In a significant legal development, three former board members of Washington Federal Bank in Chicago have pleaded guilty to conspiring to falsify bank records and obstruct regulators. William M. Mahon and George F. Kozdemba, along with Janice M. Weston, admitted to the charges in federal court. Mahon also pleaded guilty to a tax offense for willfully filing false income tax returns. The guilty pleas come as part of a larger investigation into the bank’s failure in 2017, which revealed criminal charges against 16 defendants and allegations of embezzlement totaling at least $31 million. Sentencing for the former board members has been set for later this year, with potential prison terms of up to five years for the conspiracy charge. The case illustrates the serious consequences of corporate misconduct and highlights the efforts of federal prosecutors to hold individuals accountable for their actions.
In a recent case involving the failed Washington Federal Bank for Savings in Chicago, three former board members have pleaded guilty to charges of conspiring to falsify bank records and obstruct regulators. The individuals involved are William M. Mahon, George F. Kozdemba, and Janice M. Weston. The guilty pleas were made in federal court and carry potential penalties of up to five years in prison. This article will provide an overview of the case and the actions taken by these former board members that led to the closure of the bank.
Guilty Pleas of Former Board Members
William M. Mahon, George F. Kozdemba, and Janice M. Weston, all former board members of Washington Federal Bank, have pleaded guilty to charges of conspiring to falsify bank records and obstruct regulators. Mahon, aged 56, and Kozdemba, aged 73, entered their guilty pleas during a hearing in front of U.S. District Judge Virginia M. Kendall. Mahon also pleaded guilty to a tax offense for willfully filing false income tax returns. Weston, aged 65, pleaded guilty to the conspiracy charge separately. Sentencing dates have been set for Weston on October 20, 2023, for Mahon on December 11, 2023, and for Kozdemba on December 12, 2023.
Charges and Potential Penalties
The charges faced by the former board members include conspiring to falsify bank records and obstruct regulators. This conspiracy charge carries a potential penalty of up to five years in federal prison. Additionally, William M. Mahon faces an additional tax offense charge for willfully filing false income tax returns, which could result in up to three years in prison.
Involvement and Positions of Guilty Board Members
William M. Mahon, George F. Kozdemba, and Janice M. Weston were all members of Washington Federal’s Board of Directors. In addition to their positions on the board, Janice M. Weston also served as the bank’s Senior Vice President and Compliance Officer. As board members and high-ranking employees, they held positions of responsibility and were entrusted with ensuring compliance with banking rules and regulations.
Closure of Washington Federal Bank
In 2017, Washington Federal Bank for Savings was closed following an investigation by the Office of the Comptroller of the Currency (OCC). The OCC determined that the bank was insolvent and had nonperforming loans worth $66 million. As a result of the investigation, criminal charges were brought against 16 defendants, including high-ranking employees of the bank. Eight defendants have since pleaded guilty or agreed to cooperate with the government.
Embezzlement of Bank Funds
As part of the investigation into Washington Federal Bank, it was discovered that approximately $31 million had been transferred to Chicago attorney Robert M. Kowalski and others. These funds were transferred without proper documentation or sometimes without any documentation at all. The transfer of these funds was a violation of banking rules and regulations.
Conviction and Sentencing of Robert Kowalski and Jan R. Kowalski
Chicago attorney Robert M. Kowalski was convicted earlier this year on charges of embezzlement and fraud related to the funds transferred from Washington Federal Bank. He is currently awaiting sentencing. His sister, Jan R. Kowalski, who is also an attorney, pleaded guilty and was sentenced in June to over three years in federal prison for her role in assisting her brother in concealing money from creditors and a bankruptcy trustee.
Conviction and Sentencing of Patrick D. Thompson
In addition to the board members and attorneys involved, Patrick D. Thompson, a Chicago attorney, was also convicted in the Washington Federal Bank case. Thompson was found guilty of making false statements and tax fraud related to his involvement with the bank. He was sentenced to four months in federal prison.
Announcement and Representation
The guilty pleas of the former board members were announced by multiple agencies, including the U.S. Trustee Program. The U.S. Trustee Program provided valuable assistance throughout the investigation and legal proceedings. The government is represented by Assistant U.S. Attorneys Michelle Petersen, Kristin Pinkston, Brian Netols, and Special Assistant U.S. Attorney Jeffrey Snell. These individuals were instrumental in bringing the case against the guilty parties and seeking justice for the actions taken at Washington Federal Bank.
In conclusion, the guilty pleas of former board members William M. Mahon, George F. Kozdemba, and Janice M. Weston in the case of the failed Washington Federal Bank have shed light on the fraudulent practices that led to the bank’s closure. Their actions, including falsifying bank records and obstructing regulators, were a breach of their responsibilities as board members and high-ranking employees. These guilty pleas, along with the convictions and sentencings of other individuals involved, demonstrate the commitment of law enforcement and regulatory agencies to holding those responsible for financial crimes accountable.