The Daleys of Chicago Need Accountability in Ongoing Loan Scandal

Photograph Source: VV Nincic – CC BY 2.0

Back in 2004 when a nephew of Chicago’s second Mayor Daley threw a drunken punch and caused the death of victim David Koschman, the aftermath included investigative files that went missing and a much-delayed indictment. Despite an eventual 2014 guilty plea, recent reporting about phone calls made soon after the incident has continued to raise questions about who knew what when, to the point where the Chicago Sun-Times editorial board has called for Mayor Lori Lightfoot to release many still-concealed records from the case.

So, it’s worth asking now: will similar irregularities occur with the still-unfolding Washington Federal Bank for Savings loan scandal, since it directly involves both Alderman Patrick Daley Thompson and Cook County Commissioner John P. Daley, the two remaining Daley family members still in public office?

As periodic reporting elaborates, a sleepy Chicago bank saw millions of dollars disappear and then its president John Gembara found dead of apparent suicide at a customer’s home, right before the feds closed it in December 2017. Investigations and indictments are ongoing.

With the Daleys, no crimes have been charged, but Alderman Daley Thompson is legally represented by a former federal prosecutor, and we’ve now entered the third round of worsening revelations about their involvement. Although the existence of an October 2017 $80,000 loan to the Daleys’ political organization was mentioned in the first major Sun-Times reporting in March 2018, they successfully deflected scrutiny; notably, in the still-murky situation, Alderman Daley Thompson opined on the “horrible situation” of the bank president’s death. Then, in December 2018, Crain’s Chicago Business informed the public of apparent financial peculiarities captured in the Daleys’ campaign disclosure reports. Next, in April 2019, the Sun-Times reported that their already strange-seeming loan also lacked collateral. And now, as of February 2021, the Sun-Times alleges that as far back as 2015, Alderman Daley Thompson got a “loan” for a $340,000 Michigan summer house where, despite deducting interest on his taxes, he never actually paid interest, nor anything on the principal.

Beyond this, even just the current paper trail shows that more can be known. Take, for instance, the crucial campaign disclosure report that prompted the initial Crain’s reporting. After the single financial quarter encompassing both the Daleys’ October loan and the December bank failure, the January report proffers what seems to be a flat-out lie: “Bank loan on property.” In other words, in the pell-mell time prior to any in-depth reporting and well before anyone could even fathom that a bank might issue loans without collateral, there somehow surfaced an apparently deceptive financial term specifying that this allegedly collateral-less loan actually had collateral. If the Sun-Times reporting on the lack of collateral is correct, thatlooks like a cover-up, and it appears on a form submitted on behalf of County Commissioner Daley.

To be sure, the Washington Federal investigation seems simply on a different level than when David Koschman died. Then it was the Chicago Police Department and the Cook County State’s Attorney; now, charges are announced by an array of forces that include the FBI and IRS. Furthermore, from what information reaches the public, investigations seem very thorough, indeed. Even if some authority is tempted to somehow give special treatment to the Daleys, cautionary tale enough should be former U.S. Attorney turned Labor Secretary Alex Acosta, whose career and reputation was ruined with the revelation of his sweetheart deal for Jeffrey Epstein.

That said, it would take two further developments, to truly know that the Daleys have faced full accountability.

First, we can only hope that underlying documents become public, ideally in full and soon. Just as with what little’s leaked so far with the Trump taxes, the dry little details are always where the bodies are buried.

Second, as details emerge, possible legal scenarios should be discussed, just like how the Wall Street Journal has mused over “Why Trump’s Tax Returns Might Be Important to New York Prosecutors.” For example, what are applicable charges for getting loans without collateral and overstating tax deductions, and if so, under what circumstances are they usually charged, and what’s the typical outcomes?

To avoid any potential miscarriage of justice, that’s the type of nitty-gritty that has to be scrutinized, and those are the types of questions that have to be asked.

So far everything seems to be in good hands, but to keep public servants honest, it’s always best to rigorously examine situations ripe for abuse of power.

David Mihalyfy (@mihalyfy) is a Lecturer at the School of the Art Institute of Chicago and a Ph.D. candidate at the University of Chicago. His work has appeared in Inside Higher EdJacobinReligion DispatchesSightings, and the jtr bulletin, and has received coverage in the Dish and blogs of the Chronicle of Higher Education and the National Review.