Former Illinois Attorney Pleads Guilty to Tax Evasion in Connection with Legal Fees Stemming from Multi-Billion Dollar Tobacco Litigation

CHICAGO — Former Illinois attorney EDWARD R. VRDOLYAK pleaded guilty today to federal tax evasion for assisting another lawyer in evading taxes on income received from a multi-billion dollar legal settlement with tobacco companies.

Vrdolyak, 81, of Chicago, pleaded guilty to one count of tax evasion.  The charge is punishable by up to five years in prison.  U.S. District Judge Robert M. Dow, Jr., set sentencing for July 23, 2019.

The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  The government is represented by Assistant U.S. Attorney Amarjeet S. Bhachu and Special Assistant U.S. Attorney Michael T. Donovan.

Vrdolyak admitted in a plea agreement that he assisted another lawyer, co-defendant DANIEL P. SOSO, in evading federal income taxes owed by Soso for the calendar years 1993 through 2004, and 2008 through 2013.  The income was derived from attorney fees received in connection with a $9.2 billion settlement between the State of Illinois and a number of tobacco companies in the 1990s.  At the time of the settlement, Vrdolyak and Soso were licensed Illinois attorneys.  The pair collected legal fees from the settlement pursuant to agreements with one of the attorneys that represented the State of Illinois.  Pursuant to these agreements, Vrdolyak made payments to Soso between 2000 and 2005 of approximately $1,925,830, representing Soso’s agreed-upon share of the fees of the tobacco litigation.

In August 2005, the IRS served a notice of levy on The Law Offices of Edward R. Vrdolyak, which required the turnover of all salary, wages and other amounts owed to Soso.  Over the next two years, Vrdolyak received approximately $262,854 due Soso, but he concealed receipt of these funds from the IRS, knowing such concealment would assist Soso in evading the payment of taxes and assessments due the IRS, the plea agreement states.  Vrdolyak later caused approximately $170,242 to be paid to Soso instead of remitting these funds to the IRS.

Soso, 67, of Alsip, pleaded guilty last month to one count of tax evasion.  Judge Dow set Soso’s sentencing for June 25, 2019.