Chicago real estate developer Miroslaw Krejza was sentenced Tuesday to nearly seven years in federal prison for his role in a sweeping embezzlement scheme that toppled Washington Federal Bank for Savings, a Bridgeport institution with deep political ties.
Krejza, 67, was convicted of collecting more than $2.6 million in fraudulent loans over 12 years, contributing to the bank’s collapse in 2017, the Chicago Sun-Times reported. He could have faced up to 35 years for his crimes, though federal prosecutors asked for nine years.
Prosecutors said Krejza lived off the loans he secured from the bank between 2005 and 2017, supposedly to build homes on Chicago’s Northwest Side. While construction began on some properties, none were ever completed or sold, and Krejza was never required to repay the loans. Instead, prosecutors detailed how he financed vacations to tropical destinations and Europe, including extended stays in Poland.
At sentencing, Chief U.S. District Judge Virginia Kendall imposed an 80-month term, rejecting Krejza’s defense that the failed projects were due to the housing market crash and bank mismanagement. Kendall described the scheme as a personal “slush fund,” noting Krejza received an average of $120,000 a year in tax-free cash. “That is not something that can be minimized,” the judge said, adding there was strong evidence Krejza knew exactly what was happening.
Krejza, wearing a faded orange T-shirt and blue jeans, declined to speak in court before his sentence was handed down. His attorney, Michael Nash, had sought probation, arguing Krejza intended to repay the loans and did not live extravagantly.
The fall of Washington Federal Bank, originally established to serve Chicago’s Polish community, ensnared a host of prominent figures, including former 11th Ward Ald. Patrick Daley Thompson, grandson and nephew of two former Chicago mayors. He served time for lying to regulators and tax fraud.
Other figures include William Mahon, a longtime City Hall insider linked to the Daley political machine, who is serving an 18-month sentence for falsifying bank documents.
Meanwhile, the bank’s CEO, John F. Gembara, was found dead under suspicious circumstances just as regulators began uncovering the fraud. Though his death was ruled a suicide, questions about its circumstances persist.
Krejza’s co-defendant, Marek Matczuk, received a 13-year prison sentence last year for embezzling $6 million in the same scheme, while Chicago attorney Robert Kowalski received a staggering 25-year sentence for masterminding parts of the scheme.
As the criminal cases wrap up, the Washington Federal collapse remains one of the largest and most politically charged banking scandals in Chicago’s history — exposing how millions were looted by insiders while regulators and board members looked the other way. More than $82 million thought to be a part of the scheme remains unaccounted for.
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Jury convicts developers tied to Chicago’s Washington Federal Bank fallout