Supreme Court Overturns Conviction: Clarification on Fraudulent vs. Misleading Statements

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The U.S. Supreme Court unanimously vacated the conviction of former Chicago Alderman Patrick Daley Thompson, establishing a crucial legal distinction between “false” and “misleading” statements that could impact fraud cases nationwide.

Key Takeaways

The Supreme Court unanimously overturned Patrick Daley Thompson’s fraud convictions in a 9-0 decision authored by Chief Justice John Roberts.
The Court clarified that “false” and “misleading” statements are legally distinct, with the federal statute only criminalizing explicitly false statements.
Thompson, nephew of former Chicago Mayor Richard M. Daley, had been sentenced to four months in prison for allegedly lying to regulators about loans from a failed bank.
The case has been remanded to the 7th Circuit Court of Appeals for reconsideration based on the Supreme Court’s legal interpretation.

Supreme Court Draws Clear Line Between False and Misleading Statements

In a unanimous decision with significant implications for fraud cases nationwide, the U.S. Supreme Court vacated two convictions against former Chicago Alderman Patrick Daley Thompson. The ruling centered on a critical legal distinction between statements that are explicitly “false” versus those that are merely “misleading” under federal law. Chief Justice John Roberts authored the opinion that could potentially reshape how federal prosecutors approach bank fraud cases going forward.

Thompson was convicted in 2022 on charges related to loans he received from Washington Federal Bank for Savings, which collapsed in 2017 amid revelations of massive embezzlement. Prosecutors alleged Thompson made false statements to regulators about loans totaling $219,000, claiming he only borrowed $110,000 when confronted with collection notices after the bank’s failure. The distinction between a misleading but technically accurate statement versus an outright false one became the crux of the Supreme Court’s review.

Supreme Court Votes 9–0 to Overturn Convictions of Former Chicago Alderman
The Seventh Circuit upheld Patrick Daley Thompson’s convictions for making false statements to the FDIC even though the statements were considered misleading.

The Supreme Court on March 21 unanimously… pic.twitter.com/6w8mJTkSN0

— Claire (@ClaireGarcia161) March 22, 2025

Chicago Political Dynasty Connection

Thompson’s case garnered significant attention partly due to his political lineage. As the grandson of former Mayor Richard J. Daley and nephew of former Mayor Richard M. Daley, Thompson represented Chicago’s 11th Ward until his resignation following his conviction in February 2022. His four-month prison sentence was notably shorter than the two years prosecutors had requested, with the judge acknowledging Thompson’s public service record during sentencing.

The legal proceedings revealed that Thompson had taken loans from Washington Federal between 2011 and 2014 for various purposes, including financing his law firm, paying tax bills, and settling debts with another bank. Court records showed he made only one payment on these loans before the bank’s collapse in 2017, which triggered the FDIC’s involvement and subsequent investigation that led to his indictment.

Legal Reasoning and Implications

The Supreme Court’s decision hinged on the precise language of Section 1014 of Title 18 of the U.S. Code, which criminalizes making “false statements” to influence financial institutions. Chief Justice Roberts offered a memorable analogy to illustrate the distinction between false and misleading statements, explaining that a doctor who truthfully claims to have performed a hundred surgeries without mentioning that 99 patients died has made a misleading but not technically false statement.

Thompson’s defense attorney, Chris Gair, expressed satisfaction with the ruling, stating, “We are very gratified that the Supreme Court adopted our arguments and our reading of the statute.” The case now returns to the 7th Circuit Court of Appeals, which must reconsider Thompson’s convictions in light of the Supreme Court’s interpretation. This ruling could potentially affect numerous fraud cases nationwide by raising the bar for prosecutors who must now prove statements were explicitly false, not merely misleading.

Broader Context of Bank Collapse

Thompson’s legal troubles emerged from the larger scandal surrounding Washington Federal Bank for Savings, which closed in December 2017 after regulators discovered a massive embezzlement scheme. The bank’s president, John Gembara, was found dead in a customer’s home days before the closure, with his death ruled a suicide. Thompson’s defense argued that bank officials, including Gembara, were responsible for errors in documentation and tax forms related to his loans.

The investigation into the bank’s collapse has resulted in charges against numerous bank officials and customers. Prosecutors alleged that more than $80 million was embezzled, with Thompson’s case representing just one facet of the broader investigation. While Thompson has maintained he was unaware of the bank’s internal corruption, prosecutors argued his statements to regulators following the bank’s failure constituted criminal false statements—a characterization now rejected by the Supreme Court’s interpretation of federal law.