Au­thor­i­ties say that scheme topped $82.6M at shut­tered Bridge­port in­sti­tu­tion whose prez was found hanged in cus­tomer’s home

Chicago Sun-Times - - FRONT PAGE - BY TIM NO­VAK AND ROBERT HERGUTH Staff Re­porters

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).

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