An associate of former Ald. Edward R. Vrdolyak was sentenced Tuesday to two years in prison in connection with a scheme to cash in on Illinois’ massive tobacco settlement.
Daniel P. Soso had pleaded guilty a year ago and at that time had been ordered to pay approximately $1.8 million in restitution — mostly to the IRS. He had faced up to five years in prison.
Soso admitted to a single count of tax evasion in connection with payments both the associate and Vrdolyak received from Illinois’ multibillion dollar settlement negotiated with tobacco companies.
The feds first charged Soso with tax evasion on May 28, 2015 — the same day they charged former U.S. House Speaker Dennis Hastert in an unrelated case.
But the Soso case just simmered in the background until prosecutors managed to add Vrdolyak to the case through a superseding indictment in November 2016. That document accused Vrdolyak of impeding the IRS and dodging taxes. It accused Soso of the same but also hit him with three counts of willfully failing to file tax returns.
In a court memo filed last week, Assistant U.S. Attorney Amarjeet Bhachu wrote Soso has still failed to pay taxes for 2015 through 2018 — years in which his annual income allegedly exceeded $100,000. Bhachu said Soso has failed to pay $167,000 in taxes, interest and penalties due for those years. Meanwhile, he has, “with some regularity,” asked permission from the court to take vacations, mostly to Florida.
Soso’s attorneys, Jeffrey Steinback and Vadim Glozman, wrote in their own memo that the “root cause” of Soso’s legal and personal problems date back to the death of his infant daughter to sudden infant death syndrome on Christmas Eve 1986. His father later “died in his arms following a tragic boating accident on the Chicago Sanitary and Shipping Canal.”
The defense attorneys wrote that Soso eventually “developed an ‘I don’t care’ attitude towards everything other than his family.” They asked the judge for a lenient sentence.
The allegations in the case revolve around the state of Illinois’ $9.3 billion court settlement with tobacco companies decades ago, which 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 say his involvement was no secret, and they’ve complained about the failed memories of key witnesses, including former Attorney General Jim Ryan.
The nature of that deal was confusing even to U.S. District Court Judge Robert Dow, who kicked off Tuesday’s sentencing hearing by asking lawyers to tell him “how did all this start? It’s a mystery to me … I can’t figure it out.”
Glozman told Dow that Soso got involved in the tobacco litigation through a lawyer he knew.
“This notion that no one knew Mr. Soso was involved in this is baloney, judge,” Glozman said.
Dow, unconvinced, noted that the defense “can’t show me a single time sheet that shows a single hour billed.” The feds say Soso received more than $3 million from the tobacco litigation, an amount Dow called “absurd.”
In his memo last week, Bhachu wrote that Ryan received a “non-target letter” from the government. And though a health condition has affected his memory, Bhachu wrote that Ryan “was clear and consistent that he never authorized Vrdolyak or Soso’s involvement in the litigation.”
“Ryan further stated that if he had found out Vrdolyak had received money from the litigation, Ryan would have tried to get the money returned,” Bhachu wrote. “Ryan also denied having any knowledge about Soso’s involvement, and specified that he did not give any consent or authorization for Soso to be paid. Ryan was clear that his authority was required before somebody could be paid for participating in the tobacco litigation.”
At Tuesday’s sentencing hearing, Bhachu said Soso’s participation in the tobacco litigation was “disguised” and called his collection of substantial fees “unethical.”
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.
Soso’s plea agreement said Vrdolyak paid Soso $1.9 million between 2000 and 2005. Bhachu wrote in his memo last week that Soso “has received more than approximately $3,197,390 in payments derived from the tobacco litigation even though he did no work to benefit the State of Illinois.”
But because Soso was also dodging taxes, the IRS served Vrdolyak with a levy in 2005 and 2006 demanding he pay it any money he owed Soso. Instead, Vrdolyak allegedly stopped paying Soso and told the IRS he owed Soso nothing.
Meanwhile, the feds 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 agreement.
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.
Also unclear is how much money Vrdolyak collected off the tobacco settlement. Prosecutors have said he and Soso “have so far received in excess of $10 million in fees.” They also told a judge in 2010 that Vrdolyak “has a guaranteed income stream of $260,000 per year … until 2023 from tobacco-related litigation.”
Vrdolyak pleaded guilty to tax evasion in March 2019. His sentencing is set for April 2.
