Former U.S. House Speaker Dennis Hastert agreed to pay $3.5 million in apparent hush money to a longtime acquaintance to cover-up wrongdoing in his past, then lied to the FBI when asked about suspicious cash withdrawals from several banks, federal prosecutors alleged Thursday.
The stunning indictment of the longtime Republican powerhouse alleged he gave about $1.7 million in cash beginning in 2010 to the acquaintance, identified as Individual A in the charges, to “compensate for and conceal (Hastert’s) prior misconduct” against Individual A from years earlier.
Individual A was described in the charges as having lived previously in Yorkville, where Hastert worked as a high school teacher and wrestling coach from 1965 to 1981. The individual has known Hastert “most of Individual A’s life,” the indictment said.
While details of the relationship and Hastert’s alleged wrongdoing were not provided, the indictment clearly indicated that Hastert’s early career at Yorkville High School was material to the charges, Jeffrey Cramer, a former federal prosecutor, told the Tribune.
“The feds don’t put superfluous facts in an indictment,” said Cramer, who is head of the Chicago division of the private security company Kroll. “If it’s in there, it’s relevant.”
Cramer noted the size of the alleged payoffs seemed to indicate whatever Hastert was trying to conceal could be devastating.
"$3.5 million is a lot of money to keep a secret hidden,” he said.
Hastert, 73, of Plano, was charged with one count each of structuring currency transactions to evade currency transaction reports and making a false statement to the FBI, counts that each carry a maximum penalty of five years in prison and a $250,000 fine if convicted. He will be arraigned later at U.S. District Court in downtown Chicago.
Hastert was House speaker for eight years and has been working as a consultant and Washington lobbyist since stepping down from office in 2007.
The bombshell charges had immediate fallout for Hastert. On the same day the indictment was announced, Hastert resigned from the board of directors at the Chicago-based futures exchange operator CME Group, a spokesman said.
Later Thursday, a spokesman at the Washington lobbying firm where Hastert had been working, Dickstein Shapiro, confirmed that Hastert had resigned his position as co-leader of the firm’s public policy and political law practice.
Hastert’s bio was taken down from the company’s website Thursday afternoon.
A woman who answered the phone Thursday at the former congressman’s Yorkville consulting business, Hastert & Associates, said Hastert told her to refer questions to Dickstein Shapiro.
According to the seven-page indictment, Individual A met multiple times in 2010 with Hastert but brought up the allegations of past misconduct during at least one of the meetings. During that discussion and later meetings, Hastert agreed to pay $3.5 million to Individual A to conceal the wrongdoing, the indictment alleged.
From June 2010 to April 2012, Hastert made 15 withdrawals of $50,000 each from bank accounts he controlled and paid Individual A that cash about every six weeks, according to the charges.
After bank representatives questioned Hastert about the withdrawals in 2012, he began illegally structuring the cash withdrawals in increments less than $10,000 to evade bank reporting requirements, the indictment said.
The FBI began investigating the cash withdrawals in 2013. According to the indictment, agents were interested in whether Hastert was using the cash “for a criminal purpose” but were also investigating the possibility that Hastert “was the victim of a criminal extortion related to, among other matters, his prior positions in government.”
When questioned by the FBI about the withdrawals last December, Hastert, who as speaker was once second in line to take over the Oval Office if the president was incapacitated, said he was trying to store cash because he didn’t feel safe with the banking system, according to the charges.
“Yeah ... I kept the cash. That’s what I’m doing,” Hastert was quoted as saying to the agents.
Cramer said the charges against Hastert are difficult to beat in court because a paper trail documents the sudden changes he made in his withdrawal procedures after the banks initially questioned him in 2012.
“Those sudden changes in his conduct are pivotal,” Cramer said.
The longest-serving Republican House speaker in history, Hastert was elected to the U.S. House in 1986 after serving three terms in the Illinois legislature. Hastert was dogged by scandal near the end of his term as speaker over the response of Republican leadership to improper advances toward underage male pages by then-Rep. Mark Foley of Florida.
In 2006, the House Ethics Committee found that Hastert and other leaders were “willfully ignorant” in responding to early warnings of the scandal but did not violate any House rules.
The Tribune previously reported that although the panel did not reprimand or otherwise sanction Hastert, it cast doubt on Hastert’s public insistence that he was unaware of a complaint about inappropriate email messages Foley sent to a former page in 2005.
Controversy also followed Hastert after he left the speaker’s office. A Tribune investigation in 2012 found that Hastert had conducted private business ventures through a taxpayer-financed office.
In 2013, J. David John, a suburban Chicago businessman who was involved in the business ventures with Hastert, sued Hastert in federal court, claiming he had knowledge that Hastert “was using the federally funded offices, staff, office supplies and vehicles for his personal business ventures.”
According to records in the case, John said he had at least three conversations with an FBI agent about how Hastert used the office.
John, reached by phone Thursday, declined to comment for this story.
A judge twice dismissed John’s suit on procedural grounds but did not rule on its merits. John is attempting to revive his suit.
Chicago Tribune’s Todd Lighty and Katherine Skiba and Aurora Beacon-News’ Steve Lord contributed.