A top official in Mayor Lori Lightfoot’s Department of Streets and Sanitation who during the Daley administration was suspended for helping to rig city job applicants’ test scores now faces charges in connection with his role as a board member of a failed Bridgeport bank.
William M. Mahon is accused in an 82-page indictment made public Wednesday of being part of a years-long embezzlement scheme as a longtime member of the Washington Federal Bank for Savings board of directors.
Others previously charged in the ongoing investigation of the bank’s failure include Ald. Patrick Daley Thompson (11th), who is awaiting trial in a related case on income-tax fraud charges that accuse him of cheating on his federal income taxes regarding money he got from the bank.
Altogether, 15 people have now been charged.
Mahon, 55, is newly charged along with three others, including two who also were board members of the bank, which authorities shut down in December 2017 over what they said was an embezzlement scheme involving the bank’s president that siphoned off $90 million.
The indictment accuses Mahon of:
- Failing to tell regulators about a $130,000 personal loan he obtained from then-bank president and chief executive officer John F. Gembara and Gembara’s wife. The loan has never been repaid, a source said.
- Helping doctor paperwork so it falsely appeared that the bank’s loan committee on which he sat had given approval to some borrowers on certain dates.
- Helping forge minutes of bank board meetings that were sent to federal regulators and falsely stated “that pending loans were reviewed and approved” by the bank’s loan committee.
Authorities think bank officials gave loans to favored people with no expectation the money would ever be repaid and reported loan repayments even though they weren’t made, the Chicago Sun-Times previously has reported.
Mahon — who, as the $138,800-a-year deputy commissioner for quality control and accountability, is one of the highest-ranking officials in the Department of Streets and Sanitation — couldn’t be reached for comment.
He lives in Bridgeport down the street from where the late Mayor Richard J. Daley raised his family and is a longtime member of the 11th Ward Regular Democratic Organization that swept two Daleys into office as mayor. The ward organization is now run by Thompson and his uncle, Cook County Commissioner John Daley.
Also charged in the new indictment are two other former Washington Federal board members: Gembara’s sister Janice Weston of Orland Park, whose family ran the bank for generations, and George Kozdemba of Fort Myers, Fla., a retired electrician for the Metropolitan Water Reclamation District of Greater Chicago. Thomas Breen, an attorney for Mahon, Weston and Kozdemba, couldn’t be reached.
On Dec. 3, 2017, days before federal regulators shut down the bank, Gembara was found dead in the bedroom of a bank customer’s million-dollar Park Ridge home, seated in a chair with a rope wrapped around his neck and the rail of a staircase.
The Cook County medical examiner and Park Ridge police ruled his death a suicide. But Gembara’s widow and others involved in the case have said they suspect that someone killed Gembara.
The new indictment puts Gembara squarely in the middle of the embezzlement scheme. Referring to him not by name but as “Individual A,” prosecutors say he was involved in the bank-related scams that they say Mahon took part in.
According to the indictment, Mahon and a previously charged former bank employee named James R. Crotty, “along with Individual A, caused to be provided” to the federal Office of the Comptroller of the Currency “a loan file for Customer C which contained a loan committee approval form purportedly signed on or about October 13, 2015 by defendants Mahon and Crotty, along with Individual A, when in fact the form was not created until on or about May 20, 2016.”
Mahon got 24 loans totaling more than $4.3 million from Gembara’s bank since 1993 — including three unpaid mortgages totaling more than $1 million on a three-flat he built in the 3800 block of South Lowe Avenue in Bridgeport, according to records filed with the Cook County recorder of deeds.
Mahon also is accused of hiding from the Internal Revenue Service how much rent he was collecting from tenants of the three-flat.
Mahon not only has remained on the job at City Hall amid reports he was under investigation, his city salary has gone up more than $22,000 a year since the bank’s collapse.
Over the past several months, records show, Mahon has been exchanging emails with city pension officials, who informed him that his city pension would be $98,304 annually if he retired last month.
Mahon had been working for the Chicago White Sox when, a few months after Mayor Richard M. Daley was first elected, he was hired as a press spokesman for the Mayor’s Office of Special Events. He moved to Streets and San in 1995.
He was in his early 30s when City Hall gave him permission to serve on the Washington Federal board, which he joined in 1999 or 2001, according to city documents, and remained on the board until the bank was closed.
His brother-in-law Michael Huels, a first cousin of former 11th Ward Ald. Patrick Huels, is an accountant who worked for Bansley & Kiener, a clout-heavy accounting firm that gave Washington Federal a clean bill of health months before it was shut down.
During Richard M. Daley’s administration, Mahon was suspended from his city job for 45 days as a result of an investigation into rigged city hiring that was exposed following a Sun-Times investigation of the city’s Hired Truck Program.
Then, in 2006, City Hall’s inspector general’s office found that Mahon “repeatedly engaged in personal activities” while on the clock — including attending a White Sox game. The inspector general recommended Mahon be fired. Instead, the Daley administration gave him a 29-day suspension.