One of the board members of a failed Bridgeport bank that’s missing more than $80 million had a little-known role in the City Hall hiring scandal that sent Mayor Richard M. Daley’s patronage director to prison more than a decade ago, the Chicago Sun-Times has learned.
William M. Mahon — now a deputy commissioner of Chicago’s Department of Streets and Sanitation who also served as a board member of Washington Federal Bank for Savings until regulators shut it down — had been a City Hall personnel director, working alongside key figures in a federal investigation that brought down Daley’s patronage director Robert Sorich in 2006.
Mahon never faced criminal charges but testified as a witness at Sorich’s trial. Mahon’s role in the hiring operation then came under scrutiny by Noelle Brennan, an attorney appointed by a federal judge to ensure City Hall lived up to the Shakman Decree that bans hiring, firing and promoting lower-level city employees, such as truck drivers, based upon political considerations.
After Brennan released her report in 2013, Mahon was slapped with a 45-day suspension by Mayor Rahm Emanuel’s Streets and San commissioner, Charles L. Williams, one of the harshest punishments doled out to the remaining city officials involved in the scheme.
As part of Brennan’s recommendations, Mahon, 52, has also been banned from participating in any hiring or promotion decisions, duties he would normally be expected to perform in his job as a deputy commissioner at Streets and San, the agency that picks up garbage, kills rats and plows snow. Mahon’s annual salary tops $116,000, according to the city’s website.
Court records show Mahon was the personnel director for Streets and San’s traffic services bureau in 1997 and 1998, passing along the names of preferred job applicants to the interview panel during the height of the fraudulent hiring scheme detailed during Sorich’s trial.
“Mahon confirmed that the names were given to him so that he could rate them higher but testified that regardless of these pre-selections, ‘I’ve always kind of vetted the employee and rated them to the best of my ability of where I thought they were,’” according to the report Brennan submitted to Emanuel’s Law Department on April 19, 2013.
Federal investigators discovered the fraudulent hiring scheme in 2004 while investigating Daley’s Hired Truck Program that wasted more than $40 million a year hiring private dump trucks that did little or no work on city construction projects. The truck owners paid bribes to get in the program and then made campaign contributions to the mayor and other politicians.
Mahon’s troubles at Streets and San have resurfaced as federal bank regulators continue investigating the failure of the century-old bank founded by the grandfather of John Gembara, the Washington Federal president found hanged last December inside a customer’s Park Ridge home. The feds shut the bank down 12 days later because its assets were dwarfed by losses that have topped $82.6 million.
The FBI has also been examining the collapse of the bank, prompting Mahon and the other three surviving bank board members to hire criminal defense attorneys.
Mahon and his attorney couldn’t be reached for comment. It’s unclear how long Mahon served on the bank board or who appointed him since he had no known background in banking, spending most of his adult life working for City Hall under the Daley administration.
A Bridgeport resident, Mahon has long ties to the 11th Ward Regular Democratic Organization, which has been run by the Daley family since the 1950s. Mahon’s sister is married to a first cousin of former Ald. Patrick Huels, who was Daley’s City Council floor leader until he was forced to resign for taking a loan from trucking kingpin Michael Tadin. The Sun-Times incorrectly reported earlier this month that Mahon was Huels’ brother-in-law.
Meanwhile, the feds are liquidating the bank’s assets, selling 135 residential and commercial loans in October for about $15.7 million, records show. After the sale, the authorities are still holding 169 loans with unpaid balances totaling $108.2 million.
They won’t say whether the remaining unpaid loans include $27 million regulators are trying to collect from Robert M. Kowalski, an attorney and developer, or an $80,000 loan the 11th Ward Regular Democratic Organization got from the bank a couple months before it was shut down.
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