When federal regulators shut down Washington Federal Bank for Savings more than three years ago, it created financial headaches for two prominent Chicagoans whose late father lost about $800,000 when the Bridgeport bank collapsed.
Maggie Hickey is one of them. She’s a former federal prosecutor who’s now overseeing a consent decree for reforming the Chicago Police Department.
The other is her brother Kevin Hickey, a Bridgeport restaurant operator and award-winning chef.
The Hickeys — who haven’t been implicated in any wrongdoing — are handling the estate of John “Jack” Hickey, their late father. He was a longtime customer of and shareholder in the bank that held mortgages on his home and on The Duck Inn, his son’s critically acclaimed Bridgeport restaurant.
The father died in August 2019.
That was about 20 months after federal regulators closed Washington Federal and embarked on an investigation to unravel a “massive fraud scheme” at the clout-heavy bank.
Among those implicated: the late John F. Gembara, who was president and chief executive officer of the bank, which prosecutors say handed out loans to some people without any collateral or, in some cases, any expectation of being repaid. In December 2017, Gembara was found dead in a seated position, with his glasses on and a rope wrapped around his neck and the railing of a spiral staircase in the master bedroom of longtime bank customer Marek Matczuk’s $1 million home in Park Ridge. Days later, the bank was shut down. Gembara’s death was ruled a suicide.
Matczuk recently was charged with embezzling more than $6 million from Washington Federal.
The continuing investigation into the bank’s collapse has resulted so far in federal charges against 11 people, including Ald. Patrick Daley Thompson (11th), who represents Bridgeport and is charged with income-tax fraud and lying to federal regulators regarding loans he received from the bank.
And prosecutors say more people will be charged.
Among those who’ve been charged is a contractor who was a longtime bank customer and bought three properties from Hickey 25 years ago with loans from the bank.
After retiring from working at a paper company, Hickey dabbled in real estate. Between 1986 and 2013, he got 37 loans from the bank totaling about $1.85 million on 19 properties, including his home. That’s according to documents on file with the Cook County clerk’s office.
There’s been no indication that Hickey or his children had any role in the fraud scheme that toppled Washington Federal, whose string of bad loans prompted its shutdown and forced the Federal Deposit Insurance Corp. to cover about $90 million in losses for the bank’s depositors.
Asked about the bank and her father, Maggie Hickey responded by email: “You are correct that my dad lost money in the bank. I know that my dad was heartbroken when he learned of what went on at the bank.”
She declined to comment further.
Her brother pegged their father’s losses at $800,000, including money he said the elder Hickey invested as a shareholder. Kevin Hickey said they don’t expect to recover that money.
Aside from that loss to their father’s estate, Kevin Hickey said he has had to refinance two mortgages from Washington Federal that he got for his restaurant, which he operates in a building that was home to the Gembara family’s former tavern.
The Gembara and Hickey families share a long history. For generations, both families have operated prominent businesses in the tiny section of Bridgeport that’s tucked between the south branch of the Chicago River and busy Archer Avenue.
Joseph Gembara was 23 when he immigrated to Chicago from Poland in 1911. By around 1920, he had opened a corner bar at 2701 S. Eleanor St. — the building that’s now Kevin Hickey’s restaurant.
The bar — called the Gem Bar Lounge — served food and drink to people who worked along the river. And the bar kept operating during Prohibition.
Gembara and his wife raised their seven children in an apartment behind the lounge.
At some point, Gembara became an investor in a building and loan association that had been founded in 1913 to serve Polish immigrants. The institution grew, ultimately evolving into Washington Federal Bank for Savings, which was run by Gembara’s son Emil Gembara and finally his grandson John Gembara.
Gembara’s bank set up shop at 2869 S. Archer Ave., a block north of the JJ Hickey Funeral Home, which already had been in the Hickey family for three generations by the time Jack Hickey ran it.
In 1963, Jack Hickey bought a small home on Eleanor Street where he and his wife raised their two children a block south of the Gem Bar.
In interviews about his restaurant, Kevin Hickey has warmly recalled playing video games inside the tavern when it was owned by one of the founder’s sons, Eugene “Herman” Gembara, who also served on the Washington Federal board of directors.
After Jack Hickey and his wife got divorced in the early 1980s, he began buying and selling property near his home. These deals all were financed with Washington Federal loans signed by Emil Gembara and his children — John Gembara and Janice Gembara Weston.
Hickey sold two of those properties to Miroslaw Krejza, a contractor, on Nov. 4, 1996, and a third one on July 1, 1997, for a total of $95,000. Krejza also obtained loans from Washington Federal. He then flipped the homes, selling them to new buyers.
Like Hickey, Krejza was a longtime customer of the Gembara bank. A federal grand jury indicted Krejza earlier this year, charging him with helping embezzle about $2.8 million from the bank between 2004 and the time of the bank’s collapse in December 2017.
The grand jury also indicted Krejza’s brother-in-law. Boguslaw Kasprowicz was charged with helping embezzle more than $14 million from the bank.
Gembara’s bank financed homes Kasprowicz built in Wicker Park. Kasprowicz sold the homes, but federal officials have said the loans from Washington Federal never were repaid.
Kasprowicz once worked as a bricklayer for Gembara’s friend and customer Robert M. Kowalski, a lawyer and developer who has been charged in the embezzlement scheme.
It’s unclear how long Jack Hickey had been a shareholder in the Gembara bank. Kevin Hickey says the family has been unable to find any paperwork regarding his father’s investment.
Jack Hickey isn’t mentioned in annual reports Washington Federal Bank filed with federal regulators. Those reports required the bank to identify only people who owned at least 5% of the stock — John Gembara, his sister Janice Gembara Weston and his mother-in-law Rosemary Komperda, who had been dead for years when those reports were filed — as well as any bank officials who owned stock.
Those bank officials who also were shareholders were: Gembara; his sister; George Kozdemba, a retired employee of the Metropolitan Water Reclamation District of Greater Chicago, who replaced Eugene Gembara on the bank board; William Mahon, a deputy commissioner with the Chicago Department of Streets and Sanitation Commissioner; and Lester Stepien, comptroller of a meatpacking plant.
The bank’s annual reports disclosed the names of people who owned about 65% of Washington Federal’s stock. So about one-third of the stock was owned by people whose names haven’t been made public.
In 1997, the annual report disclosed that John Gembara’s brothers Michael Gembara and Robert Gembara also owned stock, as did an aunt and uncle who since have died.
Eugene Gembara — who was a precinct captain for the 11th Ward Regular Democratic Organization that’s been run by the late Mayor Richard J. Daley’s family for decades — died in 2009.
Four years later, on Nov. 14, 2013, his widow June Gembara sold the family bar for $322,500 to Kevin Hickey, who got a $236,000 loan the next day from the Gembara family bank.
Kevin Hickey, who previously was executive chef for The Four Seasons Hotels, had been working as a chef for Chicago’s Rockit Ranch Productions when he decided to open a restaurant in his old neighborhood, just down the street from his father’s home. Named after a restaurant run by his great grandmother, Hickey opened The Duck Inn in 2014, attracting diners from across Chicago and the suburbs to a neighborhood that wasn’t known then for upscale dining.
When federal regulators closed the bank on Dec. 15, 2017 — 12 days after John Gembara was found dead inside Matczuk’s home — the FDIC took control of nearly all outstanding loans the bank had, including two on The Duck Inn, one on Jack Hickey’s home and another on an apartment building he owned.
The FDIC sold those four Hickey loans to other mortgage companies in late 2018.
Soon after, Kevin Hickey repaid his original loans from Washington Federal with new mortgages from Beverly Bank.
Jack Hickey was 79 when he died on Aug. 24, 2019. He left Maggie Hickey and Kevin Hickey to settle his estate, which included his home and eight other properties.
The estate has yet to be settled. It’s being handled by an attorney in the Loop law offices of Schiff Hardin, the firm where Maggie Hickey is a partner.
Five months before her father died, Maggie Hickey was appointed by U.S. District Judge Robert M. Dow Jr. as the court monitor for Chicago police reforms spelled out in a federal consent decree that resulted from a Justice Department investigation that followed the fatal shooting of Laquan McDonald as he was walking away from a Chicago cop.
The consent decree focuses on areas including police use of force, training and records.
It’s the latest high-profile appointment for Maggie Hickey, who was chief of staff for former U.S. Sen. Peter Fitzgerald, a Republican firebrand who orchestrated the appointment of Patrick Fitzgerald as the top federal prosecutor in Chicago, with a mandate to attack corruption that led to the convictions and imprisonment of former Govs. George Ryan and Rod Blagojevich.
Maggie Hickey later worked as a federal prosecutor in Chicago under Patrick Fitzgerald and also has been tapped to investigate sexual harassment allegations within the office of then-Illinois House Speaker Michael J. Madigan. She also was the state executive inspector general under former Gov. Bruce Rauner.
It’s unclear whether federal prosecutors have talked with their former colleague regarding the collapse of Washington Federal Bank or her father’s transactions with the Gembara family.