CHICAGO (CBS) — Ald. Patrick Daley Thompson (11th), the grandson and nephew of two Chicago mayors, pleaded not guilty Thursday to federal charges tied to the collapse of a Bridgeport bank, accusing him of lying about loans he received from a failed bank in his ward.

At Thompson’s arraignment hearing on Thursday, held by telephone conference, defense attorney Chris Gair said. “We want to get to trial and clear Mr. Thompson’s name as soon as possible.”

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After Thompson pleaded not guilty, Gair asked U.S. District Judge Franklin Valderrama to schedule a trial date for the alderman, potentially as soon as this fall, but the judge said due to COVID restrictions, he’s not ready to set a trial date yet. However, Valderrama told prosecutors and defense attorneys to be ready to discuss potential trial dates at Thompson’s next hearing on June 10.

Valderrama also ordered Thompson to surrender his passport within a week, despite Gair’s objections.

“There’s no point to it, because everybody agrees he is not a flight risk,” Gair said. “There’s just no point to this requirement. It’s just punitive.”

However Valderrama said it’s a standard condition for defendants to surrender their passport in criminal cases in federal court. He said, if Thompson should need to travel overseas for business reasons, he could file a motion with the court to get his passport back, since he would need the court’s permission to travel out of state in any case.

Gair said Thompson also owns a firearm, which he already has disposed of, and will provide the court with proof within one week as well.

Thompson faces five counts of filing a false income tax return, and two counts of false statements to the Federal Deposit Insurance Corp regarding $219,000 in loans and other payments he received from Washington Federal Bank for Savings.

The clout-heavy bank was shut down in by federal regulators in 2017, after those regulators determined it was insolvent and had made at least $66 million in bad loans.

According to the charges against Thompson – the nephew of former Mayor Richard M. Daley and grandson of former Mayor Richard J. Daley – the Bridgeport alderman received $219,000 in loans and other payments from the bank between 2011 and 2014, before he was elected to the City Council.

The indictment accuses Thompson of making only one payment on those loans, but then stopped making payments, and failed to pay back any interest on the money he received. He is also accused of taking deductions on five years of income tax returns by falsely claiming he paid “mortgage interest” on the loans, “even though he knew he did not pay interest in the amounts reported on the returns.”

After federal regulators shut down the bank in 2017, the FDIC tried to collect the money Thompson still owed on his loans, but Thompson falsely claimed he owed only $110,000 and that the money was used for home improvements. Prosecutors said Thompson knew full well he actually got $219,000 from the bank, and “that $110,000 of it was paid by the bank to a law firm as Thompson’s capital contribution.”

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Federal prosecutors said they expect to produce thousands of pages of evidence in the case before that next hearing, and Gair said he doesn’t expect to receive “a tremendous amount” of documents from prosecutors overall.

Gair sought to downplay the charges against Thompson at his arraignment on Thursday, saying the case involves approximately $15,000 his client allegedly owes in income taxes.

Thompson, 51, is the first member of the Daley family who’s held public office to face criminal charges.

Thompson has denied any wrongdoing, issuing a statement after the charges were filed last month:

“I am very disappointed by the Justice Department’s decision to return an indictment against me today for inadvertent tax preparation errors and my incorrect memory about the amount of a personal bank loan. I discovered the tax error and paid the small amount of taxes I owed. When the bank provided me the documents showing the actual amount of the loan, I promptly paid it back. Both matters were resolved before there was any government investigation.”

“I want to make two points.”

“First, my conscience is clear. I did not commit any crime, I am innocent, and I will prove it at trial.”

“Second, I am, first and foremost, a public servant. The charges in the indictment do not relate in any way to my public service or to my professional life. I remain 100 percent dedicated to serving the people of Chicago to the best of my ability.”

“I have complete confidence in our system of justice and look forward to showing that the accusation is false.”

Thompson, an attorney, began his career in public office when he was elected to the Metropolitan Water Reclamation District in 2012. Three years later, when Ald. James Balcer (11th) retired, Thompson gave up his seat on the water district board and ran for the City Council seat in the ward that had been the Daley family’s home and political power base for decades.

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Federal prosecutors said the investigation of Washington Federal has resulted in charges against 10 other defendants.

CBS 2 Chicago Staff