Relative Tied to Blago Case Charged With Tax Evasion - NBC Chicago
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Relative Tied to Blago Case Charged With Tax Evasion



    Relative Tied to Blago Case Charged With Tax Evasion
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    CANTERBURY, UNITED KINGDOM - AUGUST 23: A bull dozer moves rubbish at the Shelford Landfill, Recycling & Composting Centre on August 23, 2007 near Canterbury, England. The Shelford landfill site, run by Viridor Waste Management receives 200 truck loads of waste weighing 2100 metric tonnes a day. (Photo by Peter Macdiarmid/Getty Images)

    The Rod Blagojevich relative at the center of a bitter family dispute over the closing of a Joliet landfill, is himself in hot water with the feds over failure to pay taxes.

    Frank Schmidt, a cousin of the former governor's wife Patti, has been charged with failing to pay more than $2 million in taxes on more than $11.2 million in gross income generated by the Joliet landfill over five years.  Schmidt and employee Dominic Grande have both agreed to plead guilty to the charges.
    The landfill was the focal point of an explosive family feud after Blagojevich shut the facility down in the winter of 2004, alleging that Schmidt had been accepting illegal waste and trading on his family's political connections.  That prompted the governor's father-in-law, Alderman Richard Mell (33rd Ward) to publicly blast Blagojevich, alleging that aides had been selling political appointments for big contributions to his campaign fund.
    Mell later recanted the allegation, but it was sufficient to put the matter on the federal government's radar, and the charges of job-selling resurfaced when Blagojevich was indicted three years later.
    Ironically, Blagojevich was heard suggesting on undercover tapes played at his trial, that he and his family would have been better off financially if he had left the matter alone.
    "You know, I should have (EXPLETIVE) looked the other way on the landfill, and then my father-in-law would take care of us," he told aides less than a month before his arrest. "I should have (EXPLETIVE) done that. Incidentally, he's making money on that thing against, you know, in violation of state law."
    The facility operated by Schmidt's company, Land Reclamation Services, was a closely-held corporation and the government says Schmidt was obligated to report the business's net income on his personal tax returns, in addition to declaring as personal income any money that he either withdrew from the business or that he was paid directly for his own expenses.  The complaint states that he evaded taxes by cashing company checks worth hundreds of thousands of dollars, causing LRS to pay for his personal expenses. It also says that he paid employees, including Grande, cash wages while failing to report those payments to the IRS.
    In 2008, Schmidt sold the landfill, at a profit of approximately $9 million.  The government says he failed to report that windfall on his personal tax returns, and that in 2008 alone, he evaded payment of federal income taxes totaling more than $1.3 million.