A jury found Chicago Ald. Patrick Daley Thompson guilty on charges of lying to federal regulators and filing false federal tax returns in an attempt to pay a lower tax bill on loans he received from a now-closed bank.
Thompson was accused of telling federal regulators he owed $110,000 on a loan he received from a Bridgeport bank, when the actual total he borrowed was $219,000, according to the prosecutors.
Prosecutors told jurors that Thompson falsely claimed mortgage interest deductions for interest paid to the Washington Federal on his tax returns for the years 2013 through 2017, which cost the Internal Revenue Service $15,589. Authorities also say Thompson lied in early 2018 to a Planet Home Lending customer service representative and two FDIC contractors about how much he owed.
Thompson was the first sitting councilman to stand trial on federal charges in more than two decades. He is also the first member of his legendary political family to stand trial.
A jury of four men and eight women heard about three and a half days of testimony at Thompson’s trial last week, mostly from government witnesses. The trial began nine months after the federal government hit Thompson with an indictment charging him with two counts of lying to regulators and five counts of filing false federal tax returns.
The jury found Thompson guilty on all seven counts.
Federal prosecutors have sought to undermine the idea that Ald. Patrick Daley Thompson had forgotten about $109,000 he had received from a Bridgeport bank or had overlooked his tax returns during oral arguments during his trial on Monday.
Assistant U.S. Attorney Michelle Petersen told jurors that Thompson had been a “long lawyer.” She called it “sophisticated” and said it “could handle the fine print”.
“When he saw an opportunity to lie, to cheat, to pay less than he had to, he took it,” Petersen said. “And his lies follow a pattern.”
Fourteen other people have been charged in connection with a multi-million dollar embezzlement scheme at the bank.
Thompson got a $110,000 loan from Washington Federal in November 2011, followed by additional payments of $20,000 in March 2013 and $89,000 in January 2014, according to Thompson’s indictment. He made a payment of $389.58 in February 2012 but paid no interest, according to the federal government.
Petersen noted that Thompson picked up the checks he received from the Washington Federal Bank for Savings in person and asked his accountants various questions about his tax returns. She insisted, “He’s not a disengaged taxpayer.”
Finally, she said, Thompson only changed the tax returns at issue in her lawsuit after being visited by federal agents and receiving a subpoena.
“The defendant is an attorney,” Petersen said. “He knows a subpoena is serious business. And you know it’s common sense that he read this thing in detail. Because it’s unusual, and it’s important.
Jurors then began hearing from defense attorney Chris Gair, who said Petersen’s argument showed “how desperate the government is to convict Patrick Daley Thompson.”
The defense attorney pointed to “Daley.”
Testimony at trial hovered around $219,000 that Thompson had received from the Washington Federal. The bank was shut down by regulators in December 2017, days after its chairman, John F. Gembara, was found dead in the million-dollar home of a bank client.
He is the youngest child of Patricia Daley Martino, the eldest of the late Mayor Richard J. Daley. Thompson and his wife, Kathleen, raised their three children in the late mayor’s bungalow. Thompson is also the nephew of former Mayor Richard M. Daley.
Another grandson of the late mayor, Richard J. “RJ” Vanecko, pleaded guilty in January 2014 to manslaughter, admitting to throwing the punch that killed David Koschman in 2004.
Meanwhile, after Washington Federal’s failure, the Federal Deposit Insurance Corp. turned over Thompson’s loan to Planet Home Lending.
Thompson ended up settling the debt with the FDIC for a payment of the principal amount borrowed, $219,000, in December 2018, records show. He also filed amended tax returns and attempted to pay the taxes he owed, but the returns and payments for 2013, 2014 and 2015 were rejected as too old, an IRS agent testified.
Thompson’s defense attorneys argued that Thompson did not realize that his accountants had wrongly claimed the deductions for interest paid to the Washington Federal. The accountants relied on the interest forms the bank had mistakenly sent to Thompson, who then gave them to the accountants along with other documents.
Thompson was too frazzled, disorganized and busy to pay attention to interest forms or his tax returns, his attorneys say.
They also insisted that when Thompson told Planet Home Lending and FDIC contractors in early 2018 that he owed the Washington Federal $110,000, he “just forgot” about the second and third. payments he had received from the bank, totaling $109,000.
Among the key witnesses in the trial was Alicia Mandujano, a longtime federal worker from Washington who is among 14 defendants in the embezzlement scheme at the bank. She pleaded guilty last month. When she did, she agreed to cooperate with prosecutors, a move that could earn her a suspended sentence.
Mandujano testified that Thompson picked up the checks he received from the bank in Gembara’s office, including once before business hours.
Jurors also heard from Robert Hannigan, the managing partner of an accounting firm with close ties to the Daley, Bansley & Kiener family. Lawyers in the case used his testimony to paint conflicting portraits of Thompson as both an attentive and committed tax client and a procrastinator always rushing to file his tax returns at the last minute.
Bansley & Kiener gave Washington Federal a clean bill of health six months before it closed.
Hannigan ended up in trouble with the judge the day he testified. He was heard giving evidence – in violation of a court order – to two witnesses coming into the courthouse cafeteria during a lunch break as Thompson’s friends and family were seen nearby. Hannigan reportedly called his cross-examination by Thompson’s defense attorney “just a trick game.”
The judge threatened to hold Hannigan in contempt. But only one of the upcoming witnesses Hannigan later spoke to spoke. She did so briefly and denied that her handwriting appeared on Thompson’s records. The episode did not seriously affect Thompson’s trial.
Jurors later heard a recording of the Feb. 23, 2018, phone call in which prosecutors said Thompson lied about how much he owed the Washington Federal. Planet Home Lending had sent him a statement claiming he owed $269,120 in principal, so Thompson called a customer service line.
“I’m very puzzled,” Thompson said on the call. “It’s much higher and much more than – remotely from what we were talking about.”
He later added, “And I dispute that.”
But Thompson’s defense team scored key points when cross-examining the two FDIC contractors the feds said Thompson lied to in March 2018. They both agreed that Thompson didn’t never said he “only” owed $110,000. One said Thompson “disputed his balance” when asked about the $269,120.
After prosecutors closed their case, Thompson’s attorneys called a series of brief witnesses, primarily to testify to Thompson’s good character. Among them was Robert Gamrath, a colleague of Thompson’s at the law firm Burke, Warren, MacKay & Serritella. He said he had known Thompson for about 25 years and called him “one of the most honest, truthful and hardworking people I know.”
Thompson did not testify.