Former Ald. Edward R. Vrdolyak pleaded guilty Thursday to a federal tax evasion charge.
His plea comes more than two years after the feds accused him of dodging taxes and impeding the IRS. A decade ago, he also pleaded guilty to fraud.
His sentencing hearing is scheduled for July 23. Assistant U.S. Attorney Amarjeet Bhachu said in court Thursday that Vrdolyak faces a maximum prison sentence of five years, but more likely 24 to 30 months.
Just last week, Vrdolyak associate Daniel P. Soso pleaded guilty to a single count of tax evasion. Now Vrdolyak has taken his turn. His plea arrives amid a citywide debate over public corruption that began with the separate federal case against Vrdolyak’s onetime Council Wars ally, Ald. Edward Burke (14th).
Dow on Thursday asked Vrdolyak about his work and his health. Vyrdolyak said he helps out at the law office, “just running papers around.” As for his health, Vrdolyak says, “I’m doing alright.”
Vrdolyak, 81, has been under indictment since November 2016. That’s when the feds quietly unsealed charges and outlined his alleged role in a scheme to pocket millions of dollars from Illinois’ nearly two-decade-old settlement with tobacco companies.
Prosecutors have previously said Vrdolyak and Soso “have so far received in excess of $10 million in fees” from that settlement. They also previously told a judge that Vrdolyak “has a guaranteed income stream of $260,000 per year … until 2023 from tobacco-related litigation.”
However, even after Vrdolyak entered his plea Thursday, it still wasn’t clear exactly how much money Vrdolyak put his hands on.
Illinois’ $9.3 billion court settlement with tobacco companies included $188.5 million in payments to outside law firms that helped with the litigation.
The feds say Soso and Vrdolyak struck a secret deal with Washington attorney Steve Berman to collect on some of that money even though Vrdolyak “did no work on the tobacco lawsuit.” Vrdolyak’s attorneys insist that it was not a secret that Vrdolyak would receive money from the agreement, and they’ve complained about the failed memories of key witnesses, including former Attorney General Jim Ryan.
There have also been suggestions that Vrdolyak was left off the paperwork because he was “too publicly known and too controversial,” according to a court document filed in 2015 amid the feds’ investigation.
But Ryan told the feds he didn’t know about the cut taken by Vrdolyak and Soso, and he would have tried to get the money back had he known, the document states.
The deal between Berman, Soso and Vrdolyak evolved over time, according to the indictment. In May 1999, Berman allegedly sent Vrdolyak a letter indicating Vrdolyak could expect to collect $65 million. Vrdolyak agreed in writing to give a portion of that money to Soso.
Vrdolyak paid Soso $1.9 million between 2000 and 2005, according to Soso’s plea agreement.
Meanwhile, the feds say Soso was dodging taxes. So, the IRS served Vrdolyak with a levy in 2005 and 2006 demanding he pay the agency any money he owed to Soso. Instead, Vrdolyak allegedly stopped paying Soso and told the IRS he owed Soso nothing.
Prosecutors say Vrdolyak and his law firm continued accepting money from Berman. Eventually, Soso asked Berman to pay him directly. Soso allegedly hid that money in accounts belonging to his relatives and girlfriend. In 2008, Soso received $119,363, according to Soso’s plea deal.
Finally, in 2010 and 2011, the feds say Vrdolyak directed $170,242 to Soso and an unnamed recipient in connection with the tobacco settlement. It’s unclear exactly where those payments came from, but the exchange of money conflicted with Vrdolyak’s earlier statement that he owed Soso nothing.
A member of the City Council from 1971 to 1987, Vrdolyak earned the nickname “Fast Eddie” for his back-room deals and reputation for dancing on the edge of the law. He was known for saying he always assumed anyone he was talking with might be wearing a wire.
A federal judge gave him a big break in 2009, after Vrdolyak pleaded guilty to conspiracy to commit mail and wire fraud. The judge handed Vrdolyak no prison time for his role in a financial scam with corrupt influence peddler Stuart Levine. But prosecutors appealed, and another judge ultimately sentenced Vrdolyak to 10 months in prison followed by 10 months of home confinement and work release.
