A federal prosecutor told a judge on Friday that bank CEO Steve Calk participated — alongside former Trump campaign chair Paul Manafort — in a conspiracy to defraud his own small Chicago-based bank.
“Mr. Calk is a co-conspirator,” prosecutor Greg Andres said to the judge during Manafort’s trial on charges that include defrauding The Federal Savings Bank.
“Mr. Manafort was submitting both false documents and other material to the bank,” Andres added. “Mr. Calk approved those loans. And it’s the government’s theory that he did that because he was trying to obtain a position within the Trump administration.”
Prosecutors have previously argued that Calk’s bank approved $16 million in mortgage loans to Manafort because of Calk’s own political ambition. But the comments during Friday’s court proceedings were the government’s most forceful public statements to date about Calk’s role in the alleged fraud.
Andres made the remarks in the midst of an argument over whether the judge should allow a particular question to be put to a witness.
In an interview Saturday, former federal prosecutor Renato Mariotti cautioned against drawing the inference that Calk may be charged with a crime.
Mariotti said that in order to win the courtroom argument, Andres merely needed to convince the judge that it is more likely than not that Calk participated in a conspiracy, whereas a conviction in a criminal case would require that a jury find guilt beyond a reasonable doubt.
Under the rules of evidence, testimony that would otherwise be excluded as hearsay may be admitted at a trial if it relates to statements made by a co-conspirator.
“So it sounds really sinister that they’re saying the guy’s a co-conspirator,” Mariotti said, “but it’s really just a way of getting their evidence in for trial.”
Andres made his comments during a bench conference in the Alexandria, Va., courtroom of Judge Thomas Ellis. Lawyers for both sides huddled in front of the judge after Manafort’s lawyer objected to a question that the prosecutor put to the witness, a former employee of Federal Savings, where Calk is CEO.
The ensuing discussion took place out of earshot of both the jury and courtroom spectators, but it was made part of the public record of the trial. American Banker obtained a copy of the transcript.
During the bench conference, Andres said that one of the bank’s loans to Manafort did not go through the bank’s normal process because Calk was expediting it, notwithstanding certain red flags.
Andres also told the judge: “Mr. Calk has other criminal liability aside from this bank fraud.”
Calk and a spokeswoman for The Federal Savings Bank did not respond to requests for comment over the weekend.
The bank has previously said that it would not comment during Manafort’s trial. In a letter to members of Congress earlier this year, the compliance manager at The Federal Savings Bank portrayed the bank as a victim of Manafort’s fraudulent conduct. Calk has not testified at Manafort’s trial.
Evidence presented at the trial has shown that Trump’s onetime campaign chief talked with Calk in 2016 about a potential job in the incoming administration. Jobs that were allegedly mentioned
Richard Westling, a lawyer for Manafort, argued during the bench conference Friday that prosecutors have not shown that the discussions about a possible job in the Trump administration were connected to the mortgages the bank approved.
“I think what it shows is that there were communications between these two gentlemen about a possible position,” Westling said. “There’s been no evidence to suggest it influenced any decisions, and it seems to me there is no evidence to show Mr. Calk was intending to defraud his own bank.”
The judge expressed skepticism about the government’s argument that Calk, who is a co-owner of Federal Savings Bank, should be considered a co-conspirator to defraud his own bank.
“I’m still not sure that I see evidence by a preponderance that there was a conspiracy,” the judge told Andres. “The trouble I’m having is that one of the conspirators is an owner of the bank that you contend was defrauded.”
After a long discussion, Ellis said that he would allow Andres to ask the question that triggered the back-and-forth over Calk’s role, suggesting that he was not rejecting the government’s argument out of hand.
But the judge also said that he would allow Manafort’s lawyers to submit a written brief arguing that the question should not be allowed, and that if he found their arguments persuasive, he would strike the witness’ response from the record.
Andres responded that he would move on to another question.
The discussion before the judge interrupted the prosecution’s questioning of Dennis Raico, a former senior vice president at Federal Savings, who was testifying under an agreement that granted him immunity in connection with any comments he made from the witness stand.
Raico testified that around April 2016, he got a referral to Manafort, through a mortgage broker, from an employee of Bank of Internet. Raico said that he subsequently contacted Calk about his new potential client, and that Calk wanted to meet Manafort.
In May 2016, a dinner meeting attended by Manafort and Federal Savings employees was held at the Capital Grille in lower Manhattan, according to Raico. He said that Calk and Manafort spoke one-on-one for a fair amount of time.
“I know that politics came to the surface,” Raico said.
That dinner was one of multiple meetings between Calk and Manafort, according to Raico.
On Aug. 3, 2016, Manafort sent an email to Raico asking for a copy of Calk’s resume. Two days later, Calk was named to the Trump campaign’s 13-member economic advisory team.
On Nov. 16, 2016, the first of the bank’s two loans to Manafort — a $9.5 million cash-out refinancing that was secured by properties in New York and Virginia — closed.
Eight days later, Manafort sent an email to a Trump transition official that stated: “We need to discuss Steve Calk for Sec of Army. I hear the list is being considered this weekend.”
The Federal Savings Bank’s second loan to Manafort — a $6.5 million construction loan secured by a separate property in Brooklyn — closed on Jan. 4, 2017.
Prosecutors have portrayed Manafort, who agreed to work for the Trump campaign for free after lucrative gigs in Ukraine dried up, as desperate for cash in 2016. They allege that he presented falsified documents in an effort to get approved for loans.
In an Oct. 7, 2016, email to Calk, Manafort stated that he had mistakenly told the bank CEO during a lunch meeting that a property he owned in the Hamptons had a $2.5 million first mortgage. “I must have had a blackout,” Manafort wrote. “I meant to say a $3.5m first.”
Raico said during his testimony Friday that during the loan underwriting process, discrepancies arose regarding Manafort’s income.
“A plus B didn’t equal C all the time,” Raico testified.
During cross-examination, Raico acknowledged that the bank’s loans to Manafort were sufficiently collateralized. He also testified that the loans were unanimously approved by Federal Savings Bank’s credit committee, which included Calk and four other members, two of whom had a vote.
A member of Federal Savings’ credit committee, James Brennan, is expected to testify Monday before prosecutors rest their case against Manafort.
