Re: Lessons from one of the biggest bank frauds ever

Adam H. Kerman <ahk@chinet.com> wrote:

I really don't know if this story made national news. It was a major
local news story for years, mostly because the story would never end.

Washington Federal Bank for Savings, a thrift (savings and loan),
committed bank fraud requiring FDIC to cover $140 million in losses, an
amazing amount of money for a tiny institution.

Basically, the president of the bank authorized loans to friends that
were not expected to be repaid. His relatives were on the board of
directors, and employees were making outstanding loans as repaid.

One of the recipients of a "loan" was Patrick Daley Thompson. He's in
prison. He was an alderman and nephew of Mayor Richard M. Daley. Mayor
Daley was never stupid enough to take bribes.

In 2011, the CFO, not a relative of the bank president, while doing her
job, noticed that there was a significant balance on a loan owned by a
friend of the president that bank employees had marked "paid" in
documents presented to an auditor.

The CFO immediately notified two of the bank's five board members, one
of whom was the sister of the president. She ducked speaking to the CFO
that day and the following day. The CFO then quit on the following day.

The sister has been sentenced to several months.

Sister of crooked Bridgeport bank's CEO sentenced to 3 months in prison
for her role in bank's collapse
In handing down the sentence, U.S. District Judge Virginia Kendall told
Janice Weston, "It's very troubling. You have a few moments in time
where you knew it was illegal and you could have left."
By Tim Novak
Chicago Sun-Times
May 16, 2024, 6:19pm CDT
https://chicago.suntimes.com/the-watchdogs/2024/05/16/bridgeport-bank-failure-janice-weston-sentencing-washington-federal-bank-savings-embezzlement

. . .