For more than a decade, the now-deceased president and CEO of a crooked Bridgeport bank coerced his loan officer to forge dozens of documents to hide a $140 million embezzlement scheme from federal regulators, who eventually closed the clout-heavy bank.
The loan officer, Cathy Torres, later pleaded guilty in the conspiracy, helping federal agents unravel the scheme at Washington Federal Bank for Savings. She testified against three close allies of bank president John F. Gembara, who looted the small financial institution that had been previously run by his father and grandfather.
Torres, 44, was facing a five-year prison sentence, but Chief U.S. District Judge Virginia Kendall followed a recommendation from federal prosecutors and gave her nine months home confinement — a lighter sentence that reflected her cooperation. Torres is the third bank employee to avoid prison after spending years helping to hide the scheme from regulators.
The three women, including former chief financial officer Rosallie Corvite and corporate secretary Jane Tran Iriondo, must help repay $27.8 million to the Federal Deposit Insurance Corporation, which spent $140 million to cover the bank’s losses. The FDIC has recovered about $50 million so far.
“It was an enormous bank collapse,” Kendall said. “You’re going to carry the seriousness of that with you forever… You will be paying that regularly and monthly. You risk ending up in jail if you don’t.”
Torres and her attorney, Marc Barnett, maintained that she followed Gembara’s orders to forge various bank records because she needed a paycheck and health insurance as a single mother raising a young daughter after her abusive husband died.
“I feel horrible,” Torres told Kendall. “I think about it every day. I really feel bad about what (bank customers) had to go through. I didn’t know everything that was going on.”
Gembara’s embezzlement scheme began as far back as 2006, and continued even after his former chief financial officer Barbara Glusak alerted the bank’s board of directors, including Gembara’s sister Janice Weston, along with then-U.S. Attorney Patrick Fitzgerald.
Federal regulators discovered the scheme during an audit in 2017, pushing the bank board to suspend Gembara on Nov. 28, 2017. Five days later, he was found dead with a rope around his neck inside the Park Ridge bedroom of Marek Matczuk, a contractor who owed the bank millions. The Cook County Medical Examiner concluded Gembara killed himself.
Twelve days after Gembara died, federal officials closed the bank’s main office at 2869 S. Archer and a branch office at 1410 W. Taylor St. in the Little Italy neighborhood.
Matczuk was among 16 people, including bank officials, employees and customers, who were indicted for looting the bank. Matczuk was convicted and died in prison last month.
Among the bank customers charged was then-Ald. Patrick Daley Thompson, who represented Bridgeport in the Chicago City Council. He is the grandson of the late Mayor Richard J. Daley and the nephew of former Mayor Richard M. Daley. Thompson was convicted of lying to federal regulators about the money he owed the bank and cheating on his federal income taxes by deducting interest payments he never made on the loans.
A few weeks before the bank failed, Thompson secured an $80,000 loan from Gembara to remodel the Daley family’s 11th Ward Regular Democratic Organization headquarters in Bridgeport.
Two more bank employees await sentencing — former vice president James R. Crotty who was fired for allegedly stealing the bank’s stamp money, and Gembara’s secretary Alicia Mandujano.
READ THE ORIGINAL SUN-TIMES INVESTIGATION
Read the first story in the Sun-Times investigation of the failed Bridgeport bank Washington Federal Bank for Savings, published March 4, 2018.