Seventh Circuit upholds conviction for nephew of Chicago’s longest-serving mayor

CHICAGO (CN) — A felony conviction and $50,000 restitution order against the scion of one of Chicago's most famous political dynasties will stand, a three-judge panel of the Seventh Circuit ruled Monday.

That scion, former City Council member Patrick Daley Thompson, is the grandson of Richard J. Daley and nephew of Richard M. Daley. A father and son, respectively, who served as Chicago's longest-serving mayors to date. Both held office for over two decades, with M. Daley's 22 years between 1989 and 2011 just barely overtaking his father's 21-year tenure between 1955 and 1976.

A federal jury convicted Daley Thompson on seven counts of tax fraud in February 2022. The jurors found he had lied to federal regulators in 2018 about how much money he owed to the now-closed Washington Federal Bank for Savings, reporting he only owed $110,000 to Washington Federal when he was actually on the hook for $269,000 in loans he solicited, received and never paid back, including interest. They also convicted him of lowballing 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.

It was the first time any office-holding member of the Daley family had been convicted on federal crimes. The city subsequently forced Daley Thompson to resign as alderman for Chicago's 11th Ward, the longtime Daley seat of power.

He served four months in prison for the conviction between August and December 2022, on top of a year of supervised release. As restitution, the court also ordered him to pay the IRS a little over $8,000, and the roughly $50,000 in interest he owed on his loans to the Federal Deposit Insurance Corporation, which became the receiver for Washington Federal's loans after the bank failed in 2017.

In July 2022, Daley Thompson appealed his conviction on the counts related to the Washington Federal loans, as well as his FDIC restitution order. The move didn't keep him out of jail, but U.S. District Judge Franklin Valderrama did grant him a pending stay on the restitution order in July 2023. Daley Thompson's attorney Chris Gair went before the federal appellate court last April, arguing that the government had employed "sleights of hand" to mislead the jury into thinking Daley Thompson had lied about how much he owed Washington Federal, when really he just made a mistake when stating how much he borrowed from the bank.

"The first [sleight of hand] was to say that he used the terms “borrowed” and “owed” interchangeably when he did not. The second was to argue that his actual statement about borrowing $110,000 was false because it omitted the amount of interest he 'borrowed' on that amount," Gair wrote in Daley Thompson's appellate brief. "While a bank may add unpaid interest to a loan balance, it is surely bizarre as a matter of the English language to say that someone 'borrowed' the amount of unpaid interest on a principal balance owed."

U.S. Circuit Judge Judge Doris Pryor, a Biden appointee, acknowledged this argument in the 20-page opinion Monday.

"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," Pryor wrote.

Some paragraphs later, she also made it clear it was an argument the court 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.

Pryor's opinion also chided Daley Thompson for seemingly trying to duck responsibility for his actions, citing an argument Gair made in the 2022 appellate brief.

In that filing, Gair pointed out that Daley Thompson had already reached a civil settlement with the FDIC in 2018 for the $219,000 principal he owed, sans interest. Despite the $50,000 loss, Gair argued, "The FDIC regarded the settlement a 'slam dunk' because [Washington Federal]’s poor documentation undermined collectability."

Pryor and the other appellate judges saw it differently.

"The reason the parties settled for $50,000 less than the total loss was in part because of another misrepresentation Thompson told — that he owed only the principal amount and not the additional $50,000 in interest," Pryor wrote. "So the agreement was not some outside, unpredictable force pulling responsibility away from Thompson. The reduced settlement was a natural consequence of his actions."

Pryor was joined in the opinion by U.S. Circuit Judge Amy St. Eve, a Donald Trump appointee, and Senior Appellate Judge Joel Flaum, a Ronald Reagan appointee.

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