Washington Federal Bank Members Sentenced for Fraud

Two former board members of the failed Washington Federal Bank for Savings in Chicago faced justice this month as they were sentenced to federal prison terms for their involvement in a massive fraud scheme. George F. Kozdemba, 74, from Fort Myers, Fla., and Janice M. Weston, 66, of Orland Park, Ill., were sentenced respectively to one year and three months, and three months behind bars.

Both Kozdemba and Weston pleaded guilty last year to conspiracy charges for orchestrating the falsification of bank records. The pair aimed to deceive the Office of the Comptroller of the Currency (OCC) and obstruct its examination of Washington Federal Bank’s loan portfolio, which was on the brink of collapse.

U.S. District Judge Virginia M. Kendall meted out justice on May 9, 2024, sentencing Kozdemba to one year and a day in federal prison with a fine of $25,000. Weston was sentenced to three months in prison and fined $20,000 by the same judge on May 6, 2024.

William M.Mahon, another board member, was sentenced in January to 18 months for conspiracy and tax charges. All three were members of the bank’s Board of Directors, with Weston also serving as Senior Vice President and Compliance Officer.

Washington Federal Bank, based in Chicago’s Bridgeport neighborhood, was shut down in 2017 after revelations of its insolvency and $66 million in nonperforming loans. The OCC had been evaluating the bank’s loan portfolio when the falsified records were provided.

The government’s hard-hitting investigation led to criminal charges against 16 defendants, including senior employees of the bank. Juries convicted four while ten pleaded guilty, with two entering into deferred prosecution agreements. The money embezzled was funneled through Robert M. Kowalski, a Chicago attorney, and real estate developers Miroslaw Krejza and Marek Matczuk. They await sentencing for their roles in the $31 million theft.