The financial-adviser request came a few weeks before Dennis Hastert, as federal prosecutors charged in an indictment, made his first payment to a man known as “Individual A.”
WASHINGTON — After a relatively slow start to his career as a consultant and lobbyist, Dennis Hastert, the former speaker of the House of Representatives, became very busy in 2010. He was traveling to spots including Singapore and Montreal, meeting with clients about ventures as varied as futures trading and Formula One racing.
He also made an unusual request to one of his business associates: Find a financial adviser who could come up with a plan for an annuity that would generate a substantial cash payout each year. According to the associate, J. David John, the former speaker also asked that the adviser not be told of Hastert’s involvement.
The request came a few weeks before Hastert, as federal prosecutors charged in an indictment, made his first payment to a man known as “Individual A” in what was supposed to be a total of $3.5 million. The money, according to two people briefed on an FBI investigation of Hastert, was paid to prevent the man from publicly saying Hastert sexually abused him decades ago, when Hastert was a high-school teacher and wrestling coach in Illinois.
“I did not think much about it at the time, but looking back at it, it does seem strange,” John said. “He just said he needed to generate some cash.”
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In emails and other documents provided to The New York Times, accounts of the former speaker’s business dealings show a burst of activity to increase his wealth. Apparently unknown to his business associates, Hastert was not merely following the path of other former members of Congress who have tried to cash in. The indictment says he was seeking to prevent a hidden past from undoing his life.
Although Hastert had amassed several million dollars in assets while he served in Congress as a Republican from Illinois, much of his wealth was tied up in real estate, records show.
Prosecutors charge that Hastert agreed to make large cash withdrawals for payments to Individual A. The indictment, announced May 28, said he had made $1.7 million in payments out of the proposed total of $3.5 million.
Hastert, 73, is charged with violating federal bank-reporting laws related to extensive cash withdrawals. John said he did not know whether there was a link between the request for help in setting up an annuity and the activities described in the criminal case against Hastert, who is to be arraigned Tuesday in federal court in Chicago. Barry Levine, a lawyer for Hastert, declined to comment.
But the moves to create an annuity in 2010 and the push by Hastert to rapidly build up his business are detailed in hundreds of pages of emails and other documents filed in court records or shared with The New York Times by an attorney for John.
After Hastert left the House in late 2007, John spent more than two years working closely with him on ventures including an effort to persuade Richard Daley, then the mayor of Chicago, to hold a Formula One race in Chicago, a land-development deal in California and a proposal to move a golf tournament from California to the Middle East.
“I may have stumbled upon a funding source,” Hastert wrote in one email to business partners in summer 2010 about the proposed Chicago car race. “Call me.”
At that point, in the nearly three years since Hastert had left Congress, he had registered on behalf of only four lobbying clients, and the total revenue attributable to this lobbying work in a two-year period equaled just $210,000, congressional records show. (He may have been advising other clients without having to register as a lobbyist.)
That changed abruptly by 2011, as Hastert was added to his firm’s biggest lobbying account, Lorillard Tobacco, and he helped bring in new clients, such as ServiceMaster, whose former chief executive, like Hastert, is a graduate of Wheaton College, a Christian liberal-arts college west of Chicago.
Hastert and John, another graduate of Wheaton, had bonded over efforts to save funding for the college’s wrestling team in 2002. An entrepreneur who holds graduate degrees from Columbia University and the University of Chicago, John, 50, also helped Hastert raise money for the J. Dennis Hastert Center for Economics, Government, and Public Policy at Wheaton. Last week the school dropped Hastert’s name from the center.
There is little evidence that the ventures between Hastert and John paid off for either man. Their relationship ultimately collapsed. John ended up filing lawsuits that raised allegations about possible abuse of public funds by Hastert, who had a taxpayer-funded office to wind down his business as speaker. Courts have twice dismissed one of John’s lawsuits, although he has moved to refile the case.
But emails sent by Hastert, his former aides and staff members at his firm, Dickstein Shapiro, offer glimpses into how a high-profile elected official like Hastert makes the transition from public officeholder to a big-money rain maker.
Early on, Hastert’s role on proposed projects was to make introductions to government officials who could help clear the way for the projects or to court wealthy individuals who could help finance them.
But the email correspondence shows that by 2010, Hastert had begun to play a more active role in trying to find funding for an expanding list of ventures, including the proposal to bring Formula One racing to Chicago.
It was at this time that Hastert approached John for assistance in setting up a way to discreetly pay someone, over perhaps as long as a decade, John said in an interview.
The financial adviser — whom John and his attorney, Michael Goldberg of Chicago, asked that The New York Times not name — struggled to provide the information that John was seeking on behalf of Hastert, given that the exact purpose and the client’s identity were left unclear.
“This would provide him a fairly steady stream of income and more than likely a guarantee that he would not run out of income in his lifetime,” the financial adviser wrote in a June 2010 email to John, adding that “it’s a difficult question without knowing more details.”
By summer 2010, Hastert was making cash withdrawals of $50,000 at a time for payments every six weeks, according to the indictment. Those transactions overlapped with the business meetings as he tried to increase his earnings, including the mid-June trip to Montreal to attend a Formula One race, and then a few days later, a scheduled meeting at Chicago’s City Hall with one of Daley’s top aides.
There was no hint in all the email exchanges of the private crisis playing out in Hastert’s life.
“Rainy here, hope it clears up,” Hastert wrote to John after he arrived in Singapore, as the two prepared to meet. “You have my email and BB phone #. Call me when you get in. JDH.”