POLITICS

Dennis Hastert Allegedly Bilked Taxpayers As He Made Hush Money Payments

05/29/2015 03:14 pm ET | Updated May 29, 2015

WASHINGTON -- As former House Speaker Dennis Hastert (R-Ill.) was allegedly paying hush money to hide prior misconduct, he was also allegedly bilking the federal government of thousands of dollars to subsidize his lobbying work and private interests.

Hastert was indicted Thursday on charges of lying to federal authorities to cover up payments he was making to an individual he knew from his time as a wrestling coach. But two years ago, he was embroiled in another legal battle over misusing taxpayer funds in his post-congressional career.

The two cases appear to be unrelated. But taken together, they provide a clearer view of how a longtime public servant took advantage of the perks of his office to enrich himself, eventually becoming wealthy enough to be able to pay the individual millions of dollars.

The federal case, which has gone relatively unnoticed amid the current drama surrounding Hastert, was brought in July 2013, more than five and a half years after he resigned from Congress. Under the law, Hastert, like all House speakers, was granted what is essentially a taxpayer-funded allowance to settle and conclude his affairs. He did that by renting and furnishing an office in his old congressional district and hiring three administrative personnel.

But the complaint, filed by Illinois businessman J.David John, one of Hastert's business partners from that time period, alleged that he misused the taxpayer allowance on lobbying work, in violation of the Federal False Claims Act. Hastert, according to the complaint, worked closely with John to schedule and promote sporting events in foreign countries.

The complaint says that Hastert used his office and a government-funded GMC Yukon and relied on his taxpayer-funded staff to conduct private business and travel to lobbying events. The projects he pursued included planning a trip to Saudi Arabia to "discuss private corporate opportunities including an ESPN sponsored golf tournament;" prepping a slideshow "concerning the private proposal to build a racetrack and technology park in Riverside, California;" and meeting with the United Arab Emirates ambassador to discuss hosting an "ESPN golf outing and other events in Abu Dhabi."

It wasn't just Hastert's lobbying business that was being propped up with federal funds, according to the complaint. Hastert used his public office and email account to work with John on fundraising operations for Hastert's public policy center at Wheaton College and the school's wrestling team. Hastert used his government-funded vehicle to attend an NCAA wrestling event, according to the complaint. Two of Hastert's employees were also operating "other private businesses out of Mr. Hastert's official office with Mr. Hastert's full knowledge."

All told, Hastert spent roughly $1.9 million of his allowance, about half of what he could have. The biggest portion of that went to salaries.

Hastert was hardly poor by the time he left Congress. His net worth increased from about $300,000 when he took office in 1987 to more than $6 million when he stepped down 20 years later. Much of it came from real estate holdings, according to an extensive Chicago Tribune review of his wealth published in 2006. But after he resigned, he really cashed in, becoming a high-profile lobbyist for the firm Dickstein Shapiro.

His position on K Street, and his strong ties to government officials, made him a well-situated power broker, attracting those hoping for beneficial introductions or legislative favors.

John was one of those people. He and Hastert were both Wheaton graduates and former college wrestlers. They met around 1992 and worked together to raise funds for the Hastert Center and other projects. Hastert wrote a letter in 2011 calling John a "trust-worthy and responsible individual" who has "always been someone that I could rely upon whether it be a professional or personal matter." He said he was "continually reminded of his honesty and integrity." The two took trips together to Singapore, Montreal, California, Washington, D.C. and Saudi Arabia.

The court documents don't explain why John ultimately blew the whistle on Hastert's alleged misuse of federal funds. But under the False Claims Act, a whistleblower is entitled to a portion of the funds recovered by the government, usually somewhere in the range of 15 and 25 percent.

John has yet to see any money, however. A federal judge ruled in March that the court could not find based on the available evidence that he was the “original source” for a Chicago Tribune article questioning Hastert's use of federal funds in his post-congressional career, though the article repeatedly cited a complaint that John filed against Wheaton alleging the school had interfered in his business relationship with Hastert.

John’s lawyers have since filed an amended complaint arguing that he provided the relevant information about Hastert’s activities to FBI Special Agent Doug Soika on Aug. 30, 2011. John alleges that he spoke to the agent about Hastert several times that year, long before filing the original complaint.

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