The US government has provided more detail on how a former AT&T executive allegedly bribed a powerful state lawmaker's ally in order to obtain legislation favorable to AT&T's business.
Former AT&T Illinois President Paul La Schiazza is set to go on trial in September 2024 after being indicted on charges of conspiracy to unlawfully influence then-Illinois House Speaker Michael Madigan. AT&T itself agreed to pay a $23 million fine in October 2022 in connection with the alleged illegal influence campaign and said it was "committed to ensuring that this never happens again."
US government prosecutors offered a preview of their case against La Schiazza in a filing on Friday in US District Court for the Northern District of Illinois. A contract lobbyist hired by AT&T "is expected to testify that AT&T successfully passed two major pieces of legislation after the company started making payments to Individual FR-1."
The Madigan ally referred to in the court document as "Individual FR-1" is former state Rep. Edward Acevedo, a Chicago Tribune article notes. Acevedo, who was Madigan's assistant majority leader in the Illinois House before retiring in 2017, was sentenced to six months in prison for tax evasion in 2022. Madigan left his House speaker post in 2021.
In one internal email sent to an AT&T employee, La Schiazza allegedly described the company's quid pro quo with Madigan as "the friends and family plan."
The government said the bribery scheme resulted in passage of legislation eliminating AT&T's Carrier of Last Resort (COLR) obligation to provide landline phone service, and separate legislation related to small cell deployments. Madigan, a Democrat, was House speaker when both bills were passed. The lobbyist who is expected to testify allegedly acted as an intermediary by transmitting payments to Madigan's ally.
“The friends and family plan”
From February 2017 to January 2018, La Schiazza "conspired with Madigan, Madigan's close confidant, Michael McClain, and [three AT&T employees identified as] ATT-1, ATT-2, and ATT-3 to corruptly confer benefits on a Madigan associate to influence and reward Madigan for passing the COLR legislation," the government filing said.
Madigan and McClain were indicted on federal racketeering and bribery charges and are scheduled to go on trial in October. La Schiazza was indicted on one count of conspiracy, one count of corruptly giving something of value to reward a public official, and three counts of using a facility in interstate commerce to promote unlawful activity.
"Madigan's outsized power in the General Assembly meant his approval was necessary for the passage or defeat of legislation of concern to AT&T," the government filing in the La Schiazza case said. Testimony at trial "will demonstrate that Madigan and McClain were closely associated and that McClain acted on Madigan's behalf in soliciting and facilitating the provision of benefits from AT&T," the filing said.
The $22,500 was paid in nine monthly installments of $2,500 in 2017, the filing said. The payments were approved by AT&T even though "internal justifications to AT&T's accounting department for the payments to Individual FR-1 were incomplete, in that they did not mention that Individual FR-1 was the intended recipient of the payments," the filing said. A "false contract amendment" was allegedly used to conceal the payments.
"Specifically, at McClain's request, defendant and his coconspirators arranged for AT&T to pay Individual FR-1, a former state representative and political ally of Madigan, approximately $22,500 for supposed consulting services. In reality, the reasons given for paying Individual FR-1 were pretextual, and Individual FR-1 did no work in return for the payments," the government said.
AT&T expected millions in savings
The people referred to as ATT-1, ATT-2, and ATT-3 were employees that La Schiazza supervised in AT&T's legislative affairs group. The filing says the "friends and family plan" comment came in a communication from La Schiazza to one of these employees:
In an email on July 12, 2017, less than two weeks after the COLR bill became law, defendant received a request to sponsor a non-profit event from a relative of Madigan's "at the suggestion of our good friend Mike McClain." Defendant forwarded that request to Individual ATT-1 and noted, "this will be endless." Individual ATT-1 responded, "I suspect the 'thank you' opportunities will be plentiful," a reference to the recent passage of the COLR legislation. Defendant responded, "Yep... we are on the friends and family plan now."
The COLR bill approved in 2017 "eliminat[ed] AT&T's costly responsibility to provide landline telephone service to any Illinois resident who requested it," the filing said. (AT&T is currently trying to end its landline phone obligations in California, but utility officials in that state are set to reject AT&T's request.)
"AT&T projected that enacting the COLR legislation [in Illinois] would save the company millions of dollars," the government filing said. "AT&T had failed at multiple prior attempts to pass COLR reform between 2010 and 2015, partly due to a lack of legislative backing from Michael Madigan, then-Speaker of the Illinois House of Representatives. As a result, AT&T viewed Madigan's support to the renewed COLR effort in 2017 as critical."
The Illinois small cell bill that became law in 2018 "establish[ed] fees for small cell tower attachments used by carriers like AT&T to boost signal," the government filing said. Madigan helped advance the bill and "helped defeat an amendment to the small-cell legislation that would have been harmful to AT&T's interest in the spring of 2018," the filing said.
Getting “credit” from Madigan
On one occasion, AT&T employees allegedly discussed in emails whether they could be certain of receiving "credit" from lawmakers for the payments to Individual FR-1:
Notably, Individual ATT-3 emphasized that even though Individual FR-1 would technically receive payment from Intermediary 4, "we would make sure that ATT gets credit for fulfilling this request," referring to credit from Madigan. Defendant responded that he had no objection to the plan "as long as you are sure we will get credit and the box checked."
On the same day, Individual ATT-3 subsequently emailed Individuals ATT-1 and ATT-2 and asked, "are we 100% certain that we will get credit for being responsive?" Individual ATT-3 further sought to confirm that AT&T "would get credit from the powers that be," another veiled reference to Madigan. Individual ATT-2 responded, "I would hope that as long as we explain the approach to McClain and [Individual FR-1] gets the money then the ultimate objective is reached." Individual ATT-3 wrote in response, "I don't think Paul [defendant] wants this based on 'hope.' We need to confirm prior to executing this strategy."
The emails tellingly contained "no discussion of whether this arrangement would be acceptable" to the person receiving the payments, the government said. "These emails demonstrate that it was McClain, acting as Madigan's agent, who dictated the payment arrangement with Individual FR-1, that the payments had no connection to any legitimate business need of AT&T, but were instead intended to secure Madigan's legislative support," the filing said.