Three former board members of the now-defunct Washington Federal Bank for Savings in Chicago have confessed to a conspiracy that fueled the bank’s collapse and a staggering $31 million in stolen funds. William M. Mahon, George F. Kozdemba, and Janice M. Weston all pleaded guilty in federal court to charges of falsifying bank records and obstructing regulators – a desperate attempt to hide the rot within the institution. Mahon also admitted to dodging taxes while lining his pockets.
The guilty pleas are the latest fallout from the bank’s 2017 failure, which triggered a wide-ranging federal investigation. The feds have already charged 16 individuals, revealing a network of embezzlement and blatant disregard for banking laws. Weston, 65, will be sentenced October 20th. Mahon, 56, faces his day in court December 11th, followed by Kozdemba, 73, on December 12th. Each could face up to five years in prison for the conspiracy charge. Mahon’s tax evasion could add another three years to his sentence.
Mahon, Kozdemba, and Weston weren’t just passive board members; they were directly responsible for oversight. Weston also held the crucial position of Senior Vice President and Compliance Officer – a role that demanded she *prevent* the very crimes she now admits to enabling. Their failure to act, and active participation in the cover-up, demonstrates a calculated betrayal of public trust and a willingness to prioritize personal gain over the bank’s stability.
The Office of the Comptroller of the Currency (OCC) shut down Washington Federal in 2017 after discovering $66 million in nonperforming loans – a clear sign of systemic financial mismanagement. But the OCC’s findings only scratched the surface. The investigation quickly revealed the $31 million had been siphoned off to Chicago attorney Robert M. Kowalski and his associates, often with little to no documentation, a blatant violation of banking regulations.
Kowalski, unsurprisingly, is already facing the music. He was convicted of embezzlement and fraud earlier this year and awaits sentencing. His sister, Jan R. Kowalski, also an attorney, received over three years in federal prison in June for helping him hide assets from creditors and a bankruptcy trustee. Another Chicago attorney, Patrick D. Thompson, has also been convicted in connection with the case, further illustrating the widespread corruption that plagued Washington Federal.
These guilty pleas aren’t just about locking up criminals; they’re a warning. Federal prosecutors are sending a clear message: those who exploit the financial system for personal enrichment will be held accountable, no matter how high their position. The unraveling of Washington Federal Bank is a stark reminder that unchecked greed and corporate misconduct can devastate communities and erode faith in the institutions that are supposed to protect them.
RELATED: Three Former Board Members Guilty of Falsifying Records and Obstructing Regulators
Related Federal Cases
🔒 Get the grimiest stories delivered weekly.
Subscribe free →
Browse More
