Case: 1:15-cr-00314 Document #: 125 Filed: 05/22/18 Page 1 of 11 PageID #:363

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA, )

)
Plaintiff, )
)
v. ) No. 15 CR 314
) Hon. Amy J. St. Eve
DANIEL SOSO and EDWARD R. )
VRDOLYAK, )
)
Defendants. )

MOTION TO DISMISS BASED ON PRE-INDICTMENT DELAY

NOW COMES the Defendant, EDWARD R. VRDOLYAK, by and through his

attorneys, and pursuant to the Fifth Amendment’s Due Process Clause and Rule 48(b)(1) of

the Federal Rules of Criminal Procedure respectfully requests that the Court dismiss the

Superseding Indictment based on pre-indictment delay. The charges described in the

Superseding Indictment go back twenty (20) years and in the delay at least one critical

witness had passed away and two others are suffering from varying degrees of mental

degeneration.

IN SUPPORT of this Motion Defendant states that previously in this litigation he

moved to strike as surplusage language in the Superseding Indictment allegations that prior

to the year 2000 Defendant had entered into a “secret” agreement with codefendant Daniel

Soso (“Soso”) and “Individual B” to share legal fees out of nationwide tobacco litigation

settlement fund. Defendant argued these allegations had nothing whatever to do with

whether the Defendant had committed the income tax violations at issue. The Government

opposed the motion, arguing the allegations established Defendant’s motive and provided

necessary context for the Defendant’s actions for the jury. The evidence Defendant has lost

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as a result of the pre-indictment delay would have directly rebutted the Government’s

theory.

Specifically, one of the principal witnesses who Defendant would have relied upon to

rebut the Government’s concealment theory has died, another suffers from dementia, and a

third appears to suffer from significant memory loss. The delay may therefore impact on

whether Defendant will be able to defend this case without waiving his constitutional Fifth

Amendment right not to testify. Moreover, notwithstanding what may be Defendant’s

actual state of mind, in the event he chooses to waive his right not to testify jurors will be

less likely to believe him because of his advanced age. Defendant’s advanced age also

affects how effectively he can help counsel prepare his defense. Meanwhile, critical IRS

records have also been lost.

If this alleged concealment evidence is necessary for the Government to prove its

case then the lost evidence is vital for the Defendant to disprove it. Defendant cannot fully

defend himself or receive a fair trial because of this pre-indictment delay and he therefore

respectfully requests an Order dismissing all the charges against him. Alternatively,

Defendant respectfully requests that the Court conduct a hearing on the substance of this

motion.

IN FURTHER SUPPORT of this Motion, Defendant states:

Summary of Charges

1. The charges that make up the Superseding Indictment date back more than

two decades when, according to the charges, Soso, Vrdolyak, and “Individual B” entered

into secret agreements to pay SOSO and VRDOLYAK a portion of the attorney fees

awarded in a nationwide tobacco lawsuit. Under the caption, “Soso’s and Vrdolyak’s

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Secret Receipt of Fees from the Tobacco Lawsuit,” the Superseding Indictment alleges that

on October 8, 1996, “Individual B,” on “Law Firm B” letterhead, sent Defendant Soso a

letter, with a copy to Vrdolyak, confirming that the firm would provide a 2½% share of its

legal fees to Vrdolyak to the extent Law Firm B was retained and successfully prosecuted a

lawsuit against certain tobacco companies for damages incurred by the State of Illinois as a

result of the sale of tobacco products to Illinois residents. (SI, ¶¶ 1(e), (o)(1)). The

Superseding Indictment emphasizes that Vrdolyak allegedly did no work to justify a fee and

that Soso, Vrdolyak, and Individual B therefore concealed this agreement from the State of

Illinois, the Attorney General, Law Firm C, the tobacco companies and the attorneys for

the tobacco companies. (SI, ¶ 1(o)).

2. On October 9, 1996, the Illinois Attorney General entered into a written

contract with several law firms, including Law Firm B, appointing them to act as Special

Attorneys General who would represent the State of Illinois in just such a lawsuit. (SI, ¶

1(g)). In November 1998, the case was resolved. In February 1999, Soso and Vrdolyak

allegedly entered into an agreement providing that Vrdolyak would give Soso fifty percent

(50%) of any fees he received from the settlement, including the fees Vrdolyak received from

Individual B. Soso agreed to give Vrdolyak forty percent (40%) of any fees he received,

including any he fees received from Individual B. (SI, ¶ 1(o)(2)).

3. In May 1999, Individual B sent Vrdolyak a letter on Law Firm B letterhead

agreeing to pay him 10% of the national counsel’s legal fees. The Superseding Indictment

calculated a potential award to Vrdolyak totaling $65 million, even though, according to the

Superseding Indictment, Vrdolyak had done no work on the tobacco lawsuit. (SI, ¶ 1(o)(3)).

Soso and Vrdolyak thereupon amended their February 1999 agreement to provide that Soso

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would receive a total of 3½ points, with 2½ points representing Soso’s original share

pursuant to a prior agreement with outside counsel, and one (1) point from Vrdolyak in case

Vrdolyak received the those agreed points from outside counsel. (SI, ¶ 1(o)(4)).

4. In September 1999, an arbitration panel awarded Illinois outside counsel a

total of $121 million in fees for their work on the Tobacco Lawsuit. A dispute over the total

amount of those fees led to a written settlement agreement that increased the award of

attorneys’ fees by paying three installments of totaling another $67.5 million. In the end,

Outside Counsel was awarded a total of $188.5 million in connection with the Tobacco

Settlement, to be paid in three installment payments in 2003, 2004, and 2005. (SI, ¶ 1(n)).

5. In August 2005 and again in April 2006, the IRS served notices of levy

requiring Vrdolyak’s law office to pay to the IRS any money it held that was due Soso. (SI, ¶

1(u)). The Superseding Indictment charges that Vrdolyak should have turned over to the

IRS Soso’s share of the legal fees that Vrdolyak had received from the tobacco litigation, but

he instead falsely denied having any funds at the time or receiving any such funds in the

future. In those year through 2014 Vrdolyak allegedly conspired with Soso to conceal those

funds from the IRS.

Evidence Lost From Pre-Indictment Delay

6. A federal court may dismiss an indictment “if unnecessary delay occurs in …

presenting a charge to a grand jury.” Fed.R.Crim.P. 48(b)(1). Although a defendant’s

primary safeguard against pre-indictment delay lies in the statute of limitations, the Fifth

Amendment Due Process Clause also plays a part. See, e.g., United States v. McMutuary, 217

F.3d 477, 482 (7th Cir. 2000). If a defendant can show that the delay caused him “actual

and substantial prejudice,” the burden then shifts to the Government to explain the delay

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with the court then balancing the prejudice to the defendant against the reasons for delay in

determining whether the defendant has been deprived of due process. United States v. Canoy,

38 F.3d 893, 901-02 (7th Cir. 1994); United States v. Sowa, 34 F.3d 447, 451 (7th Cir. 1994).

Allegations of actual and substantial prejudice must be specific, concrete, and supported by

evidence. Canoy, 38 F.3d at 902. See also McMutuary, 217 F.3d at 482. With respect to

witness testimony, the defendant must show that the witness would have testified, that the

testimony would have withstood cross examination, and that the jury would have found the

witness credible. Canoy, 38 F.3d at 902. Regarding documentary evidence, the defendant

must show “whose records would have been subpoenaed, what those records are likely to

have shown, and how the records would have been helpful to the defense.” Canoy, 38 F.3d

at 903.

7. The Government’s theory accuses Defendant of criminal conduct conceived

20 years before the Government tucked Defendant into the Superseding Indictment. This

pre-indictment delay has caused Defendant actual and substantial prejudice by seriously

weakening Defendant’s ability to defend himself. The charges should therefore be dismissed

as a violation of Due Process.

8. As noted, the Superseding Indictment devotes an entire section to describe a

“secret” agreement between Defendant, Soso, and “Individual B” to funnel allegedly

unearned and unjustified tobacco litigation settlement legal fees to Defendant. The

Government knows that proving Defendant received a portion of the fees “secretly” will

have a powerful influence on how the jury views the actual issues in this case. The

Government already argued as much when it successfully opposed Defendant’s motion to

strike the allegations as surplusage. But the evidence is not just surplusage; it is untrue.

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There was never any “secret” agreement. Only several witnesses who could testify to the

falsity have either died or lost their memories in the twenty-year delay between the events

and the bringing of the Indictment, dramatically and even fatally hindering Defendant from

establishing that fact to the jury.

9. For instance, Richard Stock now suffers from dementia. An Assistant Illinois

Attorney General, Stock was the primary person involved with choosing participating

outside counsel and in handling the tobacco litigation. Defendant has reason to believe that

if Stock did not have dementia he would have been able to contradict the allegations that the

State and others did not know about Defendant’s interest in the litigation. Among other

things Defendant handwrote a note to Stock specifically requesting that he “inform Jim”

that he was very interested (Ex. A), “Jim” being an obvious reference to then-Attorney

General Jim Ryan and his “interest” an obvious reference to participating in the fee dispute,

as Stock would have clearly been able to explain. Meanwhile Jim Ryan had heart surgery

in January 2013 and his memory appears to have suffered because in a September 26, 2014,

interview he could not recall an interview a year earlier and could not recognize the

interviewer. He told the interviewer that when recovering from heart surgery he underwent

a series of “mini-strokes” that impaired his vision, mobility, speech and memory. (Ex. B).

Ryan could no longer recall the handwritten note from Defendant to Stock where

Defendant expressed his interest and asked Stock to relay his interest to Ryan. (Id.)

10. Jerry Solovy, a principal lawyer involved in the tobacco litigation fee dispute,

passed away in 2011. Solovy could have also rebutted the allegations made in the

Superseding Indictment that Defendant’s participation was concealed from the State,

defendants, and other lawyers. Robert Clifford, who represented certain lawyers in the fee

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dispute, recalled that during the mediation in front of Judge O’Donnell Solovy made “a

flippant comment that Eddie Vrdolyak doesn’t need any more money,” to which Clifford

responded “whether he needs it or not you need to up your offer.” Judge O’Connell’s 302,

he states that Solovy commented that Defendant had an interest in the outcome of the

mediation. With Solovy unavailable, Defendant cannot explore these comments.

11. The testimony from these witnesses is critical to the defense. Defendant

previously moved to strike all these allegations with respect to this alleged “concealment” by

Defendant that he was going to receive a share of the legal fees. Defendant argued it was

surplusage. See R.Doc. #84, PgID #247. The Government responded, arguing how the

evidence was relevant to the jury’s understanding of the Defendant’s motive for committing

the crimes and that it provides the jury with a complete picture of the context in which

Defendant’s conduct took place. R.Doc. #87, PgID #267. Further, the Government argued

that this evidence “serves to demonstrate that Vrdolyak’s acts were not the product of either

mistake or inadvertence over some incidental legal matter, but deliberate acts to ensure that

a confederate continued to reap the benefit from this large scale, secret, and unauthorized

arrangement.” Id., at PgID #268. Based on the Government’s argument, the Court denied

the motion to strike, accepting its argument that the evidence was “directly relevant to

Defendant’s motive to engage in the charged behavior, his willfulness on Count Two, and to

put Defendant’s actions in context.” R.Doc. #99, PgID #309.

12. The Government cannot have it both ways. If this evidence of concealment is

necessary to prove Defendant’s motive and specific intent to commit the offense, then the

evidence of lack of concealment is just as necessary for the Defendant to disprove it. If the

evidence of concealment is necessary to put the Defendant’s conduct in “context,” then the

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evidence of lack of concealment is just as necessary to the Defendant to show this “context”

is but a mirage. The witness who has since died, and the witnesses whose memories are

now impaired are no longer available to help Defendant rebut these allegations that are, in

the Government’s view, apparently necessary in order to prove that Defendant committed

the crimes charged.

13. In addition, because of the Government delay, he is unable to conduct an

adequate investigation in order to defend himself. As an initial concern, the IRS has

apparently lost Soso’s case file. Former IRS revenue officer Debra O’Neal, who was

interviewed by Special Agents of the Internal Revenue Service on November 10, 2014,

stated that she was assigned to Soso’s case in 1993. Ms. O’Neal further stated that she

could not remember if she ever any contact with anyone at Vrdolyak’s law firm about the

levy. When asked how many levies she issued concerning this case, Ms. O’Neal could not

recall but stated that “…this information should be identified on her case history sheet; a

copy of the levies would also be in her case file.” See IRS_001-000037-40. When showed a

document Bates labeled “VLG000042” purporting to relate to a levy issued in this case,

O’Neal indicated that she did not remember receiving the document indicating “…that Soso

is not an employee and that Soso received a 1099 from the law firm…” O’Neal stated that

“…she would have entered a note on her case history sheet that she received a response for

the levy; O’Neal would have put any documents she received in response to the levy in her

file.” Finally, when shown a document Bates labeled “VLG000043,” which was a fax from

the Vrdolyak Law Group, LLC, O’Neal told agents that she did not remember receiving the

fax and reiterated that she would have put the document in her case file. The loss of Ms.

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O’Neal’s case file is significant because, among many other reasons, the Government will

need to establish that the notice of levy was properly served upon Defendant.

14. Moreover, Defendant himself is now 80 years old and even a younger man

would be unable to recall incidents from up to twenty years ago. And should Defendant

choose to forego his right not to testify, his credibility before the jury will be instinctively

discounted by the jurors based on Defendant’s advanced age and passage of time alone. In

the Northern District of Illinois, upon request an individual over the age of seventy years is

automatically excused from jury duty. Northern District of Illinois, Plan for Random

Selection of Jurors, 8(c) (Jan. 26, 2107, rev.). There are rather obvious reasons for that and

they go beyond simply the greater difficulty in travel. It also has to do with the ability to

recall. And younger people are less likely to believe the memories of older ones, especially

where the elderly witness is the one accused of the crime.

CONCLUSION

For the foregoing reasons, Defendant respectfully requests that the Court enter an

Order dismissing the Superseding Indictment. Alternatively, Defendant respectfully

requests for a hearing on the merits of this motion.

Respectfully submitted,

EDWARD R. VRDOLYAK

By: /s/ Barry A. Spevack

One of his attorneys

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Michael D. Monico
Barry A. Spevack
Jacqueline S. Jacobson
MONICO & SPEVACK
20 South Clark Street, Suite 700

Chicago, Illinois 60603

312-782-8500
mm@monicolaw.com
bspevack@monicolaw.com
jjacobson@monicolaw.com

Catharine D. O’Daniel
Law Offices of Catharine D. O’Daniel
161 North Clark Street, Suite 3250
Chicago, Illinois 60601
312-580-2072
co1117@aol.com

Terrence Patrick Gillespie

Gabrielle Sansonetti
GILLESPIE & GILLESPIE
53 West Jackson Blvd.
Suite 1062
Chicago, Illinois 60604
312-588-1284
Tpg50@aol.com
gabriellesansonetti@yahoo.com

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CERTIFICATE OF SERVICE

The undersigned, Barry A. Spevack, an attorney, hereby certifies that the following
document:

MOTION TO DISMISS BASED ON PRE-INDICTMENT DELAY

was served on all parties hereto on May 22, 2018 in accordance with Fed. R. Crim. P. 49, Fed. R.
Civ. P. 5, and LR 5.5, and the General Order on Electronic Case Filing (ECF) pursuant to the
district court’s system as to ECF filers.

/s/ Barry A. Spevack

Barry A. Spevack, an attorney
for Edward R. Vrdolyak

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