Federal prosecutors have indicted four more people — including one of Chicago’s top Streets and Sanitation officials — in the Washington Federal Bank for Savings alleged multiyear $31 million embezzling scheme.
Three of those charged in Tuesday’s 82-page indictment were former directors of the bank, and they were all accused of conspiring to obstruct regulators and falsify bank records. William Mahon, 55, of Chicago, was one of those directors, and has also served as the Streets and Sanitation Department’s quality control and accountability deputy commissioner.
Mahon also faces charges of willfully filing false income tax returns, the indictment said.
Mahon had a salary of $132,828 as the deputy commissioner, according to Chicago’s public data portal, which was last updated in July.
The other former directors charged were Janice Weston, 63, of Orland Park, and George Kozdemba, 71, of Fort Myers, Florida, according to the indictment.
A fourth person, real estate developer William Kowalski, 56, of Chicago, was charged with conspiracy to embezzle bank funds, the indictment said. Kowalski is the brother of Robert Kowalski, an attorney and former bank customer who was previously indicted on bankruptcy fraud charges as part of the scheme, according to federal authorities.
Washington Federal was shut down in December 2017 after banking regulators determined it was insolvent and had at least $66 million in bad loans. Four former Washington Federal employees, including the bank’s chief financial officer and treasurer, were indicted on embezzlement charges last year.
The former Washington Federal Bank for Savings at 2869 S. Archer Ave. in Chicago in December 2017, when it was shut down after regulators determined it was insolvent and had at least $66 million in bad loans. Royal Bank took over some Washington Federal locations. (Terrence Antonio James/Chicago Tribune)
The former CEO and president of Washington Federal, John Gembara, was found dead less than two weeks before the bank’s closure. His death was ruled a suicide. His grandfather launched the family-run bank in 1913.
This latest indictment now brings the total to 15 people who have been charged in the scheme.
Mahon isn’t the only city official that has been charged in the scheme.
In April, Chicago Ald. Patrick Daley Thompson of the 11th Ward, nephew of former Mayor Richard M. Daley, was also charged in a seven-count indictment with filing false tax returns and lying to Federal Deposit Insurance Corp. officials about $219,000 in loans and other payments he allegedly received in 2011 to 2014 from Washington Federal Bank for Savings. Thompson’s trial date is scheduled for Feb. 1.
In Tuesday’s indictment, others who were charged allegedly falsified bank records to support insider loans, including to Mahon. In 2011, two of those charged altered appraisals for two properties owned by Mahon, which served as collateral for two mortgages at Washington Federal, according to the indictment.
Mahon was also listed as one of those accused of making false records of Washington Federal to give to the Office of the Comptroller of the Currency in an attempt to appear as though the bank was following banking rules and internal policies, the indictment said. Mahon and others were also accused of making false entries into the bank’s records to block the comptroller’s examinations into the bank’s loan portfolios.
Mahon, who owned a multiunit building, was also accused of not depositing rental incomes from his tenants in his name; instead, he signed the checks over to Washington Federal as a payment on his outstanding loans, the indictment said.
Mahon was accused of falsifying his 1040 tax forms from 2013 to 2018, where every year he underreported the amount he received in rent payments and overreported his rental expenses, the indictment said.
City Hall did not respond to the Tribune’s request for comment about Mahon.
Tribune reporter Gregory Pratt contributed.
pfry@chicagotribune.com
Twitter @paigexfry
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