Vrdolyak associate pleads guilty in tax evasion scheme over tobacco settlement

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Former Chicago Ald. Edward Vrdolyak leaves the Dirksen Federal Building last year. | Santiago Covarrubias/Sun-Times file photo

An associate of former Ald. Edward R. Vrdolyak pleaded guilty in federal court Wednesday 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.

Daniel P. Soso, 67, a lawyer, said little during the brief hearing before U.S. District Court Judge Robert Dow. He was ordered to pay approximately $1.8 million in restitution — mostly to the IRS. He faces a maximum of five years in prison.

The judge agreed to delay entering the plea into the record for about a month so Soso can wrap up some matters with his legal clients.

Soso’s guilty plea sets the stage for the long-awaited trial of Vrdolyak, which is scheduled to finally begin April 15 after several delays. If the trial goes forward, it will play out against a backdrop of a citywide debate over public corruption sparked by the separate federal case against Vrdolyak’s onetime Council Wars cohort, Ald. Ed Burke (14th).

The feds first charged Soso with tax evasion on May 28, 2015 — the day they charged former U.S. House Speaker Dennis Hastert in an unrelated case.

But the Soso case simply simmered until prosecutors managed to lump Vrdolyak into it using 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.

The allegations all 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.

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 filing from prosecutors in 2015.

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.

But the feds say Soso was dodging taxes. So, the IRS served Vrdolyak with a levy in 2005 and 2006 demanding he pay it any money he owed to 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 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.

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.”

READ MORE

Ex-Chicago powerbroker Ed Vrdolyak to go to trial in tobacco case next spring

Vrdolyak lawyers: Indictment ‘deceptive, irrelevant and sinister’

‘Vrdolyak again in feds’ crosshairs — as ‘Individual A’ authorities say concealed tobacco deal payments

Contributing: Stefano Esposito

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