Ald. Patrick Daley Thompson (11th) has been found guilty of lying to federal regulators and cheating on his tax returns for five years.
Jurors spent about three-and-a-half hours deliberating Monday before convicting Thompson on all seven counts in the federal indictment handed up against him in April 2021. The most serious counts carry a maximum prison sentence of 30 years.
His lawyers will surely ask for probation.
The case against Thompson revolved around $219,000 he received from the now-shuttered Washington Federal Bank for Savings in Bridgeport starting in 2011.
Thompson’s daughter began to sob in an overflow courtroom before the verdict was even read. Her cries grew louder as she heard the news, and she eventually had to leave. Thompson’s remaining family members in the overflow room huddled together.
Because of COVID-19 restrictions, Thompson could not have his family with him to hear the verdict.
State law now requires him to leave office.
During closing arguments, Assistant U.S. Attorney Brian Netols told the jury that “no one is so big, no one is so important, that they can’t be held accountable for their criminal conduct.”
But defense attorney Chris Gair said federal prosecutors were “desperate” to convict “Patrick Daley Thompson.”
Gair emphasized “Daley.”
Prosecutors sought to undermine the notion that Thompson forgot about $109,000 of the $219,000 he received from Washington Federal, or that he didn’t pay enough attention to his tax returns year after year to catch deductions claimed in error.
Assistant U.S. Attorney Michelle Petersen said Thompson had been “a lawyer for a long time.” She called him “sophisticated” and said he “can deal in the fine print.”
She also noted that Thompson picked up the checks he got from Washington Federal 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 then heard from Gair, who said the case against Thompson is full of reasonable doubt.
“If it were a federal crime to make a mistake, then we’d all be guilty,” Gair said.
The defense attorney pointed to problematic testimony from various witnesses called by prosecutors, and he pushed back on the notion that Thompson plotted what to tell his accountant — leading to the amended returns — after his visit by federal agents.
“It would take a master criminal to do that,” Gair said.
The 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.
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.
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.
Meanwhile, after Washington Federal failed, the Federal Deposit Insurance Corp. handed Thompson’s loan over to Planet Home Lending.
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 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.
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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.
