Chicago (CBS) — Former Alderman Edward R. Vrdolyak plans to change his plea to guilty Thursday for a federal tax charge tied to a tobacco settlement scheme that alleges he and an associate failed to pay taxes on millions from Illinois’ multi-billion dollar settlement with tobacco companies in the 1990s.
Vrdolyak, 81, pleaded not guilty in 2016 to an indictment accusing him of tax evasion charges. The federal charge alleged he obstructed an IRS investigation into the tobacco settlement by hiding payments with Soso’s assistance.
Daniel P. Soso, 67, an attorney, pleaded guilty last month to one count of tax evasion in a hearing before U.S. District Court Judge Robert Dow. He was ordered to pay about $1.8 million in restitution to the IRS, and faces a maximum prison sentence of five years.
A judge could also impose a term of supervised release of no more than three years.
The 2016 indictment alleges an unnamed “Individual B” — who was a partner in a Washington state law firm that helped represent the state of Illinois in its lawsuit against several tobacco companies in the late 1990s — agreed to pay Vrdolyak $65 million from legal fees from the case, even though Vrdolyak did not work on the lawsuit.
According to the indictment, Vrdolyak also made an agreement with Soso to share the money he received from “Individual B.” According to federal prosecutors, Soso failed to pay taxes on the money he received, and in 2005 and 2006 the IRS served a notice to Vrdolyak that any money still owed to Soso should be paid directly to the IRS.
However, Vrdolyak allegedly stopped paying Soso and falsely told the IRS he didn’t owe Soso anything.
In the meantime, Vrdolyak allegedly made arrangements for Individual B to pay money due to Soso directly, and Soso concealed the money by depositing it in accounts held by his relatives and girlfriend. Then, from 2010 to 2011, Vrdolyak arranged for Soso to be paid $170,242 in proceeds from the tobacco lawsuit, according to the indictment.
Known as “Fast Eddie” for his reputation for working backroom political deals while he was a four-term alderman from 1971 to 1986, Vrdolyak is scheduled to go on trial before a federal jury on April 15.
The most serious charge against Vrdolyak carries a maximum sentence of 5 years in prison.