Chicago political dynasty heir wins SCOTUS review of tax fraud conviction

CHICAGO (CN) — The U.S. Supreme Court announced Friday that it will hear arguments from Chicago political scion and former city councilor Patrick Daley Thompson, who’s challenging his tax fraud conviction in a case that turns on whether a federal anti-corruption statute prohibits “making a statement that is misleading but not false” to government agencies and financial institutions.

A member of the once-powerful Daley family, Thompson is nephew to Chicago’s longest-serving mayor, Richard M. Daley, and the grandson of the city’s second-longest-serving mayor, Richard J. Daley. Jurors found him guilty in February 2022 on seven counts related to tax fraud.

According to prosecutors, Thompson falsely reported to creditors and the Federal Deposit Insurance Corporation in 2018 that he only owed $110,000 to the now-closed Washington Federal Bank for Savings when he actually owed about $269,000 on loans — $219,000 principal plus interest — he solicited, received and never paid back. Email records obtained by prosecutors show he was in contact with Washington Federal’s former CEO John Gembara shortly before Gembara was found dead by what has been ruled a suicide in the home of one the bank’s wealthy customers in December 2017.

Thompson was also convicted of low-balling his taxable income between 2013 and 2017 and falsely reporting that he paid over $170,000 in mortgage interest payments in the same time period.

His conviction was the first time any office-holding member of the Daley family had been found guilty on federal charges. The city subsequently forced Thompson to resign as alderman for Chicago’s 11th Ward, the longtime Daley seat of power.

A Seventh Circuit panel upheld Thompson’s conviction in January, after he had already finished the four-month prison sentence U.S. District Judge Franklin Valderrama handed down in July 2022. The former city councilor argued before the appellate court that he never lied about how much he owed Washington Federal — he just made a mistake when stating how much he borrowed.

“As Thompson sees it, he never outright lied. For example, rather than stating that he owed only $110,000, he just said that he borrowed $110,000 — which is true even if he later borrowed more,” U.S. Circuit Judge Judge Doris Pryor, a Joe Biden appointee, wrote in the 20-page unanimous opinion.

But in the same opinion, she made it clear it was an argument the Seventh Circuit didn’t buy.

“Even taking interest out of the equation, Thompson borrowed much more than the $110,000 that he admitted to knowing about. He borrowed nearly double that amount — $219,000 — meaning that he misrepresented the extent of his principal loan balance by over $100,000. This significant discrepancy, not semantics, led the jury to convict Thompson,” Pryor wrote.

Thompson’s appeal to the Supreme Court challenges the panel’s conclusion, noting that the appellate courts have issued contradictory rulings on the same anti-corruption law he was convicted of violating. He argues the First, Sixth and Eleventh Circuits hold that the law criminalizes “only false statements, not misleading ones,” while the Fifth, Seventh, Eighth and Tenth Circuits hold the law bars “misleading statements as well as false statements.”

He argues the Supreme Court can use his case to finally settle the appellate split.

“If the court interprets the statute literally, to prohibit only false statements, the parties’ dispute about whether Thompson’s statements were false can be resolved by the lower courts on remand,” Thompson wrote in his petition to the high court.

Thompson’s case could mark the second time in as many years that the Supreme Court issues a decision affecting corruption trials for Chicago politicians. In June, the high court ruled in a case out of the Chicagoland town of Portage, Indiana, that “gratuities” given to politicians for past services do not count as bribes without a quid pro quo arrangement.

The ruling forced federal prosecutors in Chicago to re-assess their bribery charges against former Illinois House Speaker Mike Madigan, who faces his own sprawling corruption trial starting next week. Though U.S. District Judge John Robert Blakey ruled Wednesday that the bribery charges against Madigan can stand, the court pushed the ex-speaker’s trial back from April to October while the Supreme Court deliberated on the issue.

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