Former Chicago board members of failed Washington Federal Bank plead guilty in scheme

Three former board members of the failed Washington Federal Bank for Savings in Chicago have pleaded guilty to falsifying records and obstructing regulators.

William M. Mahon, 56, of Chicago, and George F. Kozdemba, 73, of Fort Myers, Florida, pleaded guilty to a conspiracy charge on Monday. Last week, Janice M. Weston, 65, of Orland Park, also pleaded guilty.

Additionally, Mahon’s guilty plea included a tax offense for filing false income tax returns.

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Mahon, Kozdemba, and Weston were board members of Washington Federal Bank, which was closed in 2017 due to insolvency and nonperforming loans. Prosecutors say the bank's Chief Financial Officer, Treasurer, and other employees were also charged in a scheme to embezzle $31 million in bank funds. Several defendants have pleaded guilty or cooperated with the government.

During a review of Washington Federal's loan portfolio, prosecutors say Mahon, Weston, Kozdemba and others falsified bank records to deceive the Office of the Comptroller of the Currency and obstruct its examination. They were accused of creating false entries to appear compliant with banking rules and internal policies.

Sentencings for Weston, Mahon and Kozdemba are scheduled for October 20, December 11, and December 12.

The conspiracy charge carries up to five years in federal prison, and Mahon's additional tax offense could get him up to three years in prison.