Robert M. Kowalski enters the Dirksen Federal Courthouse wearing a zipped up jacket over a flannel shirt.

Lawyer and developer Robert M. Kowalski is about to go on trial in federal court in Chicago in the long-running investigation of Bridgeport’s failed Washington Federal Bank for Savings.

Ashlee Rezin / Sun-Times

Embezzlement trial could spill new secrets about Bridgeport bank linked to Patrick Daley Thompson

Washington Federal Bank for Savings’ failure was at the periphery of Thompson’s trial but will be center stage when Robert M. Kowalski, who got millions of dollars in loans the feds say didn’t have to be repaid, goes on trial Monday.

One year since Ald. Patrick Daley Thompson (11th) was convicted of cheating on his income taxes in a case involving clout-heavy Washington Federal Bank for Savings, another trial is about to get underway that holds the promise of revealing more secrets about the Bridgeport bank.

In Thompson’s trial, the failure of the bank — which was shut down in late 2017 after a massive fraud scheme was uncovered — was at the periphery of the case.

This time, it will be center stage when lawyer and developer Robert M. Kowalski, who got millions of dollars in loans from the bank, goes on trial Monday. He’s the first to face trial of 14 people charged with having a role in what federal authorities have said was an embezzlement scheme that involved top executives of the bank.

Kowalski, 60, whose law license was suspended by the Illinois Supreme Court after he was indicted, is accused of participating in a conspiracy to embezzle millions of dollars over more than a decade from the small, family-owned and operated bank.

Kowalski — who has taken the unusual step of choosing to act as his own attorney — has blamed the bank’s collapse on a dead man: John F. Gembara, who was a longtime friend and the godfather of Kowalski’s son. Gembara also was Washington Federal’s president, chief executive officer and major shareholder.

In what was one of the relatively rare bank failures in the United States in recent years, federal regulators shut down Washington Federal days after Gembara was found dead Dec. 3, 2017, with a rope around his neck in the main bedroom of a $1 million Park Ridge home owned by Marek Matczuk, a bank customer and longtime Gembara friend who is among those charged and awaiting trial.

Marek Matczuk leaving the Dirksen Federal Courthouse after a court appearance March 4, 2021.

Marek Matczuk leaves the Dirksen Federal Courthouse after a court appearance March 4, 2021.

Ashlee Rezin / Sun-Times

The Park Ridge police and the Cook County medical examiner’s office said Gembara died by suicide, but some of his family members and friends have said they don’t believe he killed himself.

Ahead of his trial, Kowalski has filed about 200 pretrial motions and butted heads with U.S. District Judge Virginia Kendall, asserting that she was silencing him and saying that the evidence in the case “reads like a Grisham novel.”

Kowalski, who has called himself “Bob the Builder” in court filings, isn’t a well-known figure, unlike Thompson, a grandson of the late Mayor Richard J. Daley and a nephew of former Mayor Richard M. Daley.

Former Ald. Patrick Daley Thompson leaves the Dirksen Federal Courthouse on Feb. 14, 2022, after being found guilty of cheating on his tax returns for five years and lying about how much money he got from a crooked Bridgeport bank.

Former 11th Ward Ald. Patrick Daley Thompson leaves the Dirksen Federal Courthouse Feb. 14, 2022, after being found guilty of lying to federal regulators and cheating on his income tax returns for five years.

Ashlee Rezin / Sun-Times file

But his trial could provide more answers about the bank that previously had been run by Gembara’s father and grandfather.

Among the questions: Why was Washington Federal handing out loans to Thompson and others that apparently didn’t require they ever be paid back, in some cases without the bank even having any paperwork regarding the money that supposedly was being borrowed?

Also: Who decided to give out these loans? The Chicago Sun-Times has reported that the bank’s loan committee was chaired by William M. Mahon, a member of the Daley family’s 11th Ward Regular Democratic Organization who was a deputy commissioner of the city Department of Streets and Sanitation — until after he was indicted in late 2021 as part of the case.

William M. Mahon.

William M. Mahon.

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The Federal Deposit Insurance Corporation paid $90 million to cover the bank’s losses. Some of that’s been recovered. And authorities continue to try to recover more, in part by selling 21 properties Kowalski owned. But hundreds of bank customers lost money.

Eight people — including five who worked for the bank — have pleaded guilty or otherwise admitted having roles in an embezzlement scheme.

Thompson wasn’t charged in that scheme but was convicted of cheating on his income taxes in a spinoff investigation involving a $110,000 loan he got from Washington Federal in November 2011, followed by payments of $20,000 and $89,000. He falsely claimed mortgage interest deductions for interest on payments to the bank he never made.

Gembara has been implicated in the fraud scheme with Kowalski. Prosecutors say Kowalski and Gembara used money from the bank to fund real estate projects in Fulton Market more than 15 years ago and to help pay for a Sea Ray 420 Sundancer yacht.

Prosecutors say Kowalski had three people take the boat from Burnham Harbor and put it in storage in an effort to hide assets when he filed for bankruptcy in 2018.

The old Washington Federal Bank for Savings, 2869 S. Archer Ave., which was shut down in December 2017 for “unsafe or unsound practices” days after John F. Gembara, its president and chief executive officer, was found dead at a bank customer’s home. A federal audit uncovered massive fraud at the bank.

Washington Federal Bank for Savings, 2869 S. Archer Ave., was shut down in December 2017 for “unsafe or unsound practices” days after John F. Gembara, its president and chief executive officer, was found dead at a bank customer’s home. A federal audit uncovered massive fraud at the bank.

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Jurors in Kowalski’s trial will be presented with emails, bank records and the testimony of some of those who prosecutors say were among Kowalski’s co-conspirators.

Those likely to testify include his brother and former Washington Federal employees including Alicia Mandujano, who told jurors at Thompson’s trial that he had collected checks from the bank directly from Gembara’s office, one time before business hours.

Alicia Mandujano walking out of the Dirksen Federal Courthouse on March 4, 2021.

Alicia Mandujano walks out of the Dirksen Federal Courthouse March 4, 2021.

Ashlee Rezin / Sun-Times file

Mandujano is expected to testify that Gembara told her to give money to Kowalski, supposedly from loans, but that these were loans for which repayment was neither arranged nor expected. She’s also expected to say Gembara told her to have the bank pay property taxes and other expenses for properties Kowalski owned or controlled.

William Kowalski, Robert’s brother, struck a deal last year called a deferred-prosecution agreement in which he admitted having a role in the scheme. Taking the witness stand against his brother, he is expected to testify about property deals in Fulton Market and the purchase of the boat.

Gembara had the bank issue a $190,000 check to cover most of a $200,000 down payment for the boat, according to court records that also say he and William Kowalski later filled out paperwork for a $160,000 Washington Federal loan that prosecutors say was part of an effort to hide the boat purchase.

The three men also used $4.5 million from Washington Federal to buy 13 lots near Halsted Street and Fulton Market for $6 million, which prosecutors say was part of the scheme.

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Click here to read the Sun-Times’ initial investigation of the failure of Washington Federal Bank for Savings.

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