In the first case to go to trial in the failure of a crooked Bridgeport bank, Robert M. Kowalski was found guilty Friday of embezzling $8 million from Washington Federal Bank for Savings and concealing more than $560,000 in assets when he went bankrupt.
Kowalski, 60, was a longtime friend, customer and business partner of the late John F. Gembara, Washington Federal’s president, chief executive officer and major shareholder. Authorities say Gembara ran the embezzlement scheme, which, when they finally began unraveling it, prompted regulators to shut down the bank his father and grandfather previously ran.
Former Ald. Patrick Daley Thompson went to prison last year for income-tax fraud and lying about $219,000 he got from Washington Federal.
Kowalski, a divorced father of five children, could face an estimated maximum sentence of 82 years in prison and likely at least 24 years, according to prosecutors.
U.S. District Judge Virginia Kendall ordered that Kowalski immediately be taken into custody, saying he could be a flight risk, noting that all of the money he hid from the bankruptcy court still hasn’t been found.
“When you take money and property from a bank . . .and you don’t pay it back . . . . you’re not a bank customer, you’re a criminal,” Assistant U.S. Attorney Kristin M. Pinkston told the jury.
Kowalski, an attorney who represented himself, argued that Gembara was to blame for any embezzlement and that he was a victim.
During his closing argument, he said, “ I can’t be guilty simply because I associated with this man.”
It’s unclear when the embezzlement scheme that ensnared Kowalski began, but testimony during his trial showed it was underway by 2010.
According to federal authorities, Gembara handed out loans with no expectation that they be repaid, and then he and his employees hid the delinquent loans from regulators, making it appear that the bank had no bad mortgages.
Sometime in 2017, the Chicago Sun-Times has reported, an unidentified bank employee who had been fired blew the whistle to federal regulators. Then, at the direction of the regulators, the bank board suspended Gembara on Nov. 28, 2017.
Five days later, Gembara, 56, was found dead, seated in a chair, with a rope around his neck and tied to a spiral staircase in the main bedroom of the $1 million Park Ridge home owned by Marek Matczuk, a contractor who is awaiting trial on charges of embezzling money from the bank. The Park Ridge police and the Cook County medical examiner’s office concluded that Gembara committed suicide, but his widow and Kowalski have questioned that, saying they suspect someone killed him.
Federal regulators shut down the bank on Dec. 15, 2017, a rare bank failure that initially cost the Federal Deposit Insurance Corp. $90 million to cover its insured losses.
Kowalski’s three-week trial provided some insights into how the bank scheme worked.
That included testimony from Alicia Mandujano — hired by Gembara’s father Emil Gembara out of high school and later John Gembara’s secretary and then the bank’s sole loan servicer — about special treatment given to people she called “Friends of John.” Mandujano, who is cooperating with prosecutors, testified that Friends of John weren’t required to make any payments on their loans and that the bank paid the real estate taxes on those properties.
Testimony at Kowalski’s trial also showed that he ended up being given ownership of homes and real estate from bank customers who avoided foreclosure by surrendering their properties to the bank.
The trial didn’t answer why Gembara would have embezzled money from the small, neighborhood bank, which provided jobs to several of his family members, including his widow Therese Gembara and his sister Janice Weston, a vice president of the bank and member of its board of directors.
Also left unclear was how much money authorities believe Gembara got from this.
Boguslaw Kasprowicz — a contractor who has pleaded guilty to embezzling $14.3 million from the bank — testified that he spent about $1.7 million of that to pay Gembara’s credit-card bills and other expenses, including monthly payment on a yacht Gembara bought with Kowalski and his brother William Kowalski.
The embezzlement blamed for the bank’s collapse has led to charges against 14 people — five bank customers, five bank employees and three members of the bank board, including Gembara’s sister and William Mahon, a member of the Daley family’s 11th Ward Regular Democratic Organization who resigned as a top City Hall official after his indictment. Mahon and four others are awaiting trial.
Mahon is one of many links between the bank and the Daley family.
Thompson was one of those. The federal investigation found that the bank lent him $219,000 but that he hadn’t made any payments for years. Thompson resigned from the Chicago City Council last year and served four months in prison.
A few months before the bank was closed, Thompson got an $80,000 loan to help make repairs on the headquarters of the 11th Ward Democratic organization. The loan has since been renegotiated with another bank.
Gembara’s bank had prepared documents in 1997 for a loan to Patrick R. Daley, the son of then-Mayor Richard M. Daley, who had agreed to pay $200,000 for a three-flat Kowalski was rehabbing in Little Italy. The deal fell apart after the mayor found out that Kowalski’s mentor, the late Oscar D’Angelo, had obtained equipment from the University of Illinois Chicago to help Kowalski rehab the apartment building.
Gembara’s customers included City Hall employees including Daley’s City Hall patronage director Robert Sorich, who went to prison for helping rig test scores so political workers could get city jobs and promotions.
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Click here to read the Sun-Times’ initial investigation of the failure of Washington Federal Bank for Savings.
