I don't know that family. When the paperwork came through, it appeared everything was in order.

"I found out two weeks later that there were issues with the hiring process. Both sides are guilty of violating what I want our normal hiring process to become."

Tippy said he is opposed to patronage hiring. He said he doesn't know if politics played a role in Fife hiring, "but I have seen indication of patronage hiring popping back up again. This Fife case has heightened my awareness to look even deeper into every single hiring candidate that comes across my desk."

The U.S. Attorney's office charged the Fife couple in 2004 with concealing under-the-table income earned by James Fife from the city. James Fife created four corporations that did business with the East Chicago city government, according to court records. 

Those corporations paid Fife, in addition to his already large municipal salary. 

The Seventh U.S. Circuit Court of Appeals stated, "The corporations were merely shells, used to conceal the large fees Fife was reaping from his dealings with the city."

The government said Krahn-Fife joined the scheme in 1997, incorporating KLK Enterprises and listing herself as the owner. There was no evidence it had any legitimate business expenses. 

The Fifes received $892,509 through their corporations from 1998 to 2001 for their personal use. None of the corporations filed tax returns with the Internal Revenue Service.

Krahn-Fife admitted responsibility for federal taxes losses of $242,569 and her false joint returns with her husband. She also admitted diverting income through KLK's bank accounts.

Krahn-Fife has been ordered by the court to repay that amount to the IRS.

She was also sentenced to two years in federal prison, and James Fife was sentenced to 46 months in federal prison in 2006.

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

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