A federal judge agreed Wednesday to a deferred-prosecution deal for a former employee of a failed Bridgeport bank that collapsed amid a massive fraud scheme that’s led to charges against bank executives and customers including former Ald. Patrick Daley Thompson.
Prosecutors had filed a conspiracy charge against Brian Fong, who was the manager of the Archer Street branch of Washington Federal, saying he worked with two bank colleagues to cook the books and thwart federal regulators.
On Tuesday, prosecutors asked U.S. District Judge Steven Seeger to approve a deferred- prosecution agreement with Fong. If Fong holds up his end of the deal, which includes cooperating with investigators, prosecutors are expected to seek dismissal of the criminal charge after one year.
At a hearing Wednesday, Assistant U.S. Attorney Brian Netols said Fong is expected to testify in an upcoming trial related to the bank collapse.
He said Fong’s deal will prevent him from working with financial institutions without written consent from regulators.
Washington Federal’s failure has led to criminal charges against 15 others. Among them was Thompson, who was convicted in February 2022 of lying to regulators and filing false income-tax returns. That cost Thompson his seat on the Chicago City Council and landed him a four-month prison sentence.
Convicted earlier this year was Robert Kowalski, a longtime friend, customer and business partner of John Gembara, who was the bank’s chief executive officer, president and chief shareholder before his death by what authorities have ruled was suicide shortly before the bank was ordered closed.
Gembara was found dead Dec. 3, 2017, in the main bedroom of the Park Ridge home of a bank borrower, Marek Matczuk, who has been charged in connection with the fraud.
The federal Office of the Comptroller of the Currency closed Washington Federal on Dec. 15, 2017. The Federal Deposit Insurance Corp. spent $139.8 million to cover losses from what authorities have described as a scheme that began in 2011 and was led by Gembara to give millions of dollars to friends and customers without requiring them to repay the money.
So far, the FDIC has recovered about $58 million.
Also mentioned in the charges against Fong are former Washington Federal employee Cathy Torres and former bank board member Janice Weston, both who are facing charges. Torres has pleaded guilty. Weston faces trial in September.
According to Fong’s deal, Weston told him to alter bank reports to make it appear that Washington Federal was checking customers against a list from the Office of Foreign Assets Control, as required by internal policies. But Fong knew that list wasn’t being checked prior to certain transactions, according to the deal.
He also understood that the documents he fraudulently altered would be given to the Office of the Comptroller of the Currency during its examinations of Washington Federal.
Contributing: Tim Novak
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Click here to read the Sun-Times’ initial investigation of the failure of Washington Federal Bank for Savings.
