Ald. Patrick Daley Thompson voted to OK development of a property he’d sold months earlier

When he first ran for the Chicago City Council, Ald. Patrick Daley Thompson (11th) failed to report he had ownership stakes in two Uptown apartment complexes that since have been sold for $85.5 million — despite financial disclosure laws requiring him to do so, a Chicago Sun-Times investigation has found.

And then, eight months after selling one of the properties, he voted to approve development plans there without disclosing his connection, the Sun-Times found.

Three days after Thompson was elected alderman in April 2015, records show, Thompson and his business partners sold one of the projects for $65.7 million.

Then, in December 2015, Thompson and the rest of the city council voted unanimously to give the new owners permission to build 24 townhomes on the property — an 18-story apartment tower and a Jewel supermarket developed in the early 1980s by William P. Thompson, the alderman’s late father.

The Bridgeport alderman didn’t reveal his ties to the property until May 2016 — six months after the council vote. That’s when he filed an ethics statement with City Hall disclosing that he had gotten capital gains of “$25,000 or more” — the disclosures don’t require any more detail than that — from the sale of the Pensacola Place apartments in Uptown a year earlier.

That same disclosure statement also revealed that Thompson had a stake in another Uptown property that he and his siblings inherited from their father — the Scotland Yard apartments, a federally subsidized complex in the 4200 block of North Broadway they sold for $19.8 million in April 2019.

Thompson could face fines if found by the Chicago Board of Ethics to have failed to disclose all of his real estate holdings on the ethics statement he filed as a freshman alderman.

Pat Nabong / Sun-Times

Thompson’s ethics statements show he was making money on real estate dealings even as he was failing to make any payments on a $350,000 loan from Washington Federal Bank for Savings, a Bridgeport institution that federal regulators shut down in December 2017 after discovering a “massive fraud” scheme involving more than $82 million.

The shutdown came days after John F. Gembara — Washington Federal’s president, chief executive officer and largest shareholder — was found dead in the master bedroom of a customer who later was charged with embezzling $6 million from the bank.

Federal investigators discovered that Thompson — a grandson and nephew of Chicago’s two longest-serving mayors, Richard J. Daley and Richard M. Daley — had an outstanding loan with the bank, apparently to buy a summer home in Michigan after his election.

That loan was never recorded with any government agency, and, the Sun-Times has reported, authorities found that Thompson never made any payments toward the principal or interest but still deducted those unpaid interest payments on the federal tax returns that he and his wife filed with the Internal Revenue Service, according to sources familiar with the investigation.

Thompson, who’s also a lawyer in private practice focusing on real estate matters, is under investigation in the bank case for possible tax fraud. He and his wife Kathleen, who is assistant principal of a school in Bridgeport, owed more than $100,000 to the IRS for income taxes, penalties and interest, according to sources.

Thompson, who hasn’t been charged with any crime, didn’t respond to interview requests.

Former federal prosecutor Christopher Gair, who is representing him, would not discuss the federal investigation or why the alderman didn’t disclose his real estate holdings on the City Hall ethics statements he filed in 2014 and 2015.

“Your reporting to date has been wildly inaccurate,” Gair said in an email in response to questions, declining to say what he views as incorrect. “We have no comment on the questions you posed.”

Thompson, 51, is the youngest child of Patricia Martino, the eldest child of the late Richard J. Daley, and her first husband William P. Thompson, a developer who was the son of a Chicago police detective. The alderman’s parents lived in a mansion in Uptown, where the elder Thompson was involved in several high-profile developments in the 1970s and 1980s.

The couple divorced in 1973. Thompson kept the Uptown home. His ex-wife and their three children moved into a home next door to the mayor’s Bridgeport bungalow — the home where Patrick Thompson and his wife are now raising their children.

After the divorce, the elder Thompson continued developing property in Uptown, getting the Daley administration to approve his $40 million plans for a high-rise apartment complex that eventually became Pensacola Place — one of the properties the developer’s children later inherited.

Sun-Times file

William Thompson’s projects in Uptown drew protests from neighborhood activists including Slim Coleman, who filed a federal lawsuit in 1975 against Thompson and City Hall, accusing them of trying to uproot poor people, primarily minorities, from Uptown’s Buena Park neighborhood because of its proximity to Lake Michigan.

Thompson ended up scaling back the Pensacola Place project — from two 40-story towers to one 18-story building atop a shopping center. And he agreed to set aside some apartments for lower-income residents in the new building as well as at the Scotland Yard complex, which he was remodeling.

Thompson died in 2000 of lung cancer. In his will, which didn’t identify the properties he owned, he left most of his estate to his three children — daughter Courtney Thompson, the eldest, and sons Peter Q. Thompson and Patrick Thompson — who ended up with stakes in Pensacola Place and Scotland Yard that later were sold for a total of $85.5 million.

“Whatever interest that the Thompson kids had was all given to them by their father, who invested with me in the 1970s,” says developer Thomas F. Moran, who says he handled the sale of those two projects following Patrick Thompson’s election to the city council. “Patrick wasn’t involved in those transactions. Patrick had nothing to do with it. I ran the partnership. They had an ownership interest, and they were totally passive.”

Moran won’t say how much of a stake Thompson had in Pensacola Place or Scotland Yard or how much money the alderman received from those sales. Nor would he identify the other investors.

But he says the sale of Pensacola Place wasn’t contingent on the new owners getting permission from Thompson and the council to build the 24 townhomes.

Nine months after William Thompson died, Courtney Thompson, the executor of his estate, sold his house in the 800 block of Junior Terrace for $1.55 million in November 2000, paying off a $200,000 mortgage, according to public records.

Pat Nabong / Sun-Times

Public records don’t show Thompson’s children selling any other property they inherited from their father until May 2016. That’s when Patrick Thompson filed his annual disclosure statement with City Hall showing he had stakes in the two Uptown apartment complexes.

Both were profit-making properties, records show. Pensacola Place had a net income of $4.4 million in 2017 from its 288 apartments and retail spaces, including Jewel, according to records Thompson’s partners filed with the Cook County assessor’s office. And Scotland Yard’s net income from its 105 apartments — all subsidized by the U.S. Department of Housing and Urban Development — was slightly over $1 million in 2017.

It’s unclear, though, whether those properties generated any income for Thompson between the time of his father’s death in 2000 and the sales of Pensacola Place in 2015 and Scotland Yard in 2019.

Thompson had an ownership stake in those Uptown apartments at the time of his election in December 2012 as a commissioner of the Metropolitan Water Reclamation District of Greater Chicago, the sewage-treatment agency for most of Cook County. The ethics statements he was required to file as a commissioner required disclosing only real estate holdings that were sold for $5,000 or more.

Pat Nabong / Sun-Times

When Thompson ran for the city council, he had to file a “statement of economic interests” with the Chicago Board of Ethics, which requires city officials and those running for city office to disclose all of their real estate holdings within the city. Thompson filed that disclosure on Nov. 24, 2014, reporting that he owned a second home down the street from his family’s Bridgeport bungalow.

There was no mention of the Uptown properties in which Moran confirmed Thompson had an ownership stake.

Thompson’s brother Peter Q. Thompson had disclosed his stake in the properties on the ethics forms he filed between 2007 and 2011 when he was a member of the Illinois Sports Facilities Authority, the government agency that operates Sox park, an appointment he received from his uncle, Mayor Richard M. Daley.

Three days after Patrick Thompson won election on April 6, 2015, the Pensacola Place high-rise was sold for $65.7 million to a real estate investment company called Waterton, owned by David Schwartz and Peter Vilim. The building at 4334 N. Hazel St. was renamed The Montrose.

Records show the sale proceeds were used in part to pay off the $28.8 million mortgage that Thompson and his partners had obtained 10 years earlier from the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac.

On April 30, 2015, Thompson and his wife paid former state Rep. Frank Giglio $340,000 to buy a summer home in New Buffalo, Michigan, the Sun-Times has reported. The Thompsons bought the home with a $350,000 loan from Washington Federal Bank, according to sources, though the mortgage wasn’t recorded with county officials in Michigan.

Thompson was sworn in as an alderman on May 18, 2015 — three days after he filed another ethics statement. This one didn’t mention the Uptown building that had just been sold nor the one in which he still held an ownership stake.

On July 28, 2015, the new owners of Pensacola Place asked the city council for permission to convert some vacant retail space into 24 townhomes, according to a proposal submitted by attorney Jack George, a former partner in the law firm of Daley and George that was headed by Michael Daley, Thompson’s uncle. George says he didn’t know Thompson had been among the previous owners.

On Dec. 9, 2015, the council approved construction of the 24 townhomes. Thompson voted yes without disclosing that, until earlier that year, he’d had an ownership stake in the building.

On May 2, 2016, in his yearly city ethics statement, Thompson first reported his ownership interest in the Uptown buildings. He reported he’d made “$25,000 or more” on the sale of Pensacola Place in 2015 and that he had a stake in the Scotland Yard complex as well as in the house down the street from his home in Bridgeport.

On Jan. 17, 2017, Thompson sold the home down the street for $335,000, which was about $175,000 more than he paid for it in 1998. The alderman reported that sale on his 2018 ethics statement and said he made a profit of “$25,000 or more.”

On Oct. 1, 2017, Thompson got an $80,000 loan from Washington Federal Bank for repairs to the 11th Ward Regular Democratic Organization offices at 3659 S. Halsted St. after a city building inspector found loose bricks and other building code violations there.

Two months later, on Dec. 3, 2017, Gembara was found dead, sitting in a chair, with a rope wrapped around his neck and a stair railing inside the Park Ridge home of Marek Matczuk, who was charged last month with embezzling $6 million from Gembara’s bank.

Gembara’s death was later ruled a suicide by the Cook County medical examiner’s office, though his widow’s lawyer has said she suspects someone killed him.

Since federal regulators shut down Washington Federal on Dec. 15, 2017, they have said that bank officials including Gembara took part in a “massive fraud” scheme that exceeded $82.6 million involving bad loans, some with no collateral or paperwork and others to customers who didn’t make any payments.

Federal investigators discovered that neither Thompson nor the 11th Ward Democratic organization had made any payments on their bank loans. They also discovered that Thompson had deducted the loan’s unpaid interest payments from his income taxes, opening him up to the ongoing tax-fraud investigation.

On May 15, 2018, Thompson and his uncle, Cook County Commissioner John P. Daley, negotiated a new loan with Royal Savings Bank — the institution that took over Washington Federal’s deposits — and they have been making monthly payments from the ward’s political fund.

On Nov. 11, 2018, Thompson and his wife refinanced their Bridgeport home, replacing a $505,000 mortgage from 2004 with a $454,000 loan from Morgan Stanley Private Bank, which also gave the couple a $250,000 mortgage on the Michigan home. They have repaid the loan from Washington Federal, sources say.

On Feb. 26, 2019, before the federal investigation of Thompson became public, he was re-elected to a second, four-year term.

On April 3, 2019, Thompson and his partners sold the Scotland Yard complex for $19.8 million, paying off their 8-year-old, $9.2 million mortgage. Thompson has disclosed that he “$25,000 or more” from that sale.

Three weeks later, the Sun-Times reported Thompson was under investigation by federal authorities examining the collapse of the bank. Federal officials issued subpoenas in September 2019 seeking deeds and mortgages filed on Thompson’s home, his former Bridgeport rental and his Michigan summer home.

Read Feb. 21, 2021, Sun-Times report

Read Sun-Times’ Washington Federal investigation