FEDS UNCOVER $82M FRAUD AT SHUTTERED BANK WHOSE PREZ WAS FOUND DEAD
Authorities say that scheme topped $82.6M at shuttered Bridgeport institution whose prez was found hanged in customer’s home
Acentury-old Bridgeport bank that federal regulators shut down last December — less than two weeks after its president was found hanged in a customer’s home — had been involved in a massive fraud scheme that topped $82.6 million, a federal audit has found.
That’s about 30 percent more than what authorities estimated when they closed the clout-heavy bank.
The audit by the U.S. Treasury Department’s inspector general makes clear that federal authorities believe officials at Washington Federal Bank for Savings engaged in a massive fraud, issuing residential and commercial loans that have never been repaid.
And the audit says federal regulators are partly responsible for the losses because they treated Washington Federal “as a ‘training’ or ‘practice’ bank” for rookie examiners who failed to detect the scheme, ignoring “red flags” and being hoodwinked by bank officials including president John F. Gembara since at least 2011.
Gembara, 56, the grandson of the bank’s founder, was found dead last Dec. 3, sitting in a chair with a rope around his neck inside the Park Ridge bedroom of a bank customer who owed the bank nearly $1.8 million and was facing foreclosure. It was 25 miles from his home in Palos Hills.
Gembara’s death has been ruled a suicide by Park Ridge police and the Cook County medical examiner’s office.
The bank’s failure is under investigation by the FBI and by the Federal Deposit Insurance Corp., a federal agency that regulates financial institutions.
The FDIC is trying to collect the unpaid loans, which include as much as $27 million it’s seeking from Robert M. Kowalski, an attorney and developer who has been locked up for days at the Metropolitan Correctional Center in the Loop for failing to turn over records to the FDIC as part of his bankruptcy case.
Criminal defense attorneys have been retained by the former bank board members — Gembara’s sister Janice M. Weston; George F. Kozdemba, a retired electrical technician for the Metropolitan Water Reclamation District of Greater Chicago; William M. Mahon, a deputy commissioner for the Chicago Department of Streets and Sanitation; and Leonard Stepien, comptroller of a packing company. None returned messages seeking comment.
Gembara’s wife, Therese Gembara, also has hired an attorney, Luke Casson, who told the Chicago Sun-Times earlier this year that the widow doesn’t believe her husband killed himself. Kowalski also previously told the newspaper he thinks somebody killed the bank president.
The federal audit issued this week doesn’t mention Gembara’s death. It also doesn’t identify any of the bank officials.
But it does highlight a series of conflicts of interest involving bank officials and board
Washington Federal Bank for Savings in Bridgeport (top) was shut down last December, less than two weeks after the bank’s president, John F. Gembara (above), was found hanged in a customer’s home in Park Ridge (above, right).