Former Chicago Ald. Edward ‘Fast Eddie’ Vrdolyak gets 18 months in federal prison in tax case related to tobacco settlement - Chicago Tribune
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Former Chicago Ald. Edward ‘Fast Eddie’ Vrdolyak gets 18 months in federal prison in tax case related to tobacco settlement

Edward Vrdolyak was still a freshman alderman from Chicago’s rough-and-tumble 10th Ward in the early 1970s, but even then “Fast Eddie” understood the city’s dirty game of politics.

“There are no rules in this town,” Vrdolyak told the Tribune in 1973. “The people who run the city make the rules, and they change them as they go along.”

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On Friday, a lifetime of playing the game by his own rules once again caught up with Vrdolyak, as a federal judge sentenced him to a year and a half in prison for skirting a tax levy related to millions of dollars in payments he and a friend received in the state’s massive settlement with tobacco companies.

The sentence handed down by U.S. District Judge Robert Dow marked the second time in the past decade the onetime political powerhouse has been ordered to federal prison.

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Rejecting defense calls for ag8亚集团官方网站home confinement for the 82-year-old Vrdolyak, Dow said the case was “really a particularly sorry story” because it involved two experienced lawyers — Vrdolyak and co-defendant Daniel Soso — disrespecting the law.

And the defense argument that Vrdolyak was confused by an IRS levy “doesn’t pass the straight-face test,” the judge added.

The judge also said it was an aggravating factor that Vrdolyak decided to try to cheat the IRS even though he’s clearly a wealthy man. “There is a disconnect (when) people who’ve got millions of dollars think it’s OK not to pay their fair share and be honest with the government,” Dow said.

In the end, however, the judge noted that the wrongdoing admitted by Vrdolyak was “not the crime of the century.” He also said he would not consider Vrdolyak’s role in the tobacco settlement — which netted the ex-alderman at least $12 million over the past 20 years — in his sentencing decision.

Vrdolyak, who participated in the three-hour hearing via videoconference from his ag8亚集团官方网站home, showed no outward reaction at the sentence, blinking and looking straight at the computer screen with two of his sons at his side.

Before Dow announced his decision, Vrdolyak removed his mask and issued a brief apology for what he said was his “selfish” behavior. “I apologize to the court, to the government and to my family,” he said in a wavering voice. “What happened was my own fault and I take full responsibility.”

Due to the ongoing COVID-19 pandemic, Dow did not set a reporting date for Vrdolyak, who suffers from a brain tumor, heart trouble, dementia and other ailments that his lawyers say make him particularly susceptible to the virus. Instead, the judge asked both sides to come back in March to discuss the situation.

The sentencing capped a final legal chapter in Vrdolyak’s long and colorful history in Chicago. It began in the 1960s when Vrdolyak, who grew up in the shadow of the steel mills in the Bush neighborhood on the Southeast Side, rose quickly from ward committeeman to alderman and eventually became chair of the powerful Cook County Democratic Party.

Vrdolyak, dubbed “Fast Eddie” by friends and foes alike, was known in his heyday as the consummate Chicago political brawler, a backroom deal-maker who made judges, handed out jobs and remembered every favor or slight.

As the chairman of the influential Building and Zoning Committee, Vrdolyak was tapped by then-Mayor Richard J. Daley to rewrite the city’s zoning code, bestowing immense power over how the city would grow into the future.

Later, he became the leader of the “Vrdolyak 29,” a faction of white aldermen who opposed the agenda of Harold Washington, the city’s first Black mayor.

His fast and loose style often led him up — and sometimes across — the line. Over the years, Vrdolyak’s name surfaced repeatedly in various investigations, from grand jury inquiries into campaign spending to an IRS probe in the 1980s that led to Vrdolyak paying back tens of thousands of dollars in back taxes.

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For decades he managed to avoid criminal charges. But in 2010, Vrdolyak was sentenced to 10 months behind bars for his role in a $1.5 million real estate kickback scheme linked to the federal probe that felled then-Gov. Rod Blagojevich. The punishment came down only after prosecutors appealed U.S. District Judge Milton Shadur’s controversial ruling granting Vrdolyak probation.

During the hearing Friday, Dow referenced a wiretapped conversation from the previous case in which Vrdolyak was recorded telling corrupt influence peddler Stuart Levine that “two (expletive) schemers” like themselves should be able to figure out how to avoid paying a gift tax on a pending deal.

“‘(Expletive) schemer’ is not how you would hope a lawyer would refer to himself,” Dow said. “Unfortunately the description is apt, at least in regard to his now two criminal convictions.”

In the most recent case, prosecutors had asked for a sentence of up to 2 ½ years behind bars, saying Vrdolyak’s decision to once again play games with the IRS and hide portions of the tobacco income was just the latest in a long string of ethical and legal lapses by someone who should have known better.

Vrdolyak’s lawyers, meanwhile, argued for ag8亚集团官方网站home confinement, saying Vrdolyak’s cut from the tobacco deal was a legitimately earned consulting fee paid by a law firm that had sought his expertise and assistance.

“At some point, the government appears to just be seeking retribution because Mr. Vrdolyak made a lot of money,” Vrdolyak attorney Gabrielle Sansonetti wrote in a filing this week.

His lawyers also said that throwing the octogenarian in prison in the middle of a pandemic could amount to a death sentence.

Former Ald. Edward Vrdolyak, center, departs Chicago's Dirksen U.S. Courthouse with lawyer Michael Monico, right foreground, on March 7, 2019, after he pleaded guilty to a federal tax evasion charge stemming from millions of dollars in payments he received from the state's massive settlement with tobacco companies in the 1990s.
Former Ald. Edward Vrdolyak, center, departs Chicago's Dirksen U.S. Courthouse with lawyer Michael Monico, right foreground, on March 7, 2019, after he pleaded guilty to a federal tax evasion charge stemming from millions of dollars in payments he received from the state's massive settlement with tobacco companies in the 1990s. (Jose M. Osorio/Chicago Tribune)

Vrdolyak pleaded guilty in March 2019 to a tax charge alleging he obstructed an IRS investigation into payments to and from his friend and associate Soso related to the state’s $9.3 billion settlement with tobacco companies in the late 1990s.

In asking for prison time, prosecutors said Vrdolyak had been paid at least $12 million in fees stemming from the settlement even though he did no legal work on the case and hid his involvement from the Illinois attorney general.

According to court records, Vrdolyak’s role in the tobacco settlement came after then-Illinois Attorney General Jim Ryan negotiated a contingency arrangement promising 10% of the payout to four law firms that handled the litigation. That figure was dramatically reduced after years of court arbitration, but in the end, several law firms were to share in a total of $188.5 million.

One of those firms was Seattle-based Hagens Berman, which was headed by attorney Steve Berman. Identified only as Individual B in the indictment, Berman entered into a secret agreement in 1996 to pay Vrdolyak and Soso fees from the settlement and hide the payments from the attorney general and tobacco companies, the charges alleged.

Berman was not charged with wrongdoing. Vrdolyak’s lawyers have argued in court filings that not only was Vrdolyak’s share of the settlement above board but it also was known to key players in Ryan’s office, including his chief of staff and a deputy attorney working directly on the fee arbitration.

But prosecutors said Vrdolyak’s name was purposefully left off the settlement paperwork because he was a controversial figure.

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Evidence uncovered in the probe showed efforts to keep the deal under wraps became frayed over time.

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In 2014, Soso emailed both Berman and Vrdolyak to vent his frustration that Vrdolyak had been withholding money he was owed. He also threatened to sue Vrdolyak, warning the legal action would make “front page news and most definitely open a can of worms that I would rather stay closed,” according to a copy of the email quoted in court records.

Ryan was issued a “non-target letter” by prosecutors and interviewed several times about his recollection of the tobacco settlement, though his memory by that time was diminished by health issues.

Soso, 68, a lawyer and former Chicago cop, pleaded guilty in 2019 to one count of income tax evasion for failing to report more than $3 million in income in the deal. He was sentenced in March to two years in prison.

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