Chicago Alderman Patrick Daley Thompson pleads not guilty to federal charges in bank probe

CHICAGO — Alderman Patrick Daley Thompson, grandson and nephew of two legendary Chicago mayors, pleaded not guilty Thursday to federal charges stemming from an investigation into the collapse of a clout-heavy bank in his family’s longtime Bridgeport neighborhood.

Thompson, 51, entered his plea during an arraignment by telephone before U.S. District Judge Franklin Valderrama, who set a recognizance bond for Thompson.

The alderman spoke only briefly during the 30-minute hearing, answering, “Yes your honor” when asked if he was prepared to go forward with the arraignment remotely.

Meanwhile, Thompson’s lawyer, Chris Gair, made several inferences to the weakness of the charges and said he was seeking a speedy trial to clear the alderman’s name.

“This is a very small tax case that the court will soon learn is simply a mistaken deduction taken as part of the tax preparation process,” Gair said at one point in the hearing.

In response, prosecutors noted that Thompson would likely face prison time if he’s convicted.

Valderrama said that due to COVID-19 restrictions still in place at the Dirksen U.S. Courthouse, he was prepared to set a trial date Thursday, but would revisit the issue at the next status hearing on June 10.

Thompson, who has served as 11th Ward alderman since 2015, was charged last month in a seven-count indictment with filing false tax returns and lying to Federal Deposit Insurance Corp. officials about $219,000 in loans and other payments he’d received from Washington Federal Bank for Savings before it was shuttered in 2017.

Washington Federal’s collapse has also led to federal charges against a number of the bank’s executives and former customers alleging a multiyear, $31 million embezzlement scheme that preceded the institution’s failure.

Thursday’s arraignment was largely procedural, but Gair struck a defiant tone over the usually routine condition that the alderman turn over his passport as a condition of his bond, which Gair described as an “indignity.”

Gair said Thompson was a “highly respected lawyer and city official” who is raising a family in the same Bridgeport bungalow once owned by his grandfather, former Mayor Richard J. Daley. He said Thompson was not accused of a violent crime and the idea that he might try to flee was preposterous.

“He is not a wide traveler. His last trip was an official trade mission to China,” Gair said. ”Mr. Thompson is not going to defect to China as a result of these charges. Instead he’s going to show up in court and show he is innocent.”

Prosecutors said Thompson had refused to participate in an interview with pretrial services officers who typically advise the judge on whether someone was a risk to flee.

“He has frankly made your job more difficult,” Assistant U.S. Attorney Brian Netols told the judge.

Valderrama in the end ordered the passport surrendered, saying the alderman could petition the court to get it back if for some reason he had to travel outside the U.S. while his case was pending.

Thompson is the latest in a long line of current and former Chicago aldermen accused of running afoul of the law, and also the first elected member of the Daley family to face federal criminal charges.

According to the indictment, Thompson’s first loan from Washington Federal for $110,000 was issued in November 2011, in the form of a check payable to a law firm as Thompson’s capital contribution. Thompson signed a note promising to pay the money back, but according to the charges he made only one payment on it the following February and never paid off the rest.

In March 2013, Thompson solicited a $20,000 payment from Washington Federal that was completely off the books and given with no collateral, according to the charges. Thompson allegedly used the money to pay past-due taxes to the IRS, but never paid a penny in principal or interest to the bank.

Ten months later, Thompson received another $89,000 loan from the bank in similarly secret fashion that he used to pay off a lien that another financial institution had placed on a property he owned, according to the indictment. Thompson also made no effort to repay that money, the charges stated.

The indictment also alleged that Thompson filed false tax returns over a five-year period stating he had paid a total of more than $171,000 in interest to Washington Federal related to the loans, when actually he had paid nothing, the indictment alleged. He also allegedly understated his taxable income on those same returns.

When FDIC officials questioned him about the money in 2018, Thompson lied on two separate occasions, saying he believed he owed $100,000 to $110,000 “and that any higher amount was incorrect,” the indictment stated.

He also told investigators that the first loan was for “home improvement” when he knew it had been paid to a law firm, according to the charges.

In a statement after the indictment as announced, Thompson said his “conscience was clear” and that he was guilty only of “inadvertent tax preparation errors.” He said he’d subsequently paid the back taxes owed and repaid the rest of the loan in question.

“I did not commit any crime, I am innocent, and I will prove it at trial,” the statement said. “The charges in the indictment do not relate in any way to my public service or to my professional life. I remain 100% dedicated to serving the people of Chicago to the best of my ability.”