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AT&T to pay $23M to settle Illinois racketeering charge

AT&T Illinois’ former president is also facing federal conspiracy charges over his alleged part in the company’s attempt to influence state lawmakers.

CHICAGO (CN) — U.S. Attorney John Lausch announced Friday morning that telecommunications giant AT&T Illinois had agreed to pay a $23 million fine to the federal Crime Victims Fund over its now-admitted scheme to influence former Illinois House Speaker Michael Madigan between 2010 and 2017.

The fine is part of a deferred prosecution agreement the company reached with Lausch’s office. Per the agreement, AT&T admitted to arranging for payments to be made to one of Madigan’s associates. The hope was that the powerful Democrat would help pass legislation beneficial to AT&T’s bottom line.

“The U.S. Attorney’s Office today filed a one-count criminal information in U.S. District Court in Chicago charging AT&T Illinois with using an interstate facility to promote legislative misconduct,” Lausch’s office wrote in a news release on the deal. “Under the agreement, the government will defer prosecution on the charge for two years and then seek to dismiss it if AT&T Illinois abides by certain conditions, including continuing to cooperate with any investigation related to the misconduct alleged in the information.”

The specific legislation federal prosecutors said AT&T worked to pass, with the help of Madigan and his associates, was a bill making it easier for the company to end its Carrier of Last Resort obligation to Illinoisans. This obligation required AT&T to provide landline telephone service to all Illinois residents. An early version of the bill passed through both Illinois chambers in June 2017, only to be vetoed by the Republican then-governor Bruce Rauner. A revised version of the bill followed the same trajectory a month later, but this time Rauner’s veto was overruled by the state House led by Madigan.

Per the now-enacted law, AT&T is legally allowed to end landline service for any remaining Illinois customers still making use of the technology, pending approval from the Federal Communications Commission.

“If the Commission does not provide notice of a hearing within 60 calendar days after the notification or holds a hearing and fails to find that the proposed discontinuation or abandonment would be contrary to the public interest, the provider may discontinue or abandon such service after providing at least 30 days notice to affected customers,” the law states.

As of 2017, an estimated 1.2 million Illinoisans still relied on landline service.

Combined with another provision in the bill raising 911 emergency service fees across the state, the legislation was worth millions to AT&T. And federal prosecutors now say the company secured its bag for only $22,500.

“AT&T Illinois admitted that in 2017 it arranged for an ally of Madigan to indirectly receive $22,500 in payments from the company …. Although AT&T Illinois employees formulated a pretextual assignment for Madigan’s ally to disguise why the ally was being paid, the ally performed no actual work for AT&T Illinois and the company made no effort to ensure any work was performed,” Lausch’s office said.

“We hold ourselves and our contractors to the highest ethical standards. We are committed to ensuring that this never happens again,” an AT&T spokesperson told Courthouse News via email.

While the multi-billion dollar corporate entity may be getting away with a $23 million slap on the wrist, its Illinois region former president Paul La Schiazza is not so lucky. In addition to announcing the deferred prosecution agreement with AT&T, prosecutors also announced Friday that they had filed five conspiracy, bribery and racketeering charges against La Schiazza for his alleged complicity in the racketeering scheme.

La Schiazza’s indictment, filed by federal prosecutors on Wednesday, accuses the former corporate president of coordinating the collective $22,500 in payments to Madigan’s camp.

“Paul La Schiazza, together with others known an unknown to the grand jury, corruptly offered and agreed to give a thing of value, and caused AT&T Illinois to offer and agree to give a thing of value, namely, monetary payments of $2,500 a month, for the benefit of Madigan … with intent to influence and reward Madigan, as an agent of the state of Illinois, in connection with any business, transaction, and series of transactions of the state of Illinois involving a thing of value of $5,000 or more, namely, COLR [Carrier of Last Resort] legislation," the indictment reads.

La Schiazza has not yet entered a plea on the charges.

Madigan himself currently faces 23 federal charges for bribery, fraud, conspiracy and racketeering, 22 of which he has pleaded not guilty to. He was indicted this past March on those 22 charges for his alleged involvement in another corporate bribery scheme by Illinois’ largest energy provider, Commonwealth Edison. Lausch’s office filed an additional conspiracy charge against Madigan, who resigned as House Speaker in 2021, on Wednesday over the new AT&T scandal. He has not yet entered a plea on the new charge.

As with AT&T, Commonwealth Edison agreed to a deferred prosecution agreement in 2020. The deal compelled the company and its parent Exelon Corporation to pay a $200 million fine and admit to attempting to bribe Illinois lawmakers between 2010 and 2019.

ComEd also faced a class action civil suit for its decade-long bribery scheme in 2020, but U.S. District Judge Jorge Alonso, an Obama appointee, dismissed the suit in September 2021. The Seventh Circuit affirmed the dismissal this September.

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