The Bank Slate


Failed Chicago bank’s directors enter guilty pleas

Three former directors of a failed Chicago bank have pleaded guilty to trying to hide embezzlement from the Office of the Comptroller of the Currency.

George Kozdemba, William Mahon and Janice Weston conspired to falsify Washington Bank for Savings’ records shared with the OCC, according to pleas given in U.S. District Court for the Northern District of Illinois.

The directors “falsified records to make it appear Washington Federal was operating in compliance with banking rules and internal policies and controls,” the U.S. attorney’s office said in a press release.

The bank failed in December 2017 after regulators discovered that the bank was insolvent and had at least $66 million in nonperforming loans. CEO John Gembara was found dead in a client’s home shortly before the failure in what authorities determined to be suicide.

The directors could each receive up to five years in prison. Mahon faces another three years for the willful filing of false income tax returns. Sentencing hearings are set for October and December.

Washington Federal’s former accounting firm, Bansley & Kiener, agreed in 2020 to pay a $2.5 million fine to the Federal Deposit Insurance Corp. to resolve claims it was liable for the bank’s collapse. Sixteen former bank employees have been charged with crimes such as fraud and embezzlement.

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