Exelon is paying the legal tab for two former executives convicted in ComEd bribery scheme
Exelon has been paying the legal fees for two now-convicted former Commonwealth Edison executives who were part of a conspiracy to bribe former Illinois House Speaker Michael Madigan, WBEZ has learned.
The move has created an unusual dynamic where, on one hand, the company’s subsidiary, ComEd, is cooperating with federal investigators under a deferred prosecution agreement and paid a $200 million fine for attempting to “influence and reward” Madigan in a long-running bribery scheme.
But on the other, the Exelon-financed legal teams for former ComEd CEO Anne Pramaggiore and former ComEd executive vice president John Hooker spent close to two months telling a federal judge and jury that their clients — and the power company — had done nothing illegal.
Past criminal defendants in Chicago’s federal courthouse have faced multimillion-dollar legal tabs for their defense lawyers. The pro-bono costs associated with former Illinois Gov. George Ryan’s legal defense, for example, have been estimated as high as $20 million.
Pramaggiore and Hooker, at least for the moment, are being spared that burden under an indemnity guarantee spelled out in Exelon’s bylaws, a ComEd spokeswoman told WBEZ.
The company wouldn’t divulge how much it has paid to Pramaggiore and Hooker’s legal teams, which comprised at least five attorneys apiece based on federal court filings. ComEd maintains that no ratepayer dollars are being used for the expense.
Earlier this month, Pramaggiore and Hooker were convicted on all counts for conspiring to bribe Madigan and falsifying company documents as part of a strategy to win Madigan’s backing for legislation that fattened ComEd’s bottom line by billions of dollars. In exchange, the company complied with Madigan’s frequent demands for company jobs, contracts and even a board appointment for his supporters.
Exelon did not pay the legal fees of Pramaggiore and Hooker’s convicted co-defendants, former ComEd lobbyists Michael McClain and Jay Doherty. They did not qualify under Exelon’s indemnification program for current and former company directors and officers, ComEd said.
“Consistent with practices at many other companies, Anne Pramaggiore and John Hooker, as former company executives, were entitled under corporate bylaws to payment of their attorneys’ fees, which later could be subject to repayment,” ComEd spokeswoman Shannon Breymaier told WBEZ. “Any fees paid by the company are excluded from rates and their cost is not recovered from customers.
“Michael McClain and Jay Doherty were never company employees and were not entitled to payment of their legal fees,” she said.
Breymaier pointed WBEZ to a section of Exelon’s bylaws that specifies current and former directors and officers of the company and its affiliates qualify to have their legal costs covered in criminal cases so long as the charged were acting in “good faith” and did not believe they were engaging in criminal behavior.
Breymaier said such legal costs “are excluded from all rates.”
“Rates and the costs that go into them are reviewed by our regulators and others, and no customer pays for those legal fees,” she said.
Breymaier did not say whether Exelon held any liability insurance coverage that might cover the expenditures.
Though the company statement alluded to the possibility of seeking repayment from Pramaggiore and Hooker, she declined to answer whether the company, in fact, would pursue reimbursement from the pair.
One nationally known expert in corporate governance said that while indemnification clauses are common in American business, recouping company assets from former company executives convicted of crimes also is common. But he acknowledged it’s also a “business decision” for each corporate board to make on its own.
“I believe frankly that one should recoup those sorts of fees,” said Charles Elson, founding director of the University of Delaware’s Weinberg Center for Corporate Governance. “I’ve always thought that it was wrong for someone to pay the legal fees of … an adjudicated and appealed guilty party with corporate assets.
“If someone has acted badly and harmed the corporation, the corporation shouldn’t pay for their wrongful actions,” Elson said.
Any company resources invested so far could grow since Pramaggiore’s legal team indicated its plans to appeal immediately after the jury’s verdict.
Pramaggiore’s legal team is headed by former U.S. Attorney Scott Lassar.
As Chicago’s former top federal prosecutor, Lassar oversaw the Operation Silver Shovel investigation that led to convictions of six Chicago aldermen. He presided over the federal Operation Safe Road investigation that later sent former Gov. George Ryan to prison. Before that, Lassar prosecuted bribe-taking judges in the federal Operation Greylord investigation of the 1980s.
Hooker’s lead lawyer is Michael Monico, another former federal prosecutor whose clients have included former President Donald Trump’s personal attorney and political fixer, Michael Cohen; actor Jussie Smollett, who was convicted of staging a hate crime against himself; and one of only two lawyers acquitted in the Operation Greylord investigation.
Though Exelon has not indicated how much it has paid so far, the value of the benefit for Pramaggiore and Hooker figures to be immense. Historically, criminal defendants in Chicago’s federal courthouse — particularly those in politically charged cases like the one that just wrapped up — have to come up with millions of dollars to mount legal defenses.
The legal tab for former Gov. George Ryan’s nearly six-month federal corruption trial in 2006 was estimated to be valued as high as $20 million, by some reports, though nearly all of his expenses incurred by the 20-lawyer contingent comprising Ryan’s legal team were covered at no cost by the Winston & Strawn law firm.
Madigan, who faces his own federal bribery and racketeering trial next April, has spent more than $8.8 million on legal expenses through campaign funds he controls. That covers a period dating back to January 2020, after the federal investigation into him became known after a series of high-profile FBI raids on homes belonging to McClain and other Madigan associates.
Likewise, former Chicago Ald. Edward Burke, 14th Ward, has spent almost $3 million in legal fees from his political fund since November 2018, when federal agents raided his City Hall office. His bribery and racketeering trial is scheduled to begin in November.
Former Democratic Gov. Pat Quinn, who vetoed key ComEd legislation as governor until being overridden by the Senate and Madigan-led House, said he is doubtful of the power company’s claim that no ratepayer dollars are involved in paying for Pramaggiore and Hooker’s lawyers.
“Commonwealth Edison has said a lot of things in the past decade that were not true,” Quinn said.
He called on the General Assembly and state utility regulators to open investigations into how much the company is paying Pramaggiore and Hooker’s lawyers and what additional terms, if any, exist for the two under Exelon’s indemnification program.
“Indemnification of Commonwealth Edison executives and their legal expenses should be subject to a hearing by the Illinois General Assembly to get all the details under oath so the people know what the facts are. I also think the Illinois Commerce Commission has a similar duty. They’re there to represent the people with respect to fairness and utility rates,” Quinn said.
“I don’t think this issue should be shoveled under the rug,” he said.