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Feds seek more than two years for ex-Ald. Vrdolyak, say he got $12 million from tobacco litigation

It has been 20 months since Vrdolyak pleaded guilty to tax evasion and four years since the feds filed an indictment outlining his role in a scheme to pocket millions of dollars from Illinois’ two-decade-old settlement with tobacco companies.

Former Chicago Ald. Edward Vrdolyak walks with his lawyers out of the Dirksen Federal Courthouse in March 2019 after pleading guilty to a federal tax evasion charge.
Former Chicago Ald. Edward Vrdolyak walks with his lawyers out of the Dirksen Federal Courthouse in March 2019 after pleading guilty to a federal tax evasion charge.
Ashlee Rezin Garcia

Federal prosecutors asked a judge late Friday to send former Ald. Edward Vrdolyak to prison for more than two years, revealing he has collected more than $12 million from Illinois’ massive settlement with tobacco companies in the 1990s.

Vrdolyak received that money even though prosecutors say he did no work on the tobacco litigation that has since become the backdrop to his most recent indictment at the Dirksen Federal Courthouse.

Prosecutors also asked U.S. District Judge Robert Dow to delay Vrdolyak’s prison sentence until 2021, after a COVID-19 vaccine has been distributed to the inmate population. In their own memo, Vrdolyak’s lawyers asked for probation or home confinement, “particularly during a global pandemic.”

A sentencing memo from Assistant U.S. Attorney Amarjeet Bhachu called Vrdolyak “a repeat offender and self-confessed ‘schemer,’” as well as a “charlatan.” It pointed to Vrdolyak’s previous fraud case in the federal courts, and revealed Vrdolyak wrote off a $5,923 fine handed down in that case “as a legal and professional services expense” on his taxes. In an exchange with influence peddler Stuart Levine, Vrdolyak is quoted as saying “f--- the gift tax.”

Meanwhile, Vrdolyak lawyer Catharine O’Daniel revealed in her own memo that Vrdolyak has a brain tumor. She called him “remorseful and contrite.”

It has been 20 months since Vrdolyak pleaded guilty to tax evasion and four years since the feds quietly filed an indictment outlining his role in a scheme to pocket millions from Illinois’ two-decade-old settlement with tobacco companies even though the feds say he did no work on it as an attorney.

His case has been overshadowed by separate, unrelated public corruption investigations that have roiled state politics in the time since.

The feds charged Vrdolyak, 82, along with attorney Daniel Soso, who was sentenced in March to two years in prison for dodging taxes. A prosecutor signaled then that sentencing guidelines would call for a lighter sentence for Vrdolyak.

Prosecutors have previously said Vrdolyak and Soso “received in excess of $10 million in fees” from the tobacco 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.”

Illinois’ $9.3 billion court settlement with tobacco companies also led to $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 state attorney Steve Berman to collect some of that money, even though they “did not perform any work.” Vrdolyak’s attorneys have insisted it was no secret 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 Vrdolyak was left off the paperwork because he was “too publicly known and too controversial.”

Bhachu wrote in a court filing ahead of Soso’s sentencing that law enforcement interviewed Ryan, and though health problems had affected his memory, Bhachu wrote that Ryan “was clear and consistent that he never authorized Vrdolyak or Soso’s involvement in the litigation.”

He also wrote that Ryan was given a “non-target letter” by the government.

The deal between Berman, Soso and Vrdolyak evolved over time, according to court records. In May 1999, records show Berman sent Vrdolyak a letter indicating Vrdolyak could expect to collect $65 million. Vrdolyak agreed in writing to give part of that money to Soso.

Vrdolyak paid Soso $1.9 million between 2000 and 2005, according to Soso’s plea agreement. Prosecutors said early this year that Soso wound up collecting more than $3 million since 2000 from the tobacco litigation.

Meanwhile, Soso was dodging taxes. So the IRS served Vrdolyak’s law firm with a levy in 2005, demanding he pay the agency any money he owed to Soso. Instead, Vrdolyak stopped paying Soso and told the IRS he owed Soso nothing.

Vrdolyak continued to accept money that Soso was due. Then, in 2010 and 2011, Vrdolyak directed $170,242 to Soso instead of sending it to the IRS.

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 fraud. The judge handed Vrdolyak no prison time for his role in a scam with Levine. But prosecutors appealed, and another judge ultimately sentenced Vrdolyak to 10 months in prison.