CHICAGO—Former House Speaker Dennis Hastert was
indicted Thursday by a federal grand jury on charges related to
bank withdrawals of large sums of money that he allegedly paid to
keep someone quiet about his "prior misconduct."
Mr. Hastert is charged with intentionally withdrawing hundreds
of thousands of dollars in cash in increments of less than $10,000
to avoid federal reporting requirements designed to prevent money
laundering. The Republican also is charged with lying to the
Federal Bureau of Investigation about the withdrawals, telling
agents he was taking the money out because he didn't feel safe
using the banking system.
The indictment alleges the money was going to someone identified
only as "Individual A," who had known Mr. Hastert for most of the
person's life. In 2010, Mr. Hastert agreed to pay this person $3.5
million "to compensate for and conceal his prior misconduct against
Individual A," the indictment said.
The seven-page indictment notes that Mr. Hastert was a
high-school teacher and coach in Yorkville, Ill., from about 1965
to 1981 before running for public office. The individual he was
trying to pay off also was a Yorkville resident and apparently met
Mr. Hastert as a child, according to the indictment.
Mr. Hastert, 73 years old, couldn't immediately be reached for
comment. Messages sent to him, his personal assistant and the law
firm where he worked, Dickstein Shapiro LLP, weren't returned. The
firm removed his biography from its website Thursday.
Mr. Hastert was first elected to Congress in 1987 to represent
an Illinois district west of Chicago. He became House speaker in
January 1999 after the resignation of Newt Gingrich, who stepped
down as speaker amid GOP infighting after the party's unexpected
losses at the polls in the previous election following House
proceedings to impeach former President Bill Clinton.
Mr. Hastert was dubbed the "accidental speaker" when he ascended
from chief deputy whip to the chamber's top role after Mr.
Gingrich's fall. He held the post for eight years, the longest
tenure as speaker by a House Republican, and helped pass
legislation creating the Homeland Security Department in the wake
of the Sept. 11, 2001, terrorist attacks.
Mr. Hastert lost the position after Democrats won control of the
House in 2006. He later stepped down as GOP leader and resigned his
seat in November 2007.
After Mr. Hastert left office, he became a lobbyist at Dickstein
Shapiro. Two years later, he began meeting with the individual
listed in the indictment. At some point, they started discussing
the "prior misconduct," according to the indictment, and Mr.
Hastert agreed to the payments.
Between 2010 and 2014, Mr. Hastert paid $1.7 million in cash to
the individual. For nearly two years, he withdrew money in $50,000
increments and paid it to the person about every six weeks,
according to the indictment.
In April 2012, the withdrawals apparently drew the attention of
bank officials and, who were under increasing pressure to flag
suspicious transactions that could be funding illegal activity. Mr.
Hastert was questioned, according to the indictment. Three months
later, Mr. Hastert began taking money out in increments of less
than $10,000. Banks are required to report transactions over that
threshold, and it is illegal to "structure" transactions to avoid
crossing it.
Mr. Hastert kept paying the individual, according to the
indictment. In 2013, the FBI and Internal Revenue Service noticed
the transactions, and agents flagged them as possible
structuring.
During an interview with the FBI last December, agents asked Mr.
Hastert if he was withdrawing the money because he didn't feel safe
keeping it in a bank. He allegedly said: "Yeah…I kept
the cash. That's what I'm doing."
As late as December 2014, the FBI was investigating possible
reasons for the withdrawals, according to the indictment, including
whether Mr. Hastert was a victim of extortion related to his time
in government or was using the cash for a "criminal purpose."
There also was the possibility that he was using the money to
cover up past misconduct.
The news came as a surprise on Capitol Hill in Washington, where
congressional leaders declined to comment on the allegations.
In Illinois, at the Yorkville Bowl sports center Thursday night,
Steve Rissman recalled his days at Yorkville High School. He said
he practiced with the wrestling team and remembers that Mr. Hastert
would help students with sports and in class.
"He was always very upfront and honorable and honest," said Mr.
Rissman, who graduated in 1976, the same year Mr. Hastert coached
the Yorkville Foxes to the state wrestling championship.
Mr. Rissman said he was shocked by the news of Mr. Hastert's
indictment.
"He made Yorkville famous for wrestling," Mr. Rissman said.
"They named a tournament after him."
Mr. Hastert resigned Thursday from the board of directors of
Chicago-based futures exchange operator CME Group Inc., effective
immediately, said CME spokeswomen, who declined to comment further.
Mr. Hastert had served on the board since 2008.
No date has been set for Mr. Hastert's first court appearance. A
judge hasn't yet been assigned in the case, said Kimberly Nerheim,
spokeswoman for the U.S. attorney's office in Chicago. Each count
of the indictment carries a maximum penalty of five years in prison
and a $250,000 fine, the Associated Press reported.
Kristina Peterson and Jacob Bunge contributed to this article.
With research by Lisa Schwartz.
Write to Andrew Grossman at andrew.grossman@wsj.com and Ben
Kesling at benjamin.kesling@wsj.com
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