Telephone giant AT&T Illinois has agreed to pay a $23 million fine as part of a federal criminal investigation into the company’s illegal efforts to influence former House Speaker Michael Madigan, according to court records made public Friday.
Federal prosecutors also unsealed a superseding indictment against Madigan and his longtime confidant, Michael McClain, adding allegations they participated in a scheme to funnel payments from AT&T to a Madigan associate in exchange for the speaker’s influence over legislation the telephone company wanted passed in Springfield.
The new conspiracy allegations against Madigan, which were added to the indictment Friday as Count 23, allege for the first time that a direct vote the speaker made on legislation was tainted by a scheme to influence him. Madigan’s attorney, Sheldon Zenner, had no comment.
Also charged as part of the investigation was Paul La Schiazza, the former president of AT&T Illinois, who was accused of orchestrating and approving the payments.
La Schiazza, 65, who has homes in Rhode Island and Florida, is charged with conspiracy, corruptly giving something of value to reward a public official and three counts of using a facility in interstate commerce to promote unlawful activity. Attempts to reach him were unsuccessful, and his lawyer, Tinos Diamantatos, declined to comment.
The investigation of AT&T Illinois, which was reported by the Tribune earlier this year, is being resolved with a deferred prosecution agreement under which the company admitted its conduct.
In exchange for admitting guilt and paying a $23 million fine, the charge will be dropped by the U.S. attorney’s office in two years, according to the paperwork filed Friday in U.S. District Court in Chicago.
AT&T has previously acknowledged it was under scrutiny by the U.S. attorney’s office as part of the investigation into Madigan’s political operation.
After the charges were announced, AT&T released a statement saying the company holds itself and its contractors “to the highest ethical standards” and is “committed to ensuring that this never happens again.”
An arraignment for AT&T Illinois was set for Monday before U.S. Magistrate Judge Susan Cox. Arraignments for La Schiazza on the new charges and Madigan and McClain on the superseding indictment had not been scheduled as of Friday.
The charges against AT&T expanded upon the far-reaching allegations brought against the ex-speaker in a similar bribes-for-favors scandal involving Commonwealth Edison.
The ComEd case against Madigan, who served a nationwide record 36 years as speaker before he was dethroned last year and quit, alleged the utility giant sought to win Madigan’s favor for its legislative agenda by steering no-work jobs and legal work to his political allies, giving college internships to students from his 13th Ward empire, and even appointing a Madigan-backed candidate to its board of directors.
AT&T’s $23 million fine follows the record $200 million fine that ComEd agreed to pay as part of its own deferred prosecution agreement. Prosecutors plan to dismiss a bribery count against ComEd if it cooperates in the ongoing probe. Both companies are publicly regulated.
In February, AT&T disclosed in a regulatory filing that federal prosecutors had notified them they were considering filing criminal charges against its Illinois subsidiary, formally known as Illinois Bell Telephone Co. LLC, involving “a single, nine-month consulting contract in 2017? worth $22,500.
State records show the company that year had hired a stable of Madigan-connected lobbyists working for the Illinois subsidiary as AT&T was fighting for a controversial bill to end landline service for its 1.2 million customers.
Critics of the landline bill, including AARP Illinois and the Citizens Utility Board watchdog group, were pushing back, saying the legislation would leave behind hundreds of thousands of Illinois residents, particularly seniors, who disproportionately rely on traditional landline telephone service for everything from connecting with family to monitoring life-threatening medical conditions, the Tribune has previously reported.
The Tribune reported that investigators were specifically looking at thousands of dollars in payments allegedly passed to former state Rep. Edward Acevedo, a onetime member of Madigan’s leadership team who’d recently left the General Assembly.
The payments to Acevedo were made via a lobbying contract between AT&T and Thomas Cullen, a former Madigan staffer and longtime political strategist aligned with the speaker, two sources told the newspaper. Acevedo was a registered lobbyist at the time, state records show, but not for AT&T.
Neither Acevedo nor Cullen has been charged with any wrongdoing in the alleged scheme.
Acevedo was not named in a statement of facts included in the deferred prosecution agreement filed Friday, but the payment amounts and circumstances described in the charges all match what was previously known, and sources said he was indeed the Madigan associate who received the payments.
Thomas Anthony Durkin, Cullen’s attorney, had no comment on the matter Friday. Patrick Cotter, McClain’s attorney, also said he had no comment about the new allegations. Acevedo’s lawyer, Gabrielle Sansonetti, also had no comment.
According to the statement agreed to by AT&T, in 2015, Madigan’s office had blocked the controversial landline legislation.
After that defeat, an executive circulated a “lessons learned” memo that contained one section headed, “Speaker Madigan.” The memo stated that AT&T had not been as “helpful” as ComEd when “requests” were made from the speaker’s camp, according to the statement.
The scheme to reward Acevedo, referred to in the court papers as “FR-1,” began in February 2017, after the company learned through McClain that the speaker was looking to kick Acevedo some money, according to the statement.
In an email exchange that March, AT&T Illinois’ director of legislative affairs asked two of the company’s executives if they were “100% certain” they would get credit “from the powers that be” if the payments were made to Madigan’s associate.
“I would hope that as long as we explain the approach to McClain and (the associate) gets the money then the ultimate objective is reached,” one of the executives wrote back, according to the statement.
The legislative affairs director responded, “I don’t think (La Schiazza) wants this based on hope. We need to confirm prior to executing this strategy,” the statement said.
In April 2017, La Schiazza approved a deal to secretly funnel $2,500 a month to Acevedo through a lobbying company already doing business with AT&T Illinois, according to the statement. The lobbying company was not named in the court filings.
At McClain’s direction, AT&T employees then met with Acevedo to discuss a “pretextual” reason for the payments: to “prepare a report on the political dynamics of the General Assembly’s and Chicago City Council’s Latino Caucuses,” according to the statement of facts.
Acevedo never did any real work for AT&T Illinois, however. In fact, according to AT&T’s admissions in court, he balked at first at the payments, saying they were too low. But Acevedo agreed to the deal after McClain stepped in and said the amount was “sufficient.”
From June 2017 to January 2018, Acevedo was paid a total of $22,500 in monthly installments. According to AT&T’s admission, the former representative “did not complete the purported assignment” on Latino politics, and “no efforts were undertaken” by AT&T to ensure work was being done in exchange for the money.
Meanwhile, after a protracted fight, the landline bill passed during the final hours of the spring 2017 legislative session — with Madigan’s direct assistance, according to legislative records and the statement of facts agreed to by AT&T.
On June 29, 2017, Madigan permitted the bill to be brought to a vote and cast his ballot in favor of the legislation, records show. Two days later, after Republican Gov. Bruce Rauner vetoed the legislation, Madigan and the Democrat-led General Assembly overrode him, with Madigan again voting for the override.
The new allegations involving AT&T further punctuate a stunning downfall for Madigan, the longest serving leader of any legislative chamber in the nation who held an ironclad grip on the state legislature as well as the Democratic Party and its political spoils. He was dethroned as speaker in early 2021 as the investigation swirled around him, and soon after resigned the House seat he’d held since 1971.
Madigan, 80, and McClain, 75, were charged in March in the original 22-count indictment alleging they conspired to participate in an array of bribery and extortion schemes from 2011 to 2019 that allegedly leveraged Madigan’s elected office and political power for personal gain
The indictment also accused Madigan of illegally soliciting business for his private property tax law firm during discussions to turn a state-owned parcel of land in Chinatown into a commercial development.
Both Madigan and McClain have pleaded not guilty. Their attorneys have accused prosecutors of trying to criminalize legal political actions such as job recommendations in a quest to bring down the once-powerful speaker.
McClain, a former state legislator and lobbyist, is also facing separate charges stemming from the alleged ComEd scheme. Also indicted in that case, which is set for trial in March, are former ComEd CEO Anne Pramaggiore, ex-ComEd lobbyist John Hooker and consultant Jay Doherty, the former head of the City Club of Chicago.
Acevedo, meanwhile, pleaded guilty to tax charges stemming from the ComEd investigation and was sentenced in March to six months in federal prison.
Though Acevedo was never charged with participating in the alleged bribery scheme, details of his alleged involvement in the ComEd scandal trickled out in hearings by a special House committee in 2020 tasked with investigating Madigan’s role with the power company after he was named “Public Official A” in federal court documents.
Among the records ComEd turned over to committee was a January 2017 email in which McClain told Fidel Marquez, then vice president of governmental affairs for ComEd, about a “frank conversation” he’d had with Acevedo about his “shortcomings” and an unflattering list of directives, including to “watch the booze.”
Marquez, who cooperated with investigators and recorded conversations with McClain and others for the FBI, pleaded guilty in 2020 to bribery and is awaiting sentencing.
The McClain email went on to note whom Acevedo would be allowed to lobby, even though he was not registered as a ComEd lobbyist. At the end of his email, McClain thanked Marquez for letting him talk to Acevedo first and told Marquez, “You may now talk to him.”
And in a reference he commonly used for Madigan, McClain wrote: “I will tell our Friend to proceed.”
