Chicago alderman found guilty of lying to regulators, filing false income tax returns

Chicago Alderman Patrick Daley Thompson was found guilty by a jury on two counts of lying to regulators and five counts of filing false income tax returns.

The 11th Ward council member is the grandson of late Mayor Richard J. Daley, and the nephew of former Mayor Richard M. Daley, according to the Chicago Sun-Times.

The verdict Monday came after around three-and-a-half hours of deliberation by the 12-person jury in the Dirksen Federal Courthouse.

During closing arguments, Assistant US Attorney Brian Netols told jurors "no one is so big, no one is so important, that they can't be held accountable for their criminal conduct."

Defense attorney Chris Gair said that the prosecutors were "desperate" to convict "Patrick Daley Thompson," and reportedly emphasized the "Daley" part of his name. He said that the case was full of reasonable doubt.

While leaving the courthouse with his wife and daughter, who had to watch the proceedings over a video stream, Gair told reporters to "stop shouting at him" and "he doesn't have any comment."

The defense attorney and former federal prosecutor said: "Extremely disappointed in the verdict. It was wrong. And I'm extremely disappointed in the United States attorney's office for bringing this prosecution and for the things it said in the closing argument."

Thompson's sentencing was schedules for July 6 by US District Judge Franklin Valderrama. According to the Chicago Sun-Times, "The most serious counts against him carry a maximum sentence of 30 years, but his lawyers will surely ask for probation. Thompson's crimes cost the Internal Revenue Service $15,589."

State law requires that Thompson now resign his seat on the City Council.

Thompson is the first sitting City Council member to face trial in more than two decades. According to the Chicago Sun-Times, most who are federally charged plead guilty. "And Thompson's case might now be the latest reason why: Despite a hard-fought defense that seemed to score key points, jurors still found Thompson guilty on every count," they reported.

One of the jurors, 30-year-old Kennetta Holden, said that one of the jurors brought up Thompson's connections to the Daley family, but Holden said they were shut down immediately by other members of the jury.

"We reminded that juror that we're going based off the evidence, not anything to do with who he's related to. We kind of just said, 'OK. That's irrelevant.' It was, like, so quick. We just shut it down right then and there," she said.

Holden said she had never heard of the family before the trial, and while driving home from the trial Monday night, she still didn't really know who they were.

"I might Google it," said Holden, noting that she also might not look it up because she has two kids, including an 11-month-old, and "better things to do."

The case centered around $219,000 Thompson received from Washington Federal Bank for Savings in Bridgeport. According to the Chicago Sun-Times, the bank was shut down in December of 2017 amidst allegations of massive fraud, and came days after the bank's president was found dead in a customer's $1 million home.

"Fourteen people have been charged in a multimillion-dollar embezzlement scheme at the bank. Its late president, John F. Gembara, has also been implicated," the Chicago Sun-Times reported.

Thompson, who did not testify during the trial, reportedly received a $110,000 loan from the bank in November of 2011, and additional payments $20,000 in March 2013 and $89,000 in January 2014. According to the feds, Thompson made one $389.58 payment in February 2012 but paid no interest.

After the closing of Washington Federal, the Federal Deposit Insurance Corp. handed Thompson's loan over to Planet Home Lending.

"Thompson falsely claimed mortgage-interest deductions for interest purportedly paid to Washington Federal on his tax returns for the years 2013 through 2017. Thompson also lied in early 2018 to a Planet Home Lending customer-service representative and two FDIC contractors about how much he borrowed," the Chicago Sun-Times reported.

He settled the debt with the FDIC for a payment of the principal amount borrowed, $219,000, in December 2018. Thompson also filed amended tax returns and reportedly attempted to pay the taxes he owed, but the returns and payments for 2013, 2014, and 2015 were rejected for being too old, an IRS agent testified.

Assistant US Attorney Michelle Petersen told jurors during closing arguments that Thompson had been "a lawyer for a long time," and called him "sophisticated," saying he "can deal in the fine print."

"When he saw an opportunity to lie, to deceive, to pay less than what he owed, he took it," Petersen said. "And his lies follow a pattern."

Defense attorneys placed blame with Thompson's accountants at Bansley & Kiener for the deductions wrongly claimed on his tax returns.

They said that Thompson was too busy to notice the mistakes.

Petersen responded by saying that Thompson was "not a disengaged taxpayer," and that rather, his correspondence with accountants showed he was paying attention and asked questions.

One example showed that there were records of Thompson emailing his accountant in April of 2017 regarding his 2016 tax returns, asking about potential adjustments for his wife's use of the house as her office.

"Perhaps the most contentious point of the trial revolved around whether Thompson lied to Planet Home Lending and the FDIC contractors in early 2018. Planet Home Lending sent Thompson a statement in February 2018 that said he owed a principal balance of $269,120. Jurors heard a recording of Thompson's follow-up call to a customer-service line in which he claimed he had borrowed $100,000 or $110,000," the Chicago Sun-Times reported.

"I'm very perplexed," Thompson said in the call. "This is a significantly higher and much more than — remotely of what we were talking about," later adding, "and I dispute that."

Gair insisted that Thompson did not say he "only" borrowed $110,000 and nothing else, as was charged in the indictment.

Petersen argued that's what Thompson said "in substance," pointing out that Thompson signed loan applications in 2016 listing his Washington Federal balance as $249,050.

She also showed jurors an envelope Thompson had turned over to the feds with writing on it that said "tax," "Washington Fed," and "$249,049.96" with a "?" scribbled in blue ink nearby.

"Despite that, Petersen alleged that Thompson sought to resolve the Planet Home Lending inquiry quickly, and in his favor, because 'if he can get them to hurry up they might not dig any deeper' and find records of the second and third Washington Federal payments totaling $109,000," the Chicago Sun-Times reported.

Peterson noted that Thompson amended the tax returns in question only after he was vitiated on Dec. 3, 2018 by federal agents and was given a grand jury subpoena.

That visit occurred just days after the feds raided the offices of Ald. Edward M. Burke, Thompson's colleague, who now faces criminal charges as well.

"The defendant is a lawyer," Petersen said of Thompson. "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."

Gair argued against the idea that Thompson had hatched the plan, saying: "It would take a master criminal to do that."

Gair told jurors that Thompson has "two full-time jobs and three offices, and he's running hither and thither all the time," and said that once he realized the errors, "he did what an honest person does when they find out that they've made a mistake. He fixed it."

"He's a straight arrow," Gair said.