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*** UPDATED x1 *** Civil RICO case filed against Madigan, ComEd and others

Monday, Aug 10, 2020

* Just remember that anyone can sue anyone for just about anything, but this may leave a mark…

Earlier today, a putative class of Commonwealth Edison customers filed a civil racketeering lawsuit against Illinois Speaker of the House Michael Madigan, Commonwealth Edison Company (“ComEd”), ComEd’s parent Exelon Corporation, and several other defendants.

Stuart Chanen and Ariel Olstein of Chanen & Olstein; Patrick Giordano of Giordano & Associates, Ltd.; and Paul G. Neilan of The Law Offices of Paul G. Neilan, P.C., all Chicago-area lawyers, filed a two-count class action Complaint in federal court under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), Potter et al. v. Madigan et al., 20 cv 4675, Dkt. 1 (N.D. Ill. Aug. 10, 2020).

The lawsuit, a copy of which is attached, alleges one count of racketeering under RICO’s civil provisions and one count of RICO conspiracy. The lawsuit asks for the following relief for ComEd’s consumers:

    1. Payment by Defendants of at least $450 million in damages to ComEd consumers, including the $150 million in ill-gotten gains ComEd has admitted to and an additional $300 million under the RICO Act’s treble damages provision.
    2. Immediate injunctive relief preventing Michael Madigan from participating in legislative activities involving electricity matters affecting Commonwealth Edison and Exelon.
    3. Immediate injunctive relief preventing Michael Madigan from continuing to Chair the Democratic Party of Illinois and running it as a corrupt organization.
    4. Additional injunctive relief enjoining ComEd from continuing to charge consumers for subsidies of Exelon-owned nuclear power plants.

Attorney Stuart Chanen, a former Assistant U.S. Attorney who in private practice has won major civil rights cases on behalf of wrongfully convicted individuals, said: “We filed our civil RICO case now to protect Illinois ratepayers from further damage by Michael Madigan – in both his capacity as Speaker and as Chair of the Democratic Party of Illinois – and also to get our clients back the damages they have suffered from ComEd’s and Madigan’s bribery scheme.”

Mr. Chanen pointed out that neither the U.S.’s July 17 federal criminal case against ComEd, nor the fact that Madigan has not yet been included in that case, prohibit ComEd customers from obtaining injunctive relief against Madigan or from pursuing damages against ComEd in a civil RICO action.

In addition to Michael Madigan, among the prominent figures named as Defendants, are: former ComEd CEO Anne Pramaggiore; former ComEd EVP John Hooker; former ComEd SVP Fidel Marquez; Jay Doherty, the longtime President of the City Club of Chicago; and former City of Chicago Alderman Michael R. Zalewski.

In crafting the Complaint, Plaintiffs’ lawyers rely heavily on the admissions ComEd had already made in its Deferred Prosecution Agreement with U.S. Attorney John Lausch. ComEd’s admissions strongly implicated all of the Defendants. The Complaint puts particular emphasis on ComEd’s admission that it profited from the bribery scheme in excess of $150 million.

Because ComEd admitted the over $150 million bonanza and because the RICO statute specifically includes a treble damages award to punish racketeers, Attorney Patrick Giordano said that ComEd should carefully consider this choice: “Pay back the $150 million to ratepayers now or pay a joint and several $450 million judgment down the road.”

This case is not these lawyers’ first battle with ComEd. Attorney Patrick Giordano has 40 years of experience in litigation against ComEd and has won over $3 billion in refunds and rate reductions for consumers. Paul Neilan has twenty years of experience litigating against ComEd, including a 2013 lawsuit in Cook County challenging one of the very statutes, the Energy Infrastructure Modernization Act (“EIMA”), which we now know was procured through a bribery scheme. Mr. Chanen was co-counsel with Mr. Neilan in that case, Hawkins v. Commonwealth Edison Company, 2015 IL App (1st) 133678.

Mr. Neilan summed up matters this way: “Back then, our clients were the lone wolves crying foul. We knew that EIMA was bad for the ratepayers and obliterated any true regulation of ComEd as a utility. We also knew that Speaker Madigan had crammed the legislation through the General Assembly – we just didn’t know then that he did so as payback for numerous bribes ComEd had paid to his associates. But we know it now.”

No hearing date has been set in this case.

Some bold claims there.

The complaint is here.

*** UPDATE *** ComEd responded to Center Square

“We apologize for the past conduct that did not live up to our values and have made significant improvements to our compliance practices to ensure that nothing like it ever happens again,” said ComEd Vice President of Communications Paul Elsberg. “The improper conduct described in the deferred prosecution agreement, however, does not mean that consumers were harmed by the legislation that was passed in Illinois.”

“The DPA makes no such allegations, and in fact the bipartisan legislation resulted in substantial benefits for ComEd’s customers, including 70 percent improved reliability since 2012 and billions of dollars in savings for customers, while residential customers’ bills are lower than they were nearly a decade ago and ComEd recently requested a third delivery rate decrease in a row, its fifth in 10 years,” Elsberg said. “ComEd has made some of the largest improvements in service at the best value of any utility serving a U.S. major metro area. This in no way excuses the conduct described in the DPA, but that is a distinct issue from the effect of the legislation for ComEd’s customers.”

“We filed our civil RICO case now to protect Illinois ratepayers from further damage by Michael Madigan – in both his capacity as Speaker and as Chair of the Democratic Party of Illinois – and also to get our clients back the damages they have suffered from ComEd’s and Madigan’s bribery scheme,” said attorney Stuart Chanen.

- Posted by Rich Miller        

37 Comments
  1. - Precinct Captain - Monday, Aug 10, 20 @ 10:42 am:

    The DeVore School of Law


  2. - Amalia - Monday, Aug 10, 20 @ 10:43 am:

    wow. I know one of the attorneys and he is a decent and very experienced person. this is not frivolous.


  3. - DuPage Dave - Monday, Aug 10, 20 @ 10:44 am:

    So this is a private, non-criminal lawsuit filed by a guy with a long history of suing ComEd?? That didn’t make the headline of the other article I saw on this. Thanks, Rich.


  4. - Oswego Willy - Monday, Aug 10, 20 @ 10:45 am:

    A new wrinkle to the politics and the governing too.

    I’ve said I think Mike Madigan should resign.

    It’s cases like this that make it seemingly impossible for anyone, even Madigan, to find 60 votes to keep the gavel.

    The Democratic Party itself will need to find their own way.


  5. - Ok - Monday, Aug 10, 20 @ 10:46 am:

    I wouldn’t call it frivolous, but it isn’t exactly out of the norm for these guys. They have all sued to overturn some piece of energy legislation in the past. Usually on behalf of someone else (e.g. NRG in Pat’s case).


  6. - Swimdad13 - Monday, Aug 10, 20 @ 10:50 am:

    Because the “Plaintiffs’ lawyers rely heavily on the admissions ComEd had already made in its Deferred Prosecution Agreement with U.S. Attorney John Lausch”, I believe it has merit. At least that leads me to believe, it is not based on speculation.


  7. - low level - Monday, Aug 10, 20 @ 10:51 am:

    Madigan wasn’t a rep from 1973-74 it says in the complaint?

    Also, why get plantiffs who now reside in Mississippi if you can get pretty much anyone to allow you to use their name?


  8. - Moe Berg - Monday, Aug 10, 20 @ 10:56 am:

    Theory of the case: Madigan single-handedly passed a bill through both chambers and signed it into law.

    The unitary executive. No senate, no senate president, no governor, no GOP support for the legislation. All Madigan.

    Same problem the feds have.


  9. - Shytown - Monday, Aug 10, 20 @ 11:05 am:

    Private attorneys have to eat too I guess.


  10. - Commentor - Monday, Aug 10, 20 @ 11:08 am:

    Low level: for federal diversity jurisdiction.


  11. - Retired 126 - Monday, Aug 10, 20 @ 11:12 am:

    The 200 million dollar fine should go to Com Ed customers, not the G.


  12. - walker - Monday, Aug 10, 20 @ 11:14 am:

    What Moe Berg said 10:56.

    The “Myth of the All-Powerful Madigan”, leveraged by allies and lobbyists, broadcast by political opponents, and allowed to flourish unchallenged by the man himself, is coming home to roost.

    It never was fully true as described. It only worked for those who chose to buy into it. These cases make no sense without it, so sufficiently demontrating the Myth will be at their core.


  13. - 33rd ward - Monday, Aug 10, 20 @ 11:14 am:

    Here’s the part that gets me:

    ComEd paid an enormous some to “defer” criminal charges.

    Q: Doesn’t that just penalize the customers for the executives’ illegal activity?

    How does it make any sense, they (we) just pay a fine?


  14. - allknowingmasterofraccoodom - Monday, Aug 10, 20 @ 11:22 am:

    Oswego Willy - dead on, could not agree with you more. That is the best thing that could happen for everyone involved at this point.


  15. - Hard D - Monday, Aug 10, 20 @ 11:25 am:

    Assuming this case makes it past summary judgement things will get very interesting. So Stuart Chanen starts taking depositions and all those defendants can either tell the truth or commit perjury. Wonder if Chanen and Lausch have a friendly relaionship?


  16. - Candy Dogood - Monday, Aug 10, 20 @ 11:25 am:

    Settle to avoid discovery?

    ===Q: Doesn’t that just penalize the customers for the executives’ illegal activity?====

    Well yes and no, this lawsuit specifically goes after the parent company which would stretch out the pool of folks paying the fine outside of current customers. The idea is the penalize the company. If 100% of the penalty is passed onto customers, maybe we should stop having publicly traded for profit utilities.


  17. - Roman - Monday, Aug 10, 20 @ 11:34 am:

    It should be noted that the feds could have gone the RICO route (either criminal or civil) against ComEd but chose not to. I suspect that’s why ComEd so willingly splayed themselves opened in the DPA and made so many admissions. The DPA is a walk in the park compared to RICO.


  18. - ILPundit - Monday, Aug 10, 20 @ 11:39 am:

    WRT @Moe Berg & @Walker

    The problem with developing a reputation of unmatched power over 4 decades by supposedly being hyper aware of every need in your caucus, hyper involved in every political decision in your organization, and notoriously controlling and opaque about how legislation moves through the House Chamber you lead is…

    ….well, it because very difficult to use the so-called “Col. Klink” defense (”I know nothing”) without fatally undermining your reputation and the supposed reasons for your political power and influence.

    You can’t be all-knowing, all powerful, and completely in the dark at the same time. The center will not hold.


  19. - ILPundit - Monday, Aug 10, 20 @ 11:40 am:

    becomes, not because — I really wish we could edit posts.


  20. - Homebody - Monday, Aug 10, 20 @ 11:41 am:

    == maybe we should stop having publicly traded for profit utilities. ==

    We never should have had them in the first place. If something is functionally necessary for a basic standard of living, there needs to be either community ownership and control, or a legitimate competitive market, or ideally both (see: community owned ISPs in a competitive market).

    Instead we get the worst of both worlds a lot of the time.


  21. - Flat Bed Ford - Monday, Aug 10, 20 @ 11:41 am:

    Discovery will be hampered by federal investigation for a while but if/when it does happen look out


  22. - Rich Miller - Monday, Aug 10, 20 @ 11:42 am:

    ===but chose not to===

    Very difficult to make a criminal RICO case these days in the political realm.


  23. - Rich Miller - Monday, Aug 10, 20 @ 11:43 am:

    ===I really wish we could edit posts===

    Take it up with Twitter /s


  24. - Back to the Future - Monday, Aug 10, 20 @ 11:51 am:

    I wonder why the Illinois Attorney General is not filing a suit like this.
    That office has filed or jointed class action suits in the past.


  25. - Curious George - Monday, Aug 10, 20 @ 11:59 am:

    Do we even have a state attorney general?


  26. - TrumpsSmallHands - Monday, Aug 10, 20 @ 12:14 pm:

    It is incredibly difficult to even plead a civil RICO case successfully let alone avoid dismissal and come away successful on the merits of the case. We are talking low single digit success rates for these types of cases….

    In my mind pleading civil RICO makes me assume this is a PR maneuver not a serious legal effort. On the PR front this effort is probably well worth the expense in “free” PR and advertising for the lawyers.


  27. - Moe Berg - Monday, Aug 10, 20 @ 12:24 pm:

    @ILPundit - perhaps you underestimate the human capacity for tolerating cognitive dissonance?

    Prior to the last 4 years I know I did.


  28. - Anon III - Monday, Aug 10, 20 @ 1:07 pm:

    === In crafting the Complaint, Plaintiffs’ lawyers rely heavily on the admissions ComEd had already made in its Deferred Prosecution Agreement with U.S. Attorney John Lausch. ComEd’s admissions strongly implicated all of the Defendants. The Complaint puts particular emphasis on ComEd’s admission that it profited from the bribery scheme in excess of $150 million.===

    Deferred Prosecution Agreements serve law enforcement goals, and are likely favored as a matter of public policy for that reason. If DPFs are allowed to be used against participating defendants, it will diminish their utility for prosecutors, contrary to public policy objectives.


  29. - Gary Hart - Monday, Aug 10, 20 @ 1:10 pm:

    OK a few things…

    1. These guys are amatures and don’t have a clue about class actions.
    2. Channen donated to Scott Drury. Hmmmmm
    3. Everyone named in this suit better hope real class action attorneys start sniffing around.


  30. - Candy Dogood - Monday, Aug 10, 20 @ 1:14 pm:

    ===We never should have had them in the first place.===

    Private for profit utilities isn’t the only bag younger generations are holding in the dumpster fire that’s being reluctantly turned over to them.


  31. - Kyle Hillman - Monday, Aug 10, 20 @ 1:25 pm:

    Also their clients weren’t the only “lone wolves” crying foul back then. There were others.


  32. - Back to the Future - Monday, Aug 10, 20 @ 1:25 pm:

    If the AG thinks that having his office taking direct action against ComEd would be rude based on all the political contributions he has gotten from them, he could turn the class action claims for Illinois citizens over to a class action law firm.
    It seems he should do something or at least look like he is doing something.


  33. - sorry state - Monday, Aug 10, 20 @ 1:26 pm:

    == - TrumpsSmallHands - Monday, Aug 10, 20 @ 12:14 pm:

    It is incredibly difficult to even plead a civil RICO case successfully let alone avoid dismissal and come away successful on the merits of the case. We are talking low single digit success rates for these types of cases….

    In my mind pleading civil RICO makes me assume this is a PR maneuver not a serious legal effort. On the PR front this effort is probably well worth the expense in “free” PR and advertising for the lawyers. ==

    This is correct. Add to it these statements would likely border on defamatory or a SLAPP action if filed in state court. This is strategic and a PR stunt, likely orchestrated with those who are pushing for Madigan to resign from DPI and Speaker. The irony is the lawsuit specifically states they aren’t suing him in his official capacity as Speaker or individual capacity, but rather as Chair of DPI. They picked that to put additional pressure on Madigan to resign the post.


  34. - Sue - Monday, Aug 10, 20 @ 1:57 pm:

    Several of these comments are just silly. Paul Neilan is a U of C law grad and worked at Isham Lincoln Comed’an Long time outside counsel. He specializes in utility law and his co- counsel is a former AUSA. These guys are the real deal. Given the admissions in the DPA- it won’t be difficult overcoming a motion to dismiss. The biggest problem the lawyers will likely face is a request to delay discovery pending the criminal case. If the Feds give a green light it may by the Govt decides obtaining information from the civil case assists with the criminal investigation but based on experience it’s more likely Lausch asks them to hold off


  35. - Old Horseman - Monday, Aug 10, 20 @ 2:13 pm:

    === We are talking low single digit success rates for these types of cases…===
    Tell that to the owners of the old Balmoral and Maywood Park racetracks. They lost their civil RICO case and went bankrupt. Once the depositions start and review of emails happened the lawyers can twist and turn it to sound so unsavory. Especially in the political and legislative world. The last thing the lawyer to the jury In the racetrack case was “Pay to play has been going on for too long in Illinois and this is your chance to do something about it” .
    Basically it didn’t matter if they thought the tracks were liable they had a chance to change the system and they took it out on them.


  36. - Roman - Monday, Aug 10, 20 @ 2:50 pm:

    == Very difficult to make a criminal RICO case ==

    Agreed. The DPA was an easier route for the G, too. I bet ComEd’s high-priced, former AUSA defense attorneys worked overtime convincing their old colleagues in the Federal Building that a DPA was a guaranteed victory for them, while a RICO prosecution was anything but.


  37. - Blue Girl in Red County - Monday, Aug 10, 20 @ 3:52 pm:

    ILPundit - it’s Sgt. Schultz, not Col. Klink.


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