US finds closed Chicago bank involved in massive fraud

CHICAGO (AP) — A Chicago bank that federal regulators shut down last year had been involved in an $82.6 million fraud scheme.

An audit by the U.S. Treasury Department’s inspector general found officials at Washington Federal Bank for Savings issued residential and commercials loans that have never been repaid.

The Chicago Sun-Times reports the audit lays some of the blame for the bank’s fraudulent activities on federal regulators. The audit reports regulators treated Washington Federal “as a ‘training’ or ‘practice’ bank” for rookie examiners.

Bank president John F. Gembara was found dead Dec. 3 in the Park Ridge home of a bank customer who owed the bank about $1.8 million. Gembara was sitting in a chair with a rope around his neck. His death was ruled a suicide by the Cook County medical examiner’s office.

The bank’s failure is under investigation by the FBI and by the Federal Deposit Insurance Corp., which is trying to collect the unpaid loans.

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Associated Press

Associated Press

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