AT&T slapped with $23M fine, former exec charged for playing politics in Illinois

AT&T struck a deal with federal officials to resolve allegations it indirectly paid a state lawmaker in Illinois to secure support for legislation which freed it of an obligation to provide all residents in the state with landline phone services. An operator executive and two politicians involved in the scheme were separately charged in connection with the case.

The operator agreed to pay a $23 million fine and entered into a two-year deferred prosecution agreement. The latter will allow it to avoid going to court so long as it implements a new compliance and ethics program and provides annual reports to the government about its progress.

According to the U.S. Department of Justice (DoJ), the allegations against AT&T date back to 2017 when the Illinois General Assembly was weighing a bill which made it easier for the operator to end its carrier of last resort obligation. AT&T was accused of funneling then-Illinois Speaker of the House Michael J. Madigan a total of $22,500 via monthly payments to one of his associates.

In exchange, Madigan brought the legislation in question up for a vote and voted in favor of it. After the bill was vetoed by the Illinois Governor, Madigan allowed the state House of Representative to vote on a veto override and again voted in favor of the bill.

An AT&T representative said in a statement to Fierce “We hold ourselves and our contractors to the highest ethical standards. We are committed to ensuring that this never happens again.”

While AT&T off the hook for now as far as criminal charges go, the DoJ announced separately it has indicted former AT&T Illinois President Paula La Schiazza as well as Madigan and lobbyist Michael McClain.

DoJ documents alleged McClain specifically asked La Schiazza whether the operator had $2,500 or $3,000 per month for a “small contract” for a Madigan associate. However, that associate’s “services were not required by AT&T Illinois” and the individual “performed no work for AT&T Illinois,” the DoJ claimed.

In order to facilitate the indirect payments to Madigan, La Schiazza “created and caused the creation of a false contract and other false internal records to disguise the true nature of these payments,” according to his indictment. He has been 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. Though a grand jury heard the charges in April 2021, the indictment was just unsealed.

La Schiazza’s arraignment in federal court has yet to be scheduled.