WashFed Execs Jailed for Bank Fraud Cover-Up

CHICAGO – The rot at the failed Washington Federal Bank for Savings in Chicago continues to yield prison sentences. Two former board members, GEORGE F. KOZDEMBA, 74, of Fort Myers, Fla., and JANICE M. WESTON, 66, of Orland Park, Ill., were sentenced this month for their roles in a conspiracy to falsify bank records and deliberately mislead the Office of the Comptroller of the Currency (OCC). The bank, once a Bridgeport neighborhood fixture, imploded in 2017, revealing at least $66 million in nonperforming loans – a figure the board desperately tried to conceal.

U.S. District Judge Virginia M. Kendall handed down a year and a day in federal prison to Kozdemba on May 9, 2024, along with a $25,000 fine. Weston received a three-month sentence and a $20,000 fine on May 6, 2024, after both pleaded guilty to a federal conspiracy charge last year. This follows the January sentencing of a third board member, WILLIAM M. MAHON, of Chicago, to 18 months in prison for conspiracy and tax charges. Weston also served as the bank’s Senior Vice President and Compliance Officer, putting her directly in the line of fire for the scheme.

The scheme was simple, yet brazen. As the OCC scrutinized Washington Federal’s loan portfolio, the board members actively fabricated entries in bank records, feeding false information to regulators in a blatant attempt to obstruct the examination and hide the bank’s precarious financial state. They weren’t just failing to report problems; they were actively creating the illusion of compliance with banking rules and internal controls. This wasn’t oversight; it was a calculated cover-up.

This sentencing is the latest fallout from a sprawling federal investigation that has implicated 16 individuals in the embezzlement of at least $31 million in bank funds. Four have been convicted after jury trials, ten pleaded guilty, and two entered into deferred prosecution agreements. The money trail leads to a network of connected players, including Chicago attorney ROBERT M. KOWALSKI and real estate developers MIROSLAW KREJZA and MAREK MATCZUK, who allegedly received funds with little to no documentation. Kowalski, Krejza, and Matczuk were convicted last year on embezzlement and fraud charges and await sentencing.

The web extends further. Robert Kowalski’s sister, JAN R. KOWALSKI, also an attorney, received over three years in prison last year for aiding her brother in concealing over $357,000 from creditors and the bankruptcy trustee. And PATRICK D. THOMPSON, a Chicago attorney, was convicted in 2022 of lying to the FDIC about funds he received from Washington Federal. The investigation, a multi-agency effort involving the FDIC’s Office of Inspector General, the U.S. Department of Housing and Urban Development’s Office of Inspector General, IRS Criminal Investigation, and the FBI, underscores the systemic corruption that plagued the bank.

The case was announced by Morris Pasqual, Acting United States Attorney for the Northern District of Illinois, and a coalition of federal investigators. Assistant U.S. Attorneys Michelle Petersen, Kristin Pinkston, and Jeffrey Snell, alongside Special Assistant U.S. Attorney Brian Netols, are prosecuting the case. While these sentences offer a measure of accountability, they represent only a fraction of the damage inflicted on depositors and the financial system by the greed and deceit that consumed Washington Federal Bank.