‘Ald. Patrick Thompson Has Been Judged:' Lightfoot Responds After Guilty Verdict

After Chicago Ald. Patrick Daley Thompson was found guilty of lying to federal regulators and cheating on his tax returns for five years, Mayor Lori Lightfoot said the city will begin the process to fill his vacancy this week.

"Alderman Patrick Thompson has been judged by a jury of his peers and found guilty," Lightfoot said in a statement. "This week, we will be outlining 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."

Thompson was accused of telling federal regulators that he owed $110,000 on a loan he received from a Bridgeport bank, while the actual total he borrowed was $219,000, according to prosecutors.

Prosecutors told jurors that Thompson falsely claimed mortgage interest deductions for interest paid to Washington Federal on his tax returns for the years 2013 through 2017, which cost the Internal Revenue Service $15,589. The feds 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 alderperson to face trial on federal charges in more than two decades. He is also the first member of his storied political family to go on trial.

A jury of four men and eight women heard roughly three-and-a-half days of testimony in Thompson’s trial last week, mostly from government witnesses. The trial began nine months after the feds hit Thompson with an indictment charging him with two counts of lying to regulators and five counts of filing false federal income tax returns.

The jury found Thompson guilty on all seven counts.

Federal prosecutors sought to undermine the notion that Ald. Patrick Daley Thompson had forgotten about $109,000 he received from a Bridgeport bank or that he didn’t pay attention to his tax returns during closing arguments in his trial Monday.

Assistant U.S. Attorney Michelle Petersen told jurors that Thompson has been “a lawyer for a long time.” She called him “sophisticated” and said 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.”

Fourteen others have been charged in connection with a multimillion-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 one $389.58 payment in February 2012 but paid no interest, according to the feds.

Petersen noted that Thompson picked up the checks he got from Washington Federal Bank for Savings in person and that he asked his accountants various questions about his tax returns. She insisted, “He’s not a disengaged taxpayer.”

Finally, she said, Thompson only amended the tax returns at issue in his trial after he was visited by federal agents and given a subpoena.

“The defendant is a lawyer,” 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 next began to hear from defense attorney Chris Gair, who said Petersen’s argument showed “just how desperate the government is to convict Patrick Daley Thompson.”

The defense attorney emphasized “Daley.”

Trial testimony revolved around $219,000 Thompson received from Washington Federal. The bank was shut down by regulators in December 2017, days after its president, John F. Gembara, was found dead in a bank customer’s $1 million home.

He’s the youngest child of Patricia Daley Martino, the eldest child 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. “R.J.” Vanecko, pleaded guilty in January 2014 to involuntary manslaughter, admitting he threw the punch that caused David Koschman’s death in 2004.

Meanwhile, after Washington Federal failed, the Federal Deposit Insurance Corp. handed Thompson’s loan over to Planet Home Lending.

Thompson wound 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 for being too old, an IRS agent testified.

Thompson’s defense attorneys argued that Thompson didn’t realize his accountants had wrongly claimed the deductions for interest paid to Washington Federal. The accountants relied upon interest forms the bank wrongly sent to Thompson, who then turned them over to the accountants with other documents.

Thompson was too frazzled, disorganized and busy to pay attention to the interest forms or his tax returns, his lawyers say.

They also insisted that, when Thompson told Planet Home Lending and the FDIC contractors in early 2018 that he owed $110,000 to Washington Federal, he had “simply forgotten” about the second and third payments he received from the bank, totaling $109,000.

Among the key trial witnesses was Alicia Mandujano, a longtime Washington Federal employee who is among the 14 charged in the embezzlement scheme at the bank. She pleaded guilty last month. When she did so, she agreed to cooperate with prosecutors, a move that could earn her a sentencing break.

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 deep ties to the Daley family, Bansley & Kiener. Lawyers in the case used his testimony to paint conflicting portraits of Thompson, as both an attentive, engaged tax client and a procrastinator always rushing to file his returns at the last minute.

Bansley & Kiener gave Washington Federal a clean bill of health six months before it was shut down.

Hannigan wound up getting in trouble with the judge the day he testified. He was overheard talking about his testimony — in violation of a court order — to two upcoming witnesses in the courthouse cafeteria during a lunch break while Thompson’s friends and family were seen nearby. Hannigan allegedly called his cross-examination by Thompson’s defense attorney “just a game of gotcha.”

The judge threatened to hold Hannigan in contempt. But only one of the upcoming witnesses Hannigan spoke to later took the stand. She did so briefly, and she denied her handwriting appeared on Thompson’s records. The episode did not seriously affect Thompson’s trial.

Later, jurors heard a recording of the Feb. 23, 2018, phone call in which prosecutors say Thompson lied about how much he owed 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 perplexed,” Thompson said on the call. “This is a significantly higher and much more than — remotely of what we were talking about.”

He added later, “And I dispute that.”

But Thompson’s defense team scored key points while cross-examining the two FDIC contractors the feds say Thompson lied to in March 2018. They both agreed that Thompson never said he “only” owed $110,000. One said Thompson “disputed his balance” when asked about the $269,120.

After prosecutors rested their case, Thompson’s attorneys called a series of brief witnesses, mostly 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’d known Thompson for about 25 years and called him “one of the most honest, truthful and hardworking people I know.”

Thompson did not testify.