CHICAGO — The list of political heavyweights to face criminal prosecution at Chicago’s federal courthouse is dismally long and peppered with names such as Ryan, Blagojevich, Cellini, Vrdolyak, and Burke.
But there has never been a Daley — until now.
On Monday, Chicago Ald. Patrick Daley Thompson, grandson and nephew of the city’s two longest-serving mayors, is scheduled to go on trial at the Dirksen U.S. Courthouse on charges alleging he lied on federal tax returns about a line of credit he received from a Bridgeport bank that later collapsed.
A pool of prospective jurors reported to the courthouse Friday morning to take COVID-19 tests and fill out a questionnaire. Jury selection and opening statements are set for Monday.
In demanding a trial just months after being indicted, Thompson, 52, who represents the 11th Ward where the Daley family built its once-formidable political machine, will be the first sitting alderman to face a jury since the Operation Silver Shovel probe more than two decades ago.
But even more importantly, Thompson will be the first member of the Daley clan ever tried on federal charges — a prospect that would have been virtually unthinkable when the family was at the height of its power, holding sway over virtually every aspect of the city’s political structure, including who would serve as the U.S. attorney.
Thompson, who has served on the City Council since 2015, was charged last April in a seven-count indictment with filing false tax returns and lying to Federal Deposit Insurance Corp. officials about $219,000 in loans he’d received from clout-heavy Washington Federal Bank for Savings before it was shuttered in 2017.
The indictment alleged Thompson filed false tax returns 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, according to the indictment.
Thompson’s attorney, Chris Gair, has sought to portray any discrepancies in the paperwork as sloppy bookkeeping, not fraud. In a statement after the indictment was announced last year, Thompson said his “conscience was clear” and that he’s 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.”
The more serious charges of making false statements carry a maximum of 30 years in federal prison, while the tax counts are punishable by up to three years behind bars.
Meanwhile, a conviction on any of the counts would likely force Thompson to immediately resign his seat on the council.
The case is an offshoot of a bigger probe filled with intrigue. The bank’s president, John Gembara, died by suicide at the home of a customer days before the feds shut it down. A massive federal investigation later led to criminal charges accusing a number of former bank employees and customers of running a multiyear, $31 million embezzlement scheme that doled out millions of dollars in loans with no collateral or expectation of repayment.
Thompson was not charged as part of the embezzlement scheme and U.S. District Judge Franklin Valderrama has barred any direct testimony about it. Instead, the evidence in Thompson’s case will be largely dry, focusing on his bank records and tax returns.
The evidence is also expected to contain little if any mention of Thompson’s position as an elected official or his role in the Daley family. In fact, the indictment doesn’t include the Daley name at all, only his middle initial, and the judge has barred Thompson’s attorneys from showing the jury the alderman’s biography posted on the 11th Ward website.
The questionnaire jurors filled out, however, does identify Thompson as a Chicago alderman and states his “grandfather was the late Mayor Richard J. Daley and his uncle is former Mayor Richard M. Daley.”
To help weed out any potential biases, members of the jury pool were asked whether anything about those facts would lead them “to treat him differently in this case than someone not in politics.”
At a hearing Friday night, nine potential jurors were stricken “for cause,” all due at least in part to their views of the Daleys and their ability to remain impartial. The remaining members of the jury pool will be questioned about their answers in court on Monday.
The trial is expected to wrap up by Feb. 16.
Among the key witnesses will be Thompson’s former accountant, Robert Hannigan, who testified during a pretrial hearing last year about the alderman’s efforts to amend the tax returns at the center of the charges.
Another witness, former Washington Federal loan officer Alicia Mandujano, is expected to testify for prosecutors that Gembara directed her to doctor the bank’s books to make it look like Thompson was making payments on his loan.
Mandujano, who pleaded guilty to conspiracy charges, admitted in a 27-page plea agreement with prosecutors that her alterations to Thompson’s loan records were just part of her role in the larger embezzlement conspiracy to hide millions of dollars in bad loans.
The trial will likely also focus on the morning of Dec. 3, 2018, when FDIC agents knocked on the door to Thompson’s bungalow at 35th and Lowe — the same home where his grandfather, the late Mayor Richard J. Daley, raised his family — and served him with a subpoena for his tax records.
A report of that interview made public in court records showed Thompson initially talked to the agents through the storm door, saying he was heading into the ward office. He wound up inviting them inside and answering their questions for about 15 minutes before cutting the interview short, according to the report.
Thompson told the agents it was “tragic” what had happened to Gembara, whom he described as “the nicest guy” who meant well but whose unresponsiveness had left Thompson unable to close with a new lender that was going to take over his debt, according to the report.
At one point, Thompson said Gembara’s delays were “killing me,” before swiftly apologizing “for his choice of words,” the report stated.
When the agents started asking Thompson whether he’d been making payments on his loans with Washington Federal, the alderman answered “Yeah,” according to the report.
But when he was asked to produce canceled checks as proof, Thompson replied, “No, there weren’t any.” He then requested an attorney be present for any further questioning, according to the report.
Thompson’s lawyers have characterized the report generated from the interview as unreliable and that Thompson’s answer about payments was misconstrued by the agents, who had asked confusing, compound questions.
“There is good reason to doubt the accuracy of the agents’ interview memoranda,” Gair wrote in a court filing last month asking to review the agents’ raw notes from their interaction Thompson that day.
Thompson, a real estate attorney, began his political career when he was elected to the Metropolitan Water Reclamation District a decade ago.
With the support of Richard M. Daley and another uncle, Cook County Commissioner and 11th Ward Democratic Committeeman John Daley, he then promptly won a seat on the City Council in 2015, representing the South Side Bridgeport neighborhood that has been his family’s seat of political power for decades.
Observers noted Thompson’s jowly, blue-eyed resemblance to his grandfather, a connection bolstered by the fact that he and his family live in his grandfather’s former home.
When he ran for aldermen, Thompson played coy when asked about possible mayoral ambitions, saying he wanted to win the council seat “and, then, take four years at a time, and take a look and see.”
On the council, Thompson largely backed former Mayor Rahm Emanuel, though he pushed back against Emanuel’s moves to toughen restrictions on tobacco sales, saying they hurt corner stores in his ward.
He endorsed Toni Preckwinkle in the 2019 mayoral runoff election, and has voted against some of Mayor Lori Lightfoot’s major spending initiatives, including her 2021 budget with its $94 million property tax increase and her plan to borrow $1.4 billion to help fund a major infrastructure package.
Thompson did vote in favor of Lightfoot’s 2022 budget, however, and isn’t considered a hard-line Lightfoot opponent like some of his colleagues on the council.
Since his indictment, Thompson has remained involved with City Council issues. He attends nearly all the Zoom meetings for council committees on which he sits, frequently questioning Lightfoot administration officials about the potential impact their proposals will have on city policies and finances.
And he has spoken up repeatedly during the city ward remap fight in defense of keeping the Back of the Yards neighborhood in the 11th Ward, instead of cutting some of it out as part of a move to create Chicago’s first majority Asian ward.
The trial proceedings will be subject to strict COVID-19 protocols that have allowed the courthouse to remain open for business despite the recent surge in the omicron variant.
Valderrama began a recent hearing by asking both sides if they wanted to request a continuance due to COVID-19 issues. Both prosecutors and the defense team said they wanted to go ahead with the trial.
To accommodate crowds and allow for social distancing, members of the media and public will be able to watch the proceedings via a live video feed in the large ceremonial courtroom on the 25th floor of the courthouse.
The judge said that any witnesses or attorneys who wish to take their masks off during the trial must first verify under oath that they have been vaccinated and boosted against COVID-19. Witnesses and jurors will also be tested regularly for the virus throughout the trial, he said.
While Thompson is the first member of the Daley family to face a federal criminal trial, he’s hardly the first to get into hot water.
In 1992, then-Mayor Richard M. Daley`s son, Patrick, pleaded guilty to disorderly conduct and providing alcohol to teenagers during a beer party that turned into a brawl at the family`s summer home in Michigan.
Two decades later, Daley nephew Richard Vanecko, who is Thompson’s first cousin, was indicted on manslaughter charges stemming from a fatal altercation on the Near North Side in the 2000s, Vanecko was later sentenced to 60 days in jail.
Patrick Daley also caused the family considerable embarrassment when it was revealed that he and another cousin, Robert Vanecko, were secret investors in a sewer company that landed a lucrative contract with the city.
Their business partner, Anthony Duffy, later was convicted of fraud and sentenced to 17 months in federal prison for his role in a scheme that used a minority-owned company as a front to fraudulently secure millions of dollars in Chicago sewer contracts.
Duffy, who is white, admitted in a plea agreement he lied to federal investigators about why he didn’t reveal on economic disclosure statements that Patrick Daley and Robert Vanecko, were investors in the company.
Neither Daley nor Vanecko was charged with any wrongdoing as part of that case.
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(Chicago Tribune’s John Byrne contributed.)
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