Disgraced former Ald. Patrick Daley Thompson has misplaced his Chicago Metropolis Council seat and will go to jail over his dealings with a crooked financial institution within the Bridgeport neighborhood he represented.
However his ties to Washington Federal Financial institution for Financial savings transcend the proof introduced to the jury that discovered him responsible Feb. 14 of dishonest on his revenue taxes and mendacity to federal banking regulators.
The jury was learn years of emails from Thompson to the financial institution wherein he sounded more and more determined for cash for himself.
What the jurors weren’t informed was that, halfway via seven years of pleading to get the financial institution to quadruple the quantity of his private loans, he began depositing a whole bunch of hundreds of {dollars} in marketing campaign contributions there, a Chicago Solar-Instances examination of financial institution and courtroom information has discovered.
Thompson’s dealings with Washington Federal began 11 years in the past, when he borrowed $110,000. Then, he received further sums of $20,000 and $89,000.
However Thompson needed extra.
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For seven years, in phrases that appeared to mirror his rising desperation, he repeatedly emailed John Gembara, the financial institution’s now-deceased chief govt officer, president and main shareholder, attempting to spice up the quantity of his private loans to greater than $800,000.
The cash could be for refinancing the mortgages on the Bridgeport bungalow the place he lives — the house the place his late grandfather, Mayor Richard J. Daley, raised his household — and a close-by two-flat in addition to the loans he’d already gotten from Washington Federal, on which he’d made only one cost of $389.58.
The emails present Thompson nonetheless was holding out hope to work out that take care of the politically clout-heavy financial institution when he determined to run for town council.
That’s when he selected to deposit his aldermanic marketing campaign contributions in an account at Gembara’s financial institution somewhat than the financial institution the place he already had a political account, for contributions raised as Metropolitan Water Reclamation District of Larger Chicago commissioner.
Thompson’s aldermanic marketing campaign fund deposited greater than $600,000 with Gembara’s financial institution between October 2014 and December 2017. That’s when it was shut down by federal regulators who found a large fraud scheme that left the Federal Deposit Insurance coverage Corp. having to cowl $90 million in losses.
Authorities discovered the financial institution had been handing out loans with no collateral, no paperwork and no expectation they might ever must be repaid.
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Why did Thompson select to deposit his marketing campaign cash in Washington Federal on the identical time he was looking for to borrow a whole bunch of hundreds of {dollars} from the financial institution?
His lawyer Christopher Gair received’t speak about that. Gair says that’s as a result of earlier Solar-Instances tales have been “relentlessly slanted.”
These studies revealed that Thompson turned to the Bridgeport financial institution when he wanted cash and that he claimed deductions on his federal income-tax returns for six years on curiosity funds on the loans despite the fact that he had made just one cost and hadn’t paid any curiosity.
John McDonough — who’s Thompson’s marketing campaign treasurer and whose grandfather was a mentor to Richard J. Daley — didn’t reply to messages.
U.S. District Choose Franklin Valderrama has scheduled sentencing for July 6. Thompson might face a most of 30 years in jail for essentially the most severe costs jurors discovered him responsible of, although it’s possible he’ll search probation. Throughout the trial, his attorneys mentioned Thompson’s crimes value the Inner Income Service comparatively little — $15,589.
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Regardless of huge wage, emails reveal Patrick Daley Thompson’s rising desperation over cash
Paperwork that prosecutors subpoenaed and different public information provide a close-up take a look at convicted former Ald. Patrick Daley Thompson’s funds and his dealings with Washington Federal Financial institution for Financial savings, the crooked Bridgeport financial institution that federal regulators shut down in December 2017.
The information embody years of more and more determined emails from Thompson pleading for more cash from the politically clout-heavy financial institution that president and chief govt officer John Gembara’s household ran for 3 generations:
July 21, 2011 — The financial institution boss met the politician at a golf outing and talked about refinancing his Bridgeport house and the two-flat down the road the politician additionally owned. Two weeks later, Thompson utilized for a mortgage from Washington Federal. Then, on Aug. 5, 2011, Gembara emailed Thompson, writing: “Pat, I’m working in your refinance and can make this very clean.”
Aug. 9, 2011 — Thompson, a lawyer who lobbied metropolis officers for his shoppers, emailed Gembara, saying he wanted cash to purchase an possession stake within the legislation agency the place he’d lately began work — Burke, Warren, MacKay & Serritella.
“As I discussed to you I lately joined a brand new agency in Could,” Thompson wrote. “As an fairness companion, I’m obligated to make a $125,000 contribution to the agency. My first thought was to refinance and add that quantity to my mortgage. The opposite thought could be to refinance on the quantity presently owed and do a one-year bridge mortgage. My compensation is a base wage of $350,000. Nevertheless, based mostly on my billings of roughly $1 million, I’ll obtain one other $150,000. Since I joined in Could of this yr, I’ll in all probability not obtain my full billings on this shortened yr. Subsequently, will probably be subsequent December that I obtain the extra $150,000. What do you suppose?”
Oct. 11, 2011 — Making his first bid for elective workplace — a seat on the board of the Metropolitan Water Reclamation District, the federal government company that handles sewage therapy for many of Prepare dinner County — Thompson opened an account for his marketing campaign at Amalgamated Financial institution, which as soon as had been run by former Commerce Secretary William Daley, certainly one of his uncles. One other uncle, Michael Daley, is the marketing campaign treasurer.
Nov. 15, 2011 — Thompson went to Gembara’s workplace to select up a $110,000 test made payable to Burke, Warren. He signed a promissory observe agreeing to pay 4.25% curiosity, however he by no means made any curiosity funds.
March 20, 2012 — Thompson received the Democratic major for a seat on the water reclamation district board. He would take workplace that December.
Could 31, 2012 — Thompson emailed Gembara about borrowing $447,000 to refinance his house and $293,000 for his two-flat. However these loans by no means have been made.
Sept. 5, 2012 — Thompson emailed Gembara in regards to the $110,000 promissory observe, writing: “John, can we please talk about my present mortgage. I do know I owe curiosity on the mortgage however we mentioned me not paying as a result of it was going to be wrapped within the refinance. I wish to come present with that mortgage. Please let me know who I can speak to on the financial institution to resolve this.”
Jan. 30, 2013 — In a letter to Thompson and his spouse Kathleen, the IRS threatened to position a lien towards their house over unpaid federal revenue taxes. This was lower than three years after the IRS had put a lien on the Thompsons’ house that was lifted two months later.
Feb. 8, 2013 — Thompson emailed Gembara about refinancing his home and two-flat: “I do wish to shut as quickly as attainable. I additionally needed to make clear that we have been going to roll my $100,000 mortgage into the refinancing of each my house . . . and my constructing, 3544 S. Lowe. As well as, we mentioned including $20,000 to the entire quantity. I do know we will even want so as to add any unpaid curiosity which is roughly $4,000, for the excellent mortgage.”
Feb. 22, 2013 —Thompson emailed Gembara. “John, can we speak as we speak. I actually need a response as a result of if this isn’t going to occur as outlined beneath, I must make different preparations. I’ve a tax obligation I must make a cost on and was counting on our dialog. Please let me know as quickly as attainable.”
March 6, 2013 — In one other e mail to the financial institution president, Thompson wrote: “John, I’ve not heard from you as we speak. Please let me know if we are able to transfer ahead on this.”
March 11, 2013 — Once more emailing Gembara, Thompson wrote: “John, are you able to please name me this morning.
March 14, 2013 — Thompson emailed him: “John, please reply to me as we speak. I actually do want your assist.”
March 18, 2013 — One other Thompson e mail: “John are you able to please name me concerning my mortgage. As we mentioned beforehand, I used to be going to extend it by $20,000 and wrap all of that into the refinance. Is there a means we are able to get the $20,000 previous to closing. Quite than promote shares, I needed to go this route. Please reply as we speak so I could make preparations.”
March 20, 2013 — Thompson wrote the IRS a test for $13,772 — from an account at Amalgamated Financial institution, the place his account had a steadiness of lower than $6,500 on the time he wrote the test.
March 22, 2013 – Thompson picked up a $20,000 test from Gembara and deposited it within the Amalgamated Checking account.
March 28, 2013 — Washington Federal mortgage officer Cathy Torres emailed Thompson: “John mentioned that you’ll want to deliver with you to the closing a test for the curiosity that’s due for the mortgage he did for you final yr. The quantity of the test you will have to herald is $6,497.55. (curiosity from Nov. 17, 2011 via April 2, 2013.)”
Thompson replied: “I used to be underneath the assumption that was being rolled into the mortgage. Please verify.”
Torres responded: “John mentioned the $130,000 that was borrowed was going to be rolled in not the curiosity.”
Thompson then requested: “Can it’s?”
April 1, 2013 — Torres emailed Thompson to deliver a mortgage software for the two-flat, his tax returns and a cashier’s test for the $14,222.82. However that mortgage by no means occurred.
Jan. 22, 2014 — Thompson’s spouse was served with a foreclosures lawsuit on the two-flat after the couple went three years with out making a cost on a mortgage from Chicago Neighborhood Financial institution, which was going after them for $89,000. Two days later, Thompson picked up an $89,000 test from Gembara to pay the delinquent mortgage.
Could 23, 2014 — The financial institution president emailed the politician, this time addressing him extra formally than up to now. “Pricey Mr. Thompson: It’s my understanding that we’ve scheduled your refinance for subsequent week. We’re additionally awaiting . . . the brand new software and supporting paperwork. I’ve connected a schedule of your present mortgage with the financial institution with curiosity due.”
Oct. 17, 2014 — Thompson opened a brand new marketing campaign fund referred to as Pals of Patrick D. Thompson for Alderman of the eleventh Ward, with McDonough as its chairman and treasurer. McDonough is a former Chicago Division of Transportation commissioner. In 1917, his late grandfather had been elected to the Chicago Metropolis Council, representing the eleventh ward, and he turned a mentor to Richard J. Daley. Thompson’s marketing campaign mentioned it could preserve contributions within the account at Gembara’s financial institution.
April 7, 2015 — Thompson received election to town council. Two days later, he got here right into a $1.5 million windfall — his share from the $65.7 million sale of Pensacola Place, an 18-story residence constructing that his late father William Thompson developed in Uptown within the Seventies. Thompson didn’t use any of the cash to repay the $219,000 he owed Gembara’s financial institution. Later that month, he and his spouse paid $340,000 to purchase a summer time house in New Buffalo, Michigan, a lakefront city the place different Daley relations personal houses.
March 2016 — Thompson and his spouse submitted two mortgage purposes to Gembara’s financial institution, asking to borrow $661,000 to refinance their bungalow, and $167,264 for the two-flat. They mentioned their property topped $4.8 million, together with $900,000 at Amalgamated Financial institution, and that that they had about $900,000 in money owed, together with $249,500 owed to Washington Federal, and that his month-to-month revenue topped $40,000.
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Jan. 17, 2017 — The Thompsons bought the two-flat for $335,000.
Aug. 21, 2017 — Thompson and Gembara once more exchanged emails about refinancing the bungalow. Additionally they mentioned a mortgage for the eleventh Ward Common Democratic Group for constructing repairs.
Oct. 25, 2017 — As federal regulators went via the financial institution’s books, Gembara lent $80,000 to the eleventh ward celebration group, headed by Thompson and one other of his uncles, Prepare dinner County Commissioner John Daley. Appearing on orders from federal regulators, the financial institution’s board suspended Gembara on Nov. 28, 2017.
Nov. 30, 2017 — Thompson once more emailed Gembara, this time “concerning closing of ward and residential mortgage,” in response to an e mail prosecutors deliberate to introduce as proof however didn’t. The contents of this e mail hasn’t been launched.
Dec. 3, 2017 — Gembara was discovered useless — with a rope round his neck, in a seated place in a chair inside the primary bed room of his financial institution buyer Marek Matczuk’s $1 million house in Park Ridge. Police within the northwest suburb and the Prepare dinner County medical expert’s workplace dominated the dying a suicide, although some Gembara relations and pals have questioned that discovering. Matczuk has since been charged with embezzling $6 million from the financial institution — certainly one of 15 folks, together with Thompson, who’ve been charged within the ongoing investigation of the financial institution. Matczuk awaits trial.
Dec. 15, 2017 — Federal regulators shut down Washington Federal after discovering many unpaid loans — together with Thompson’s. The financial institution’s deposits, together with Thompson’s aldermanic marketing campaign account, have been bought to Royal Financial savings Financial institution. He had deposited greater than $600,000 in that account over time, spending about $590,000 of that.
Jan. 20, 2018 — The Thompsons received a letter from the Federal Deposit Insurance coverage Corp. saying they wanted to repay the $219,000 borrowed from Washington Federal, plus curiosity. Throughout the ensuing months, Thompson lied to regulators, saying he’d borrowed far lower than that from the financial institution — simply $110,000.
Nov. 21, 2018 — Lastly refinancing their bungalow, the Thompsons received a $454,000 mortgage from Morgan Stanley Non-public Financial institution. Kathleen Thompson signed the paperwork — however wrote that she wasn’t accountable for repaying the mortgage.
Dec. 3, 2018 — Federal brokers served Thompson with a subpoena at his house, looking for the couple’s tax returns, actual property paperwork, information associated to Washington Federal and “any and all information associated to loans made to or from the Pals of Patrick D. Thompson.” Thompson’s marketing campaign fund has by no means reported receiving or making any loans.
Dec. 5, 2018 — Morgan Stanley gave the Thompsons a $250,000 mortgage on their Michigan house. The Thompsons used the 2 Morgan Stanley mortgages to repay the FDIC the $219,000 borrowed from Gembara’s financial institution — with out paying any curiosity.
April 12, 2019 — Six weeks after Thompson was elected to a second metropolis council time period, he and his spouse filed amended tax returns for 2012 via 2017, now not claiming a deduction for the curiosity they’d by no means paid on the Washington Federal mortgage. They tried to pay the IRS $15,558 to make up for the tax financial savings they’d gained by making the false declare. However the IRS mentioned they might make amends going again simply three years, not six.
Two weeks later, the Solar-Instances reported that federal brokers have been investigating Thompson’s loans from the financial institution.
April 29, 2021 — A federal grand jury indicted Thompson, charging him with mendacity to federal regulators concerning his Washington Federal loans and submitting 5 fraudulent tax returns.
Feb. 14, 2022 — A jury discovered Thompson responsible.
He has resigned from the council, and his profile has been faraway from his legislation agency’s web site, although the Illinois Supreme Courtroom has but to self-discipline Thompson. Primarily based on his conviction, it’s possible he’ll lose his legislation license.