WASHINGTON — The U.S. Supreme Court heard oral arguments on Tuesday that could redefine the boundaries of criminal liability for false statements in dealings with banks or financial regulators.
Former Chicago alderman Patrick Daley Thompson, a member of one of Chicago's most prominent political dynasties, served four months in federal prison for making false statements to the Federal Deposit Insurance Corp. about bank loans.
His counsel
Prosecutors argued successfully in 2020 that Thompson took out three loans from Washington Federal Bank for Savings, a local bank in Chicago's Bridgeport neighborhood, and that when Washington Federal Bank for Savings failed, Thompson told the FDIC that he had borrowed $110,000, the amount of the first loan, but omitted the second two loans for which he never filled out paperwork.
Chris Gair, who represented Thompson in the Supreme Court on Tuesday, argued that this statement was technically true, but misleading. He said that the statute prohibiting false statements to the FDIC does not specify that it bars both false and misleading statements, as it does elsewhere in the law.
Whether or not the statement is "false" would depend on context, Gair argued.
The Supreme Court's decision could have wide ranging implications for all consumers when they are dealing with bank regulators and financial institutions, he said.
"This is an important statute that deals with people's dealings with sophisticated financial entities," Gair said. "And it is important for the Court to give some guidance on the question of whether a statement is misleading or false precisely because the statute is so important. So this statute could be used extremely broadly to punish a number of types of dealings between individuals and very sophisticated financial institutions."
U.S. Solicitor General Caroline Flynn, who represented the federal government in the case, argued that Thompson's statement should be taken as "false" because it was inaccurate, and gave an inaccurate impression.
"Our position in this case is not that 'false' encompasses anything that might be characterized as misleading or any failure to disclose pertinent information," she said. "It is that a statement is untrue if it states only a portion of the truth on the subject it addresses in a context where the statement would be taken as both accurate and complete."
Some justices were skeptical that the court should decide the legal question of how truthfulness should be defined in this statute, or if they would be able to.
Justice Brett Kavanaugh suggested that the court should wait to get amicus briefs on the topic from relevant stakeholders.
"Because that is going to have an effect on lots of statutes," he said.
Justice Ketanji Brown Jackson asked why the case should be sent back to the lower court for a second look, and suggested that the statement Thompson made was false.
"I guess I don't understand how that helps your client in this case, because the amount of money that he borrowed or that he owed, I would think, is a knowable fact with one correct answer and that it doesn't rely on any sort of perception of the hearer or whatnot, however you've defined 'misleading,'" she said.
Justice Neil Gorsuch said that the court took up the case not to decide whether a reasonable juror would believe that Thompson made a false statement, but rather to decide whether misleading statements could be prosecuted in addition to false ones.
"We took it to decide a legal question — whether the statute permits a conviction for misleading convictions in addition to false ones," Gorsuch said.
