Ald. Patrick Daley Thompson Found Guilty of Failing to Pay Taxes, Lying to Feds

Ald. Patrick Daley Thompson (11th Ward) was convicted Monday on all seven counts of lying to federal bank regulators and filing false tax returns.

Daley Thompson’s family members erupted in sobs at the first guilty verdict, and some left the overflow courtroom while others continued to cry quietly while clutching each other as U.S. District Judge Franklin Valderrama read the verdict, which included five counts of filing false tax returns and two counts of lying to bank officials and federal agents.

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Once considered the heir to the political empire built by his grandfather, former Mayor Richard J. Daley, and his uncle, former Mayor Richard M. Daley, Daley Thompson is no longer eligible to serve as a member of the Chicago City Council under state law. Mayor Lori Lightfoot has 60 days to appoint a replacement, who will serve until the 2023 elections.

In a statement, her office said she would conduct an “open and transparent process to fill the vacancy with a qualified public servant that represents the values of the residents of the 11th Ward and the City of Chicago.”

Deliberations lasted about three and a half hours in what was the first trial of a sitting member of the Chicago City Council since 1999 when the Silver Shovel scandal enveloped City Hall.

The jury that determined Daley Thompson committed seven federal crimes included an emergency medical technician, information technology professional, a part-time music teacher, furniture salesperson, a high school chemistry teacher and a shipping manager.

U.S. Attorney John Lausch watched from the overflow courtroom as the verdict was read. Prosecutors left the Dirksen courthouse soon after the verdict, without speaking to reporters.

Daley Thompson left the courthouse flanked by his family and attorney Chris Gair. Gair said he was disappointed by the verdict and in Lausch for bringing the case at all.

During the government’s closing argument, Assistant U.S. Attorney Michelle Petersen told the jury that Daley Thompson repeatedly lied to get out of repaying the $219,000 he borrowed from Washington Federal Bank for Savings. The Bridgeport bank failed in 2017, and federal bank regulators began working to collect that debt from the alderperson.

“The defendant, Patrick Thompson, lied,” Petersen said. “He lied to his accountants, he lied to the IRS. He lied to the (Federal Deposit Insurance Corporation). His lies follow a pattern.”

Daley Thompson only pretended to be confused when officials inquired about the debt, Petersen said.

After the failure of the bank and the death of its CEO John Gembara, Daley Thompson saw “an opportunity to pay less in taxes,” Petersen said. 

While Daley Thompson’s attorney told the jury that while their client was “disorganized,” “frazzled” and “sloppy” when it came to filing his annual tax returns and keeping track of his debts, he did not purposefully file false tax returns or lie to bank officials.

But Petersen said the evidence showed that argument was false, flashing copies of Daley Thompson’s tax documents — annotated in his own handwriting — for the jury during her summation.

“He went to college, he went to law school, he’s been a lawyer for a long time,” Petersen said. “He’s sophisticated and he can deal in the fine print.”

Daley Thompson did not testify during the trial, and has not spoken publicly about the seven criminal charges since he proclaimed his innocence after he was indicted in April. 

Gair began his closing arguments on behalf of Daley Thompson by referring to his client by his full name for the first time in the trial that began on Feb. 7. During opening statements and during jury selection, Gair called his client “Pat Thompson.”

Members of the U.S. Attorney’s Office were “desperate to convict Patrick Daley Thompson,” Gair said Monday, his voice rising to emphasize Daley. 

Daley Thompson's conviction represents the nadir of the collapse of the Daley political machine, and comes as the Chicago City Council is poised to carve up the heart of the Daley political empire that ruled the city for decades by creating a ward with a majority of Asian American voters.

The government’s case was entirely made up of “spin” “guesses” and “speculation,” Gair said during closing arguments.

Daley Thompson simply made a mistake when he told Planet Home Lending representatives and federal agents that he only owed $110,000, Gair said, referring to the government’s allegation relating to that allegation as “a tickey tack charge.”

“There is reasonable doubt everywhere,” Gair said, calling his client an honorable man and suggesting that federal agents were motivated because he is the grandson and nephew of men who ruled Chicago for a combined half-century. 

Delivering the rebuttal, Assistant U.S. Attorney Brian Netols called Daley Thompson’s conduct “outrageous” and drew a rebuke from Valderrama by accusing Gair of crossing a line by insinuating that Daley Thompson was charged because he is a member of the Daley clan.

Prosecutors argued that between 2011-14, Daley Thompson “falsely represent[ed] on five years of income taxes that he paid interest on money he received from Washington Federal, even though he knew he did not pay interest in the amounts reported on the returns.” 

The indictment alleges Daley Thompson “received $219,000 from Chicago-based Washington Federal via a purported loan and other unsecured payments.” 

Daley Thompson personally picked up three loan checks from Gembara starting in November 2011, according to the evidence presented at trial. The first, which totaled $110,000, was used to purchase equity in the law firm of Burke, Warren, MacKay & Serritella when he became a partner. The second $20,000 loan, made in March 2013, was used to resolve a tax debt, and the third loan of $89,000, made in January 2014, was used to make repairs to property Daley Thompson owned on Lowe Street, once the epicenter of the Daley political machine.

While Daley Thompson promised to repay the $110,000 loan with interest, and signed a promissory note, the additional loans were made without a written agreement signed by Daley Thompson and did not include any interest payments, who was by then a commissioner on the Metropolitan Water Reclamation District board, according to evidence presented during the trial. Daley Thompson made just one payment on the initial loan, records show.

After Washington Federal failed, Planet Home Lending attempted to collect on the then-alderperson’s $219,000 debt. On a recorded line, Daley Thompson told the customer service representative that he’d only borrowed $110,000, according to evidence presented at trial. 

While Gair told the jury Daley Thompson simply made a mistake, Netols and Petersen told the jury he lied — and then lied to federal agents who served him with a subpoena. Gair said the federal agents were mistaken in their recollection of what Daley Thompson said to them.

Only after Daley Thompson was confronted by federal agents and lied to them did Daley Thompson file amended tax returns, and pay back the $15,000 he improperly deducted from his taxes, Netols said.

However, Gair said Daley Thompson amended his taxes and paid the IRS what he owed as soon as he realized there had been an error.

The jury apparently rejected that argument quickly, and in total.

Each false statement count Daley Thompson faces is punishable by a maximum sentence of 30 years in federal prison, while each tax count is punishable by up to three years. However, if convicted, Daley Thompson is likely to serve less time in prison based on sentencing guidelines.

Lightfoot has 60 days to tap Daley Thompson's replacement, who will serve until the 2023 elections. In a statement, her office said she would conduct an "open and transparent process to fill the vacancy with a qualified public servant that represents the values of the residents of the 11th Ward and the City of Chicago."

Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]

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