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Wednesday, August 11, 2010

Former First Security exec pleads guilty to fraud in Chicago

A former vice president at First Security Trust & Savings Bank — an Elmwood Park-based lender that's part of the Wirtz family conglomerate — pleaded guilty on Wednesday to one count of federal bank fraud. Jeffrey Gonsiewski, who was charged last month, admitted that he changed the terms of at least 100 loans for more than 50 customers to make it appear that their payments were current when in fact they were overdue. His "scheme to defraud" occurred from September 2004 through February 2009, the U.S. Department of Justice said.His actions caused the $220.6 million-asset bank to lose at least $5.5 million because the lender was unable to take timely action to collect on the delinquent loans and protect its assets.
Gonsiewski's lawyer declined to comment.First Security was founded in 1946. Its president is Rocky Wirtz, whose family also owns the Chicago Blackhawks and Wirtz Beverage Group. The family also has an interest in First National Bank of South Miami.First Security said it was "disappointed in the conduct" outlined in the case."We are pleased the matter has been brought to a conclusion and are grateful for the assistance we received from the authorities," said Earl Farkas, a Gozdecki Del Giudice Americus & Farkas LLP lawyer representing First Security.Gonsiewski, 56, of Wood Dale, faces a maximum 30 years in prison and a $1 million fine, but a written plea agreement includes a federal sentencing guideline of 51 to 78 months in prison. The court also must order mandatory restitution. Gonsiewski, who could not be reached for comment, is to be sentenced Dec. 3.First Security was well-capitalized as of March 31, but it lost $157,000 in the first quarter. Nearly 40 percent of its loans are seriously delinquent, up from nearly 20 percent in the same period a year ago.The number of Chicago-area banks with Texas ratios of at least 100 percent in the first quarter stood at 38.The Texas ratio tallies up a bank's severely past-due loans and foreclosed real estate and compares them with the bank's core capital, typically shareholders' equity, and money set aside for potential loan losses. When the result exceeds 100, the bank has serious troubles. As of the first quarter, First Security's Texas ratio was 111.

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