Desperate for loans, Patrick Daley Thompson put hundreds of thousands in campaign cash in crooked Bridgeport bank

Former Ald. Patrick Daley Thompson was the first Daley family member to face trial and the first sitting Chicago Council member to do so in more than two decades. He was convicted on all counts Feb. 14 in his trial for income tax fraud and lying to federal regulators about money he got from a failed Bridgeport bank, Washington Federal Bank for Savings. | Ashlee Rezin / Sun-Times

Disgraced former Ald. Patrick Daley Thompson has lost his Chicago City Council seat and could go to prison over his dealings with a crooked bank in the Bridgeport neighborhood he represented.

But his ties to Washington Federal Bank for Savings go beyond the evidence presented to the jury that found him guilty Feb. 14 of cheating on his income taxes and lying to federal banking regulators.

The jury was read years of emails from Thompson to the bank in which he sounded increasingly desperate for money for himself.

What the jurors weren’t told was that, midway through seven years of pleading to get the bank to quadruple the amount of his personal loans, he started depositing hundreds of thousands of dollars in campaign contributions there, a Chicago Sun-Times examination of bank and court records has found.

Thompson’s dealings with Washington Federal started 11 years ago, when he borrowed $110,000. Then, he got additional sums of $20,000 and $89,000.

But Thompson wanted more.

John Gembara, who was suspended as president and chief executive officer of Washington Federal Bank for Savings shortly before it was shut down for massive fraud.

For seven years, in words that appeared to reflect his growing desperation, he repeatedly emailed John Gembara, the bank’s now-deceased chief executive officer, president and major shareholder, trying to boost the amount of his personal loans to more than $800,000.

The money would be for refinancing the mortgages on the Bridgeport bungalow where he lives — the home where his late grandfather, Mayor Richard J. Daley, raised his family — and a nearby two-flat as well as the loans he’d already gotten from Washington Federal, on which he’d made just one payment of $389.58.

The emails show Thompson still was holding out hope to work out that deal with the politically clout-heavy bank when he decided to run for the city council.

That’s when he chose to deposit his aldermanic campaign contributions in an account at Gembara’s bank rather than the bank where he already had a political account, for contributions raised as Metropolitan Water Reclamation District of Greater Chicago commissioner.

Thompson’s aldermanic campaign fund deposited more than $600,000 with Gembara’s bank between October 2014 and December 2017. That’s when it was shut down by federal regulators who discovered a massive fraud scheme that left the Federal Deposit Insurance Corp. having to cover $90 million in losses.

Authorities found the bank had been handing out loans with no collateral, no paperwork and no expectation they would ever need to be repaid.

Patrick Daley Thompson leaving court Feb. 14 after being convicted of income tax fraud and lying to federal regulators about his loans from Washington Federal Bank for Savings.

Why did Thompson choose to deposit his campaign money in Washington Federal at the same time he was seeking to borrow hundreds of thousands of dollars from the bank?

His lawyer Christopher Gair won’t talk about that. Gair says that’s because previous Sun-Times stories were “relentlessly slanted.”

Those reports revealed that Thompson turned to the Bridgeport bank when he needed money and that he claimed deductions on his federal income-tax returns for six years on interest payments on the loans even though he didn’t repay any of the money until the bank came under federal investigators’ scrutiny

John McDonough — who is Thompson’s campaign treasurer and whose grandfather was a mentor to Richard J. Daley — didn’t respond to messages.

U.S. District Judge Franklin Valderrama has scheduled sentencing for July 6. Thompson could face a maximum of 30 years in prison for the most serious charges jurors found him guilty of, though it’s likely he’ll seek probation. During the trial, his lawyers said Thompson’s crimes cost the Internal Revenue Service relatively little — $15,589.

Washington Federal Bank for Savings, 2869 S. Archer Ave., before it was shut down in December 2017 for “unsafe or unsound practices” days after its president John F. Gembara was found dead at a bank customer’s home in what authorities called a suicide.

Despite big salary, emails reveal Patrick Daley Thompson’s growing desperation over money

Documents that prosecutors subpoenaed and other public records offer a close-up look at convicted former Ald. Patrick Daley Thompson’s finances and his dealings with Washington Federal Bank for Savings, the crooked Bridgeport bank that federal regulators shut down in December 2017.

The records include years of increasingly desperate emails from Thompson pleading for more money from the politically clout-heavy bank that president and chief executive officer John Gembara’s family ran for three generations:

July 21, 2011 — The bank boss met the politician at a golf outing and talked about refinancing his Bridgeport home and the two-flat down the street the politician also owned. Two weeks later, Thompson applied for a loan from Washington Federal. Then, on Aug. 5, 2011, Gembara emailed Thompson, writing: “Pat, I am working on your refinance and will make this very smooth.”

Aug. 9, 2011 — Thompson, a lawyer who lobbied city officials for his clients, emailed Gembara, saying he needed money to buy an ownership stake in the law firm where he’d recently started work — Burke, Warren, MacKay & Serritella.

“As I mentioned to you I recently joined a new firm in May,” Thompson wrote. “As an equity partner, I am obligated to make a $125,000 contribution to the firm. My first thought was to refinance and add that amount to my mortgage. The other thought would be to refinance at the amount currently owed and do a one-year bridge loan. My compensation is a base salary of $350,000. However, based on my billings of approximately $1 million, I will receive another $150,000. Since I joined in May of this year, I will probably not achieve my full billings in this shortened year. Therefore, it will be next December that I receive the additional $150,000. What do you think?”

Oct. 11, 2011 — Making his first bid for elective office — a seat on the board of the Metropolitan Water Reclamation District, the government agency that handles sewage treatment for most of Cook County — Thompson opened an account for his campaign at Amalgamated Bank, which once had been run by former Commerce Secretary William Daley, one of his uncles. Another uncle, Michael Daley, is the campaign treasurer.

Nov. 15, 2011 — Thompson went to Gembara’s office to pick up a $110,000 check made payable to Burke, Warren. He signed a promissory note agreeing to pay 4.25% interest, but he never made any interest payments.

March 20, 2012 — Thompson won the Democratic primary for a seat on the water reclamation district board. He would take office that December.

May 31, 2012 — Thompson emailed Gembara about borrowing $447,000 to refinance his home and $293,000 for his two-flat. But those loans never were made.

Sept. 5, 2012 — Thompson emailed Gembara about the $110,000 promissory note, writing: “John, can we please discuss my current loan. I know I owe interest on the loan but we discussed me not paying because it was going to be wrapped in the refinance. I would like to come current with that loan. Please let me know who I can talk to at the bank to resolve this.”

Jan. 30, 2013 — In a letter to Thompson and his wife Kathleen, the IRS threatened to place a lien against their home over unpaid federal income taxes. This was less than three years after the IRS had put a lien on the Thompsons’ home that was lifted two months later.

Feb. 8, 2013 — Thompson emailed Gembara about refinancing his house and two-flat: “I do want to close as soon as possible. I also wanted to clarify that we were going to roll my $100,000 loan into the refinancing of both my home . . . and my building, 3544 S. Lowe. In addition, we discussed adding $20,000 to the total amount. I know we will also need to add any unpaid interest which is approximately $4,000, for the outstanding loan.”

Feb. 22, 2013 —Thompson emailed Gembara. “John, can we talk today. I really need a response because if this isn’t going to happen as outlined below, I need to make other arrangements. I have a tax obligation I need to make a payment on and was relying on our conversation. Please let me know as soon as possible.”

March 6, 2013 — In another email to the bank president, Thompson wrote: “John, I have not heard from you today. Please let me know if we can move forward on this.”

March 11, 2013 — Again emailing Gembara, Thompson wrote: “John, can you please call me this morning.

March 14, 2013 — Thompson emailed him: “John, please respond to me today. I really do need your help.”

March 18, 2013 — Another Thompson email: “John can you please call me regarding my loan. As we discussed previously, I was going to increase it by $20,000 and wrap all of that into the refinance. Is there a way we can get the $20,000 prior to closing. Rather than sell stocks, I wanted to go this route. Please respond today so I can make arrangements.”

March 20, 2013 — Thompson wrote the IRS a check for $13,772 — from an account at Amalgamated Bank, where his account had a balance of less than $6,500 at the time he wrote the check.

March 22, 2013 – Thompson picked up a $20,000 check from Gembara and deposited it in the Amalgamated Bank account.

March 28, 2013 — Washington Federal loan officer Cathy Torres emailed Thompson: “John said that you will need to bring with you to the closing a check for the interest that is due for the loan he did for you last year. The amount of the check you will need to bring in is $6,497.55. (interest from Nov. 17, 2011 through April 2, 2013.)”

Thompson replied: “I was under the belief that was being rolled into the loan. Please confirm.”

Torres responded: “John said the $130,000 that was borrowed was going to be rolled in not the interest.”

Thompson then asked: “Can it be?”

April 1, 2013 — Torres emailed Thompson to bring a loan application for the two-flat, his tax returns and a cashier’s check for the $14,222.82. But that loan never happened.

Jan. 22, 2014 — Thompson’s wife was served with a foreclosure lawsuit on the two-flat after the couple went three years without making a payment on a loan from Chicago Community Bank, which was going after them for $89,000. Two days later, Thompson picked up an $89,000 check from Gembara to pay the delinquent loan.

May 23, 2014 — The bank president emailed the politician, this time addressing him more formally than in the past. “Dear Mr. Thompson: It is my understanding that we have scheduled your refinance for next week. We are also awaiting . . . the new application and supporting documents. I have attached a schedule of your current loan with the bank with interest due.”

Oct. 17, 2014 — Thompson opened a new campaign fund called Friends of Patrick D. Thompson for Alderman of the 11th Ward, with McDonough as its chairman and treasurer. McDonough is a former Chicago Department of Transportation commissioner. In 1917, his late grandfather had been elected to the Chicago City Council, representing the 11th ward, and he became a mentor to Richard J. Daley. Thompson’s campaign said it would keep contributions in the account at Gembara’s bank.

April 7, 2015 — Thompson won election to the city council. Two days later, he came into a $1.5 million windfall — his share from the $65.7 million sale of Pensacola Place, an 18-story apartment building that his late father William Thompson developed in Uptown in the 1970s. Thompson didn’t use any of the money to repay the $219,000 he owed Gembara’s bank. Later that month, he and his wife paid $340,000 to buy a summer home in New Buffalo, Michigan, a lakefront town where other Daley family members own homes.

March 2016 — Thompson and his wife submitted two loan applications to Gembara’s bank, asking to borrow $661,000 to refinance their bungalow, and $167,264 for the two-flat. They said their assets topped $4.8 million, including $900,000 at Amalgamated Bank, and that they had about $900,000 in debts, including $249,500 owed to Washington Federal, and that his monthly income topped $40,000.

One of the exhibits that federal prosecutors used to help prove their case against Patrick Daley Thompson

Jan. 17, 2017 — The Thompsons sold the two-flat for $335,000.

Aug. 21, 2017 — Thompson and Gembara again exchanged emails about refinancing the bungalow. They also discussed a loan for the 11th Ward Regular Democratic Organization for building repairs.

Oct. 25, 2017 — As federal regulators went through the bank’s books, Gembara lent $80,000 to the 11th ward party organization, headed by Thompson and another of his uncles, Cook County Commissioner John Daley. Acting on orders from federal regulators, the bank’s board suspended Gembara on Nov. 28, 2017.

Nov. 30, 2017 — Thompson again emailed Gembara, this time “regarding closing of ward and home loan,” according to an email prosecutors planned to introduce as evidence but didn’t. The contents of this email hasn’t been released.

Dec. 3, 2017 — Gembara was found dead — with a rope around his neck, in a seated position in a chair inside the main bedroom of his bank customer Marek Matczuk’s $1 million home in Park Ridge. Police in the northwest suburb and the Cook County medical examiner’s office ruled the death a suicide, though some Gembara family members and friends have questioned that finding. Matczuk has since been charged with embezzling $6 million from the bank — one of 15 people, including Thompson, who have been charged in the ongoing investigation of the bank. Matczuk awaits trial.

Dec. 15, 2017 — Federal regulators shut down Washington Federal after discovering many unpaid loans — including Thompson’s. The bank’s deposits, including Thompson’s aldermanic campaign account, were sold to Royal Savings Bank. He had deposited more than $600,000 in that account over the years, spending about $590,000 of that.

Jan. 20, 2018 — The Thompsons got a letter from the Federal Deposit Insurance Corp. saying they needed to repay the $219,000 borrowed from Washington Federal, plus interest. During the ensuing months, Thompson lied to regulators, saying he’d borrowed far less than that from the bank — just $110,000.

Nov. 21, 2018 — Finally refinancing their bungalow, the Thompsons got a $454,000 mortgage from Morgan Stanley Private Bank. Kathleen Thompson signed the paperwork — but wrote that she wasn’t responsible for repaying the loan.

Dec. 3, 2018 — Federal agents served Thompson with a subpoena at his home, seeking the couple’s tax returns, real estate documents, records related to Washington Federal and “any and all records related to loans made to or from the Friends of Patrick D. Thompson.” Thompson’s campaign fund has never reported receiving or making any loans.

Dec. 5, 2018 — Morgan Stanley gave the Thompsons a $250,000 mortgage on their Michigan home. The Thompsons used the two Morgan Stanley mortgages to repay the FDIC the $219,000 borrowed from Gembara’s bank — without paying any interest.

April 12, 2019 — Six weeks after Thompson was elected to a second city council term, he and his wife filed amended tax returns for 2012 through 2017, no longer claiming a deduction for the interest they’d never paid on the Washington Federal loan. They tried to pay the IRS $15,558 to make up for the tax savings they’d gained by making the false claim. But the IRS said they could make amends going back just three years, not six.

Two weeks later, the Sun-Times reported that federal agents were investigating Thompson’s loans from the bank.

April 29, 2021 — A federal grand jury indicted Thompson, charging him with lying to federal regulators regarding his Washington Federal loans and filing five fraudulent tax returns.

Feb. 14, 2022 — A jury found Thompson guilty.

He has resigned from the council, and his profile has been removed from his law firm’s website, though the Illinois Supreme Court has yet to discipline Thompson. Based on his conviction, it’s likely he will lose his law license.