Bridgeport bank failure case verdict: Robert M. Kowalski guilty of all charges
CHICAGO - In the first case to go to trial in the failure of a crooked Bridgeport bank, Robert M. Kowalski was found guilty Friday of embezzling $8 million from Washington Federal Bank for Savings and concealing more than $560,000 in assets when he went bankrupt.
Kowalski, 60, was a longtime friend, customer and business partner of the late John F. Gembara, who was Washington Federal’s president, chief executive officer and majority shareholder. Federal authorities say Gembara ran the embezzlement scheme that caused federal regulators to shut down the bank his father and grandfather previously ran.
Former Ald. Patrick Daley Thompson previously went to prison for income-tax fraud and lying to authorities about $219,000 he got from Washington Federal.
Kowalski, a divorced father of five children, could face an estimated maximum sentence of 82 years in prison and likely a minimum of 24 years, according to prosecutors.
U.S. District Judge Virginia Kendall ordered Kowalski immediately taken into custody, saying he could be a flight risk, noting that all of the money he hid from bankruptcy court still hasn’t been found.
"When you take money and property from a bank . . .and you don’t pay it back . . . . you’re not a bank customer, you’re a criminal," Assistant U.S. Attorney Kristin M. Pinkston told the jury.
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Kowalski, an attorney who represented himself during the trial, maintained that Gembara was to blame for any embezzlement and that he was a victim.
During his closing argument, he said, " I can’t be guilty simply because I associated with this man."
It’s unclear when the embezzlement scheme that ensnared Kowalski began, but testimony during his trial showed it was underway by 2010.
As Gembara gave away loans without expecting repayment, he and his employees hid the delinquent loans from regulators, making it appear that the bank had no bad mortgages.
Sometime in 2017, the Chicago Sun-Times previusly has reported, a bank employee who had been fired exposed the scheme to federal regulators. At the direction of the regulators, the bank board suspended Gembara on Nov. 28, 2017.
Five days later, Gembara, 56, was found dead, seated in a chair with a rope around his neck and tied to a spiral stairway in the main bedroom of a Park Ridge home owned by Marek Matczuk, a contractor who has since been accused of embezzling money from the bank. Park Ridge police and the Cook County Medical Examiner have concluded that Gembara committed suicide, but his widow and Kowalski have questioned whether someone may have killed him.
Federal regulators shut the bank down on Dec. 15, 2017, which initially cost the Federal Deposit Insurance Corp. $90 million to cover the losses.
Kowalski’s three-week trial provided some insight to the bank’s operations, including special treatment for people known as "Friends of John," who weren’t required to make payments on their loans while the bank also paid real estate taxes on those properties. And It also showed that Kowalski ended up owning homes and real estate from various bank customers who avoided foreclosure by surrendering their property to the bank.
It still remains unclear why Gembara decided to embezzle money from the small neighborhood bank that provided jobs to several of his family members, including his widow, Therese Gembara, and his sister Janice Weston, a vice president of the bank and a member of its board of directors.
It’s also unclear how much money Gembara made during the embezzlement. Boguslaw Kasprowicz, a contractor who has pleaded guilty to embezzling $14.3 million from the bank, testified that he spent about $1.7 million of the money paying Gembara’s credit card bills and other expenses, including the monthly payment on a yacht that Gembara bought with Kowalski and his brother William Kowalski.
The bank embezzlement has led to charges against 14 people — five bank customers, five bank employees and three members of the bank board, including Gembara’s sister and William Mahon, a member of the Daley family’s 11th Ward Regular Democratic Organization who resigned his position as a top City Hall official following his indictment. Mahon and four others are awaiting trial.
Mahon is one of many links between the small Bridgeport bank and the Daley family.
The federal investigation found that the bank had loaned $219,000 to Ald. Patrick Daley Thompson (11th), who hadn’t made any payments for years. Thompson has been found guilty
of cheating on his income taxes by taking mortgage-interest deductions he never paid and lying to federal regulators about the money he borrowed from the bank. Thompson resigned his seat on the City Council last year and served four months in prison.
A few months before the bank closed, Thompson got an $80,000 loan to help make repairs on the headquarters of the 11th Ward organization. The loan has since been renegotiated with another bank.
Gembara’s bank had prepared documents in 1997 to loan money to Patrick R. Daley, son of then-Mayor Richard M. Daley, who had agreed to pay $200,000 for a three-flat Kowalski was rehabbing in Little Italy. The deal fell apart after the mayor found out Kowalski’s mentor, the late Oscar D’Angelo, had obtained equipment from the University of Illinois Chicago to help Kowalski rehab the apartment building.
Many of Gembara’s customers included prominent City Hall employees, including the mayor’s patronage director Robert Sorich, who went to prison for helping rig test scores so political workers could land jobs at City Hall. Mahon also was involved in that hiring scandal, but wasn’t charged.