Prosecutors Charge Bank Ex-CEO With Soliciting White House Position in Exchange for $16 Million in Loans

May 23, 2019 Updated: May 23, 2019

Federal prosecutors in New York charged a former bank CEO on May 23 with soliciting a position in the White House in exchange for $16 million in loans to former Trump campaign chairman Paul Manafort.

The founder and former CEO of Federal Savings Bank of Chicago, Stephen Calk, issued millions in high-risk loans to Manafort and solicited a job in the incoming administration of President Donald Trump, prosecutors say.

“As alleged, Stephen Calk abused the power entrusted to him as the top official of a federally insured bank by approving millions of dollars in high-risk loans in an effort to secure a personal benefit, namely an appointment as Secretary of the Army or another similarly high-level position in the incoming presidential administration,” U.S. Attorney Audrey Strauss said in a statement.

“Calk’s alleged attempt to obtain such an appointment was unsuccessful, and the loans he approved were ultimately downgraded by the bank’s primary regulator.”

Starting in July 2016, Manafort sought millions in loans from Calk, who understood that Manafort needed that money in order to not terminate or avoid foreclosure proceedings on several of his properties.

Calk used his position at the top of the bank to help Manafort secure the loans and, in exchange, solicited Manafort’s help to obtain a senior post in the Trump administration. At one point, Calk sent Manafort a list of positions, ranked in order of preference, starting with secretary of the treasury, and followed by deputy secretary of the treasury, secretary of commerce, and secretary of defense, and 19 ambassadorships, starting with the United Kingdom, France, Germany, and Italy, according to the indictment (pdf).

Prosecutors say Calk’s scheme ultimately failed.

“He curried favor with an influential borrower, exploited his position as CEO of a bank and its holding company, and exercised control over the bank and the borrower’s loans, intentionally turning his back on the many red flags posted along the way,” FBI Assistant Director William F. Sweeney Jr. said in a statement.

“His attempt at petitioning for political favors was unsuccessful in more ways than one—he didn’t get the job he wanted, and he compromised the one he had.”

Manafort briefly served as the chairman of Trump’s 2016 presidential campaign. He resigned after a “black ledger” surfaced that contained damaging information on his dealings in Ukraine. According to the indictment, Manafort continued informally advising the campaign and the transition team after his resignation.

Calk served as one of several economic advisers to Trump during the 2016 election campaign. The indictment doesn’t allege any wrongdoing on behalf of Trump.

The charges against Calk are the latest in a series of cases spun off from the special counsel investigation led by Robert Mueller. The special counsel concluded there is not enough evidence to establish that Trump or anyone one his campaign colluded with Russia. Mueller didn’t charge the president with obstruction of justice.

Manafort was sentenced earlier this year to 7 1/2 years in prison in two cases brought by the special counsel. None of the charges relate to collusion or obstruction.

According to the indictment, Calk authorized an unprecedented maneuver to authorize the loans for Manafort. Since the loans exceeded the legal borrowing limit for a single client, Calk had the controlling company buy a percentage of the loans from the bank, prosecutors say. Calk also overlooked significant risk factors, including Manafort defaulting on prior loans.

In return for Calk’s help, Manafort had the banker appointed to an economic advisory committee affiliated with the campaign in the summer of 2016, shortly after the bank conditionally approved a $9.5 million loan for Manafort, according to the indictment.

After Trump won the election in November 2016, Manafort lobbied to have Calk appointed to a senior position. Manafort did so as a second set of loans worth $6 million was pending with Calk’s bank, the prosecutors allege. Manafort’s efforts landed Calk an interview at the transition team’s headquarters in New York. Calk didn’t get the job.

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