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Published on May 29, 2024
Former Washington Federal Bank Board Members Sentenced in Chicago for Role in Multi-Million Dollar Bank FraudSource: United States District Court Northern District of Illinois

Bank board bigwigs behind bars: A federal judge in Chicago has dished out prison sentences to two former board members of the defunct Washington Federal Bank for Savings for their hand in a scheme that fabricated bank records, aimed to bamboozle regulators. George F. Kozdemba, 74, and Janice M. Weston, 66, were handed down their jail time earlier this month for conspiring to mislead the Office of the Comptroller of the Currency (OCC), according to a release from the Justice Department.

Caught in the act by the OCC back in 2017, Washington Federal was shuttered after being declared insolvent with a whopping $66 million in nonperforming loans. Kozdemba and Weston, along with a third board member, William M. Mahon, who is serving an 18-month sentence, spun a web of lies through false entries to trick the OCC during its review of the bank's crumbling loan portfolio. In what reads like a classic case of corporate cover-up, the board members were sentenced by U.S. District Judge Virginia M. Kendall, the Justice Department reported.

Kozdemba, hailing from Fort Myers, Fla., was slapped with a year and a day behind bars plus a $25,000 fine, while Weston, of Orland Park, Ill., will spend three months in prison with a $20,000 monetary penalty. Their role in this financial farce involved falsifying records to give off the façade that Washington Federal was complying with banking regulations and internal policies.

The long arm of the law extends beyond these board members, as the bank's collapse spurred a wider probe leading to criminal charges against 16 individuals, including high-ranking employees and external accomplices—apparently all in on the heist, operating without necessary documentation, or at times, without any paper trail at all. Robert Kowalski, Miroslaw Krejza, Marek Matczuk await their sentences after a jury found them guilty on embezzlement and fraud charges, meanwhile, Jan R. Kowalski has already landed more than three years for her part in concealing over $357,000 from her brother's bankruptcy case, the Justice Department stated. Chicago attorney Patrick D. Thompson was previously sentenced to four months federal prison in 2022.

Champions of the case included a cohort of law enforcement agencies and oversight bodies, spearheaded by Acting U.S. Attorney Morris Pasqual, the case also saw significant input from the FDIC, HUD, IRS, the FBI, and other federal and city offices. Assistant U.S. Attorneys Michelle Petersen, Kristin Pinkston, and Jeffrey Snell, with Special Assistant U.S. Attorney Brian Netols, took the reins in the government's representation.