Patrick Daley Thompson, former 11th Ward alderman and scion of the Daley political dynasty, was sentenced Wednesday to four months in prison for tax evasion and lying to banking regulators.
The decision by U.S. District Judge Franklin Valderrama made Thompson the first member of the Daley family to go to prison — a prospect that would have been unfathomable to many when the family was at its political zenith.
Thompson, the grandson and nephew of Chicago’s two longest-serving mayors, was convicted by a federal jury in February of two counts of lying to federal regulators about loans he had with the now-shuttered Washington Federal Bank for Savings in his family’s Bridgeport neighborhood.
The jury also found Thompson guilty on five counts of filing false tax returns that illegally claimed mortgage interest deductions he never paid.
In court filings, prosecutors argued that Thompson should be sentenced to two years in prison, saying he was a savvy and sophisticated lawyer and public official who knew the consequences of his actions.
Thompson’s attorney, meanwhile, asked for a sentence of probation, saying he’s already suffered “tremendous public humiliation” and lost his law license and seat on the City Council.
Under state law, Thompson, who represented the 11th Ward since 2015, was forced to resign his seat on the City Council immediately after the conviction on felony charges. Mayor Lori Lightfoot has since appointed Nicole Lee to fill the post for the rest of Thompson’s term.
The charges against Thompson were an offshoot of a larger investigation into the collapse of Washington Federal, which uncovered a massive embezzlement scheme leading to charges against more than a dozen former bank officers, employees and customers.
At Thompson’s trial, Thompson’s lawyer, Chris Gair, had sought to pin the blame on the bank and its former president, John Gembara, saying Thompson had nothing to do with generating the erroneous tax forms that wound up on his returns. Gembara was found hanged in the home of a customer days before the bank was shuttered, and his death was ruled a suicide.
The defense team has also portrayed Thompson as an honest but “frazzled” man, constantly torn between his duties as alderman, commercial real estate lawyer and father, and admittedly lacking when it came to focusing on the minutiae of his taxes.
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Gair also told jurors that the U.S. attorney’s office was bent on finally nailing a Daley.
Prosecutors, however, said Thompson, an accomplished commercial real estate attorney, knew exactly what he was doing when he tried to hide the full $269,000 in principal and interest he owed from regulators in the wake of Washington Federal’s collapse.
After receivers for the Federal Deposit Insurance Corp. confronted Thompson with evidence that he’d taken advances of $20,000 and $89,000 from Washington Federal in 2013 and 2014, the alderman feigned surprise, according to prosecutors.
In their sentencing filing on Monday, prosecutors wrote that Thompson had many chances to come clean but instead “repeatedly chose to maintain this irregular and cozy arrangement with Washington Federal.”
“The only reasonable inference is that (Thompson), being a sophisticated real estate attorney and public official, continued to engage with Washington Federal because it allowed him to have a highly unusual (at best) relationship with a bank,” the filing argued.
The relationship, prosecutors said, “allowed him to periodically obtain substantial amounts of money without any loan paperwork or other obligation to pay back the funds” by a certain date.”
mcrepeau@chicagotribune.com
