In crooked Bridgeport bank case, CEO's sister Janice Weston gets 3 months in prison
Janice Weston, former vice president of the board of Washington Federal Bank for Savings, is seen as she heads to court Aug. 2, 2023.
Ashlee Rezin/Sun-Times
A vice president of the crooked Bridgeport bank that collapsed under her brother’s yearslong embezzlement scheme will spend three months in federal prison for repeatedly altering records so regulators would not discover problems at the bank her family ran for three generations.
U.S. District Judge Virginia Kendall also imposed a $20,000 fine on Janice Weston, the only member of her family charged in the embezzlement scheme authorities say was engineered by her late brother, John Gembara, who was the bank’s president, CEO and chairman of the board until federal regulators uncovered the fraud in 2017.
They shut down Washington Federal Bank for Savings on Dec. 15, 2017 — days after Gembara was found dead in the bedroom of a customer who has since been convicted of embezzling millions as part of the scheme federal officials say lasted at least six years.
Weston, 66, of Orland Park, is among 16 people who have been charged in the bank failure, including six employees and five customers. Among the customers charged was then-Ald. Patrick Daley Thompson, a grandson of the late Mayor Richard J. Daley and nephew of former Mayor Richard M. Daley, who was found guilty of lying to regulators about his debts to the bank and cheating on his federal taxes.
There is no evidence Weston knew her brother was looting the family bank. But Weston directed employees, including her son, to backdate 33 documents so regulators wouldn’t know the bank had violated the federal Currency and Foreign Transactions Reporting Act by lending money without first checking whether the customers were on a list of people who are barred from being able to borrow from U.S. banks.
As the bank’s senior vice president and compliance officer, Weston helped foster a culture where her brother could direct employees to routinely alter loan documents for customers known as “friends of John” who got money they didn’t have to repay, prosecutors said.
The bank’s collapse cost the Federal Deposit Insurance Corp. about $140 million to cover the bank’s deposits. The FDIC has recovered about $50 million. Meanwhile, some customers lost hundreds of thousands of dollars because their deposits were greater than $250,000, the maximum amount insured by the FDIC.
“The regulators had a really important role in protecting those deposits ... and you affirmatively lied to them,” Kendall told Weston.
While acknowledging that Weston had been verbally and sometimes physically abused by her brother for many years, “yet you stay there in this abusive environment,” Kendall said. “It’s very troubling. You have a few moments in time where you knew it was illegal, and you could have left.”
One of those times came in May 2011 when Chief Financial Officer Barbara Glusak learned Gembara was giving bank auditors altered loan documents. Glusak alerted Weston and another board member, George Kozdemba, before abruptly resigning.
“That’s a huge wake-up call,” Kendall told Weston. “Why is she walking out the door and never coming back?”
Weston cried during the hearing, apologizing to her family and bank customers who lost money.
“I am truly sorry for my actions,” she said. “I made the decision to avoid provoking my brother’s anger. I knew that my brother John was obsessed with receiving perfect marks on the exams.
“My heart breaks every time I read that some of our customers lost their money. I hope they get all of their money back.”
One of those customers is a now-deceased trade association president whose daughter told the Chicago Sun-Times last fall that she was suspicious when her father put all of his money in the bank because it offered the highest CD rates.
“I remember saying to my dad, ‘Doesn’t that raise alarm bells that they are offering so much better rates?’" the daughter recalled. "He said, ‘Don’t worry, I know the president’s sister.'"
Weston started working at the bank when she was 15, , emptying waste baskets and eventually rising to vice president. When her father, Emil Gembara, decided to retire as president and CEO in 1997, he bypassed his only daughter and made his son, who was working as an auto mechanic, president and CEO of the bank.
“The decision to pass over your daughter to ... make your son who was an auto mechanic the president of the bank was a disastrous decision,” Weston’s attorney Patrick Blegen told the judge.
If Weston had succeeded her father, Blegen said, “None of this would have happened. None of these bank customers would have lost money.”
Blegen argued Weston shouldn’t go to prison because of various health issues, including leukemia. He pointed out that she didn’t profit from the scheme, and instead lost more than $500,000 she had invested in the bank’s employee stock option program.
Federal prosecutor Michelle Petersen argued Weston should get a prison term similar to two other bank board members, former City Hall official William Mahon, who is serving 18 months, and Kozdemba who was sentenced to a year and a day.
Weston “lied to make the bank look compliant,” Petersen said. “She wasn’t just any employee at the bank. She was the compliance officer. Her job was to make sure the bank was following its rules. She fostered a culture that it was OK to lie.”
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.
