October 14, 2022 – The U.S. Attorney for the Northern District of Illinois and Illinois Bell Telephone Company, LLC d/b/a AT&T Illinois have entered into a Deferred Prosecution Agreement, resolving “a federal criminal investigation into alleged misconduct involving the company’s efforts to unlawfully influence former Illinois Speaker of the House Michael J. Madigan.”[1]

As explained in the agreement, AT&T Illinois funneled $22,500 to a political ally of the Speaker of the Illinois House of Representatives for help passing legislation eliminating carrier of last resort obligations. The payments were for “special project” consulting work that never occurred. Consequently, AT&T Illinois will pay a $23 million criminal penalty, and must implement an ethics program and provide annual reports to the government regarding remediation and implementation of the program.

In connection with the case, the former president of AT&T Illinois, Paul La Schiazza, was “charged with 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.”[2]

Knowing that similar COLR-elimination legislation was proposed or passed in several other states during this same time period, the details of this case make one wonder whether AT&T considered bribing officials in other states as well.

Illinois 2017 Carrier Of Last Resort Legislation

In May 2017, the Illinois General Assembly passed legislation (SB 1839), supported by AT&T Illinois, that addressed large communications service providers’ transition to Internet Protocol-based networks and service. The bill allowed large providers to elect to relieve themselves of carrier of last resort obligations. However, the Governor of Illinois vetoed the bill.

A day later, a second version of the bill originating on the House side (HB 1811) was passed by the General Assembly, but it too was vetoed by the Governor. Both the House and Senate of the Illinois General Assembly then voted to override the Governor’s veto of HB 1811.[3]

During this time, Michael J. Madigan, the ultimate target of AT&T’s bribe, was the Speaker of the Illinois House of Representatives and the longest serving member of the House of Representatives. Moreover, “AT&T Illinois understood that, as Speaker of the House of Representatives, Madigan was able to exercise control over what measures were called for a vote in the House of Representatives and had substantial influence and control over fellow lawmakers concerning legislation, including legislation that affected AT&T Illinois.”[4]

The Deferred Prosecution Agreement also provides insight into the origin of AT&T Illinois’ illegal bribery scheme. After carrier of last resort legislation failed to pass the Illinois General Assembly in 2015, AT&T Illinois began plotting its next attempt:

After AT&T Illinois had failed to secure COLR relief in 2015, Individual ATT-1 circulated a document called “2015 Lesson[s] Learned, Setting the Stage for the 2017 Modernization Campaign,” in which one “lesson learned” under the heading “Speaker Madigan” was: “AT&T is not as ‘helpful’ when requests are made as Commonwealth Edison.”[5]

Finally, here are some details on the illegal bribery payments:

In 2017, in an effort to influence and reward Madigan’s efforts, as Speaker of the Illinois House of Representatives, to assist AT&T Illinois with respect to legislation concerning AT&T Illinois and its business, namely, the COLR legislation, AT&T Illinois arranged for Individual FR-1 to indirectly receive payments from AT&T Illinois totaling $22,500, even though Individual FR-1 did no work in return for such payments. AT&T disguised the true nature of the payments, and utilized an interstate facility in order to promote and facilitate Madigan’s legislative misconduct as further described below.[6]

Beginning no later than in or around 2017, AT&T Illinois understood that Madigan and McClain sought to obtain from AT&T Illinois monetary payments for Individual FR-1, who was a political ally of Madigan’s. After this, AT&T Illinois, together with President-1, Individual ATT 1, Individual ATT-2, Individual ATT-3, Individual 4, and Company 4, arranged for indirect monetary payments to be provided to Individual FR-1 through Company 4. Monthly payments to Company 4, intended for Individual FR-1, began in June 2017, and continued until in or around January 2018, even though Individual FR-1 did no work for AT&T Illinois in return for these payments.[7]

Deferred Prosecution Agreement – $23 Million Criminal Penalty

Under the Deferred Prosecution Agreement, AT&T Illinois admits it arranged for $22,500 in payments to be made to an ally of Speaker of the House Madigan to influence and reward Madigan’s efforts to pass legislation allowing for the elimination of carrier of last resort obligations. AT&T Illinois will pay a $23 million criminal penalty, and must implement a new compliance and ethics program and provide annual reports to the government regarding remediation and implementation of the program.

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[1] AT&T Illinois To Pay $23 Million To Resolve Federal Investigation Into Efforts To Unlawfully Influence Former Illinois Speaker of the House, Press Release, U.S. Attorney’s Office, Northern District of Illinois (Oct. 14, 2022), https://www.justice.gov/usao-ndil/pr/att-illinois-pay-23-million-resolve-federal-investigation-efforts-unlawfully-influence; U.S. v. AT&T Illinois, Deferred Prosecution Agreement, U.S. District Court For The Northern District Of Illinois – Eastern Division (Oct. 5, 2022), https://www.justice.gov/d9/press-releases/attachments/2022/10/14/att_illinois_deferred_prosecution_agreement_0.pdf.

[2] Former President of AT&T Illinois Charged With Conspiracy To Unlawfully Influence Former Illinois Speaker of the House, Press Release, U.S. Attorney’s Office, Northern District of Illinois (Oct. 14, 2022), https://www.justice.gov/usao-ndil/pr/former-president-att-illinois-charged-conspiracy-unlawfully-influence-former-illinois-0.

[3] See 220 ILCS 5/13-406.1. Large Electing Provider transition to IP-based networks and service.

[4] Deferred Prosecution Agreement, Attachment A, Statement Of Facts, p. A-2, PDF p. 23.

[5] Deferred Prosecution Agreement, Attachment A, Statement Of Facts, p. A-4, PDF p. 25.

[6] Deferred Prosecution Agreement, Attachment A, Statement Of Facts, p. A-3, PDF p. 24.

[7] Deferred Prosecution Agreement, Attachment A, Statement Of Facts, p. A-4, PDF p. 25.