The attorney and developer at the center of an embezzlement scandal at a failed bank in Bridgeport has a long history with City Hall and key political players, according to city records and court documents.
Chicago attorney and developer Robert M. Kowalski is accused of embezzling at least $31 million from Washington Federal Bank for Savings, which operated in the political fiefdom of the Daley family for generations.
Under Mayor Richard M. Daley, Kowalski was allowed to buy a sliver of a Chicago park so he could expand the yard of a home he was building in Little Italy.
Daley’s son Patrick Daley struck a deal to buy a three-flat from Kowalski while Kowalski was also pushing city officials to approve a drive-through facility for the bank. The deal later fell apart.
And Kowalski hired the law firm of Ald. Edward M. Burke to fight the property assessments on a building in the Fulton Market neighborhood. Federal prosecutors allege that building was part of the scheme to steal money from the bank run by Kowalski’s longtime friend, the late John F. Gembara. Gembara was found dead in a customer’s bedroom 12 days before regulators closed the bank in December 2017.
The alderman’s former law firm, Klafter & Burke, got Kowalski two separate tax cuts totaling $14,266.
“Had Klafter & Burke not helped, I could never have owned that building for as long as I did,” Kowalski wrote in a two-page letter he sent from his cell at the Metropolitan Correctional Center. While Burke has separately been charged with political corruption, he does not face any allegations of wrongdoing involving the Fulton Market building.
Kowalski, 59, isn’t available to discuss his City Hall deals.
He’s been in solitary confinement for weeks, furiously trying to persuade a federal appeals court to reinstate his bond, while also pleading with the Illinois Supreme Court to lift a February order suspending his law license over allegations that he committed embezzlement and bankruptcy fraud leading to the collapse of the bank.
It was an unusual decision from the Supreme Court, which typically disciplines lawyers only after they have been convicted of a crime.
Kowalski has filed a motion with the Supreme Court, asking why they haven’t also suspended the law licenses of two Chicago aldermen awaiting trial in federal court — Ald. Patrick Daley Thompson, a nephew and grandson of the city’s longest serving mayors, who is charged with lying to regulators over his loans from the failed bank, and Burke, who is accused of soliciting legal work from companies seeking city permits.
“This court may not under the law play political favorites among attorneys. By virtue of the public trust reposed in them, clearly the aldermen present a greater threat to the community than Robert ever did,” Kowalski wrote to the Supreme Court in May, referring to himself in the third person.
It’s unclear if the Supreme Court is considering suspensions for Burke or Thompson. Burke’s wife, Anne B. Burke, is the Illinois Supreme Court chief justice. She abstained from voting on Kowalski’s suspension. She hasn’t revealed why or whether it’s connected to her husband’s legal work on the Fulton Market building.
So far, 11 people — Kowalski, his sister, Jan Kowalski, Thompson, five bank officials and three contractors — have been charged in connection with the collapse of Washington Federal. More people are expected to be charged in the coming weeks.
Following the termination of a top bank official in 2017, federal regulators discovered a years-long embezzlement scheme at the neighborhood bank founded in 1913 by Polish immigrants. The early investors included Joseph Gembara, whose son Emil Gembara and grandson John Gembara would eventually run the bank.
The bank board suspended John Gembara on Nov. 28, 2017. Five days later, he was found dead, sitting in a chair with a rope around his neck, inside the Park Ridge bedroom of Marek Matczuk, a contractor who has been charged with embezzlement. Gembara’s death has been ruled a suicide, though his widow and others have questioned whether he was murdered.
The federal insurance program known as the Federal Deposit Insurance Corporation has provided about $90 million to cover the bank’s losses, while investigators try to recoup millions from Kowalski and others.
Kowalski maintains he’s innocent. “There’s no way as a matter of law that I could have conspired with this banker,” he told U.S. District Court Judge Virginia Kendall last month. “I was his attorney. I was his bank’s attorney.”
Kowalski has asked the judge to order Gembara’s body to be exhumed and also suspects foul play.
“Please exhume this man, something is not right. He did not die from a suicide. I knew him for more than 30 years. He was a good man, to a certain extent. And there’s an inherent fraud, and there’s an inherent murder that’s at the heart of this case, judge,” Kowalski said.
While the case has thrust Kowalski into the public spotlight, for years he has been a behind-the-scenes player at City Hall.
Vacant lot purchased from City Hall
Kowalski was 30 years old in May 1992 when he cut a deal with the Daley administration, paying $15,924 for a vacant lot in the 3000 block of Lock Street, according to documents signed by City Hall asset manager Cosmo Briatta. Briatta is the brother-in-law of the mayor’s brother, Cook County Commissioner John P. Daley.
Kowalski and his brother, William, got a $65,000 loan from Washington Federal, built a house and sold it for $128,000 eight months later.
On city and bank documents, the Kowalskis listed their address at a Bridgeport warehouse which had a mortgage held by Michael DiFoggio. DiFoggio was a plumbing contractor who later worked on projects financed by Washington Federal, including buildings owned by Kowalski and others charged in the bank’s collapse.
DiFoggio has deep ties to the neighborhood. His father founded the Old Neighborhood Italian American Club with mob boss Angelo “The Hook” LaPietra. DiFoggio later became an FBI mole, helping federal prosecutors convict former Cook County Commissioner Joseph Mario Moreno and former Ald. Ambrosio Medrano in 2013.
A few weeks after those convictions, DiFoggio was found dead from a gunshot wound to his head inside his plumbing office near Sox Park. His death was ruled a suicide.
Adding to a side yard
Kowalski did another deal with Daley’s City Hall in December 1995, buying a sliver of Garibaldi Park in Little Italy so he could expand the side yard of a two-story home he was building in the 1500 block of Polk Street. The home was around the corner from Oscar D’Angelo, a Daley pal and the neighborhood’s unofficial mayor who championed the park.
City Hall owned 1.7 acres of Garibaldi Park, agreeing to trade it to the Park District for a tiny portion of the park, measuring 7.5 feet by 85 feet. Then City Hall sold that strip of land to Kowalski for $4,900, according to documents signed by Briatta.
Deal with the mayor’s son
Kowalski, who calls himself “Bob the Builder,” bought a three-flat in Little Italy for $200,000 in the fall of 1997. He struck a deal to sell it to Mayor Daley’s son, Patrick, but it fell apart in late 1999 after D’Angelo finagled a cherry picker from the nearby University of Illinois at Chicago to help Kowalski rehab the building. The neighbors complained, Daley’s son canceled his contract to buy the building, and it opened a rift between the mayor and D’Angelo.
“That story still hurts,” Kowalski wrote in a letter to the Sun-Times.
Kowalski has said Gembara’s bank was going to loan the mayor’s son money to buy the building.
Daley and his son, who have not been accused of any wrongdoing, couldn’t be reached for comment.
Kowalski eventually converted the building into three condos, selling them for $1.1 million.
Pushing for a bank drive-thru
While rehabbing the three-flat for Daley’s son, Kowalski was also serving as an attorney for Washington Federal, which wanted to open a drive-thru at the bank’s office, 2869 S. Archer.
The bank’s neighbors and then-Ald. James Balcer (11th) opposed the plan because it would have turned a one-way street into a two-way. Kowalski appealed to the city’s Zoning Board of Appeals but dropped the case without explanation in December 1999, city records show. The move came just after the mayor’s son canceled his contract with Kowalski.
Instead, Gembara bought the building next door to the bank and hired Kowalski’s brother to tear it down in 2001 so they could build an addition with a drive-thru that didn’t disrupt the traffic patterns.
Fulton Market District deal
Kowalski, his brother and Gembara used a trust at Bridgeview Bank in October 2004 to pay $6 million for 13 lots in a square block at Halsted and Lake Streets, the heart of the now bustling Fulton Market District, according to the indictment.
As part of a complicated scheme, the indictment says Robert Kowalski and Gembara used the property to embezzle money from Washington Federal.
Kowalski used Burke’s law firm to appeal the property taxes on the historic building at 845 W. Fulton Market in 2007 and 2008.
Burke and his criminal defense attorney, Joe Duffy, didn’t return messages.
Kowalski and his partners ended up losing the Fulton Market property in 2013 after Bridgeview Bank sold their delinquent loans to a wealthy commodities trader, Don R. Wilson, who foreclosed on the loans and now owns the property. Kowalski got $1 million from Wilson’s company and used it to buy other property he failed to disclose in his ongoing bankruptcy case, according to the indictment.
Kowalski’s brother William hasn’t been charged. He’s not identified by name in the indictment but referred to as “Individual C,” who reportedly got money from the loans Bridgeview Bank made on the Fulton Market properties.
The Kowalski brothers and Gembara also co-owned a yacht named Expelliarmus that authorities say was bought with money stolen from the bank. Expelliarmus is the name of the spell from the Harry Potter books that forces an opponent to drop his magic wand.