Ex-Ald. Ed Vrdolyak set to plead guilty in tobacco settlement scheme

Rather than face a fast-approaching tax evasion trial in federal court, former Chicago Ald. Edward R. Vrdolyak is apparently set to plead guilty at a hearing this week that would end with his second criminal conviction.

But the details surrounding his plea — and whether it will reveal an explanation for how Vrdolyak got a cut of Illinois’ massive tobacco settlement — are still unknown.

The so-called “change of plea” hearing has been set for 10:30 a.m. Thursday before U.S. District Judge Robert Dow. An entry on the court docket said the hearing was set “at the request and by agreement of the parties.”

Vrdolyak’s lawyers did not respond to messages seeking comment. It is not clear what charge Vrdolyak plans to plead guilty to, or whether he’s reached a deal with federal prosecutors.

Just last week, Vrdolyak associate Daniel P. Soso pleaded guilty to a single count of tax evasion, setting the stage for Vrdolyak’s planned April 15 trial. That trial would be canceled if the former 10th Ward alderman pleads guilty Thursday.

The anticipated plea also arrives amid a citywide debate over public corruption sparked by the separate federal case against Vrdolyak’s onetime Council Wars ally, Ald. Edward Burke (14th).

In November 2016, the feds quietly unsealed an indictment outlining Vrdolyak’s role in a scheme to pocket millions of dollars from Illinois’ nearly two-decade-old settlement with tobacco companies. It charged Vrdolyak with impeding the IRS and dodging taxes.

More than two years later, it’s still not clear how much tobacco settlement money Vrdolyak put his hands on.

Prosecutors have said Vrdolyak and Soso “have so far received in excess of $10 million in fees.” They also previously told a judge that Vrdolyak “has a guaranteed income stream of $260,000 per year … until 2023 from tobacco-related litigation.”

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.

But 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.

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.

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.