July 12, 2019
By Dominic J Bartolone
Contributing Editor, Fraud Friday
Fraud Friday – FDIC Seeking 14.5M From Dead Bridgeport Banker’s Estate
Chicago bank president, John F. Gembara, was found dead on December 3, 2017 in the Park Ridge home of a customer who owed the bank $2.8 million. According to a spokesperson for the Cook County Medical Examiner’s office, Gembara hanged himself days before federal authorities moved in on the bank.
In the five years leading up to his death, authorities claim that Gembara began offering customers a series “loan advances” with little or no paperwork, no collateral, and no expectation that the loans would ever be repaid.
The loans totaled $14.5 million, including 189 advances. A total of $2.8 million was given to Marek Matczuk, the owner of the Chicago suburban home where Gembara was found dead.
Two weeks after Gembara was found dead, federal regulators discovered he had been involved in a fraud scheme and moved to shut down the 104-year-old Washington Federal Bank (“WaFed”) for “unsafe or unsound practices.”
The FDIC was appointed as WaFed’s receiver after the Office of Comptroller of the Currency shut down the bank on December 15.
According to the FDIC, “Gembara breached his fiduciary duties, failed to exercise that degree of care which prudent persons would exercise in the management of their own affairs, disregarded the Bank’s Real Estate Lending Policy and prudent lending standards, and ignored the foreseeable risk that his repeated disregard of applicable policies and standards would have harmful consequences for the Bank.”
After an investigation, the FDIC calculated that the bank’s losses exceeded $82 million. Federal authorities are still investigating how and why the fraudulent loans were approved and regulators are seeking to recover all of the money from Gembara’s estate.
However, authorities say some depositors will be left at a loss after the Bank’s collapse. The parent of Royal Savings Bank has agreed to acquire WaFed’s insured deposits from the FDIC, leaving about $11.6 million outstanding.