Indictment of Manafort’s banker reveals new details of loan scheme

Paul Manafort and Steve Calk
Indictment of Manaforts banker reveals new details of loan scheme

Chicago banker Stephen Calk made false statements to banking regulators last year about his interest in getting a job in the Trump administration, according to an indictment that was unsealed Thursday.

Calk, who at the time was CEO of the Federal Savings Bank, faces one count of financial institution bribery.

The charge, which carries a statutory maximum sentence of 30 years in prison, stems from Calk’s dealings with Paul Manafort, the former Trump campaign chair who was later convicted of bank and tax fraud. At Manafort’s trial last summer, prosecutors laid out evidence that Federal Savings approved $16 million in mortgage loans to Manafort because of Calk’s own political ambitions.

Paul Manafort, left, allegedly recommended banker Stephen Calk, right, for a job in the Trump administration shortly after applying for a $6.5 million loan from Calk’s bank.

While Manafort’s application for $6.5 million in loans was pending at Federal Savings, he allegedly recommended Calk for a potential job in the incoming Trump administration. Calk did not ultimately get any such job.

“His attempts 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,” FBI Assistant Director William F. Sweeney Jr. said in a press release Thursday.
The 26-page indictment contains new information about the alleged scheme and its aftermath.

In July 2018, shortly before Manafort went on trial, Calk met with two senior supervisors from the Office of the Comptroller of the Currency, which is the bank’s primary regulator, and falsely asserted that he never wanted to be hired for a position in the Trump administration, according to the complaint.

Potential administration jobs for Calk that were discussed included Treasury Secretary, Army Secretary and Secretary of Housing and Urban Development, according to testimony and evidence presented at Manafort’s trial.

Calk’s indictment does not name Manafort, but it states that an individual who matches his description contacted a representative of the presidential transition team’s executive committee on or around Dec. 15, 2016 and asked the official to arrange an interview of Calk for Secretary of the Army.

The unnamed transition official allegedly said that another candidate was likely to be nominated for the post, but agreed to arrange for Calk to be interviewed for Under Secretary of the Army. The indictment indicates that Manafort did not disclose to the transition official that he had a loan application pending at Calk’s bank.

After the $6.5 million loans closed, Calk interviewed for Under Secretary of the Army, according to the indictment. “The interview took place on or about January 10, 2017 and was conducted by three representatives of the Presidential Transition Team at the transition team’s Manhattan offices,” the indictment states.

Prosecutors also allege that Calk made false or misleading statements during a meeting with OCC examiners in 2017. Calk allegedly told the examiners that the bank had not been aware that a Brooklyn property that secured the $6.5 million in loans has been in foreclosure, when in fact he knew that the prior loans had been in default and accrued hundreds of thousands of dollars in penalties.

The indictment states that Calk authorized a maneuver that the $395 million-asset bank had never previously performed in order to issue the loans without violating the bank’s legal limit on loans to a single borrower.

The maneuver allegedly involved the bank’s holding company, National Bancorp Holdings, which Calk controlled, and which a portion of the loans from the bank.

Calk, 54, is scheduled to appear in federal court in Manhattan on Thursday afternoon. A bank spokesperson did not immediately respond to a request for comment.

On Thursday, Calk was no longer listed as CEO on Federal Savings’ website, and his name had been removed from a page listing the bank’s leaders. His brother John, who has served as the bank’s vice chairman, was listed as CEO.

An OCC spokesman declined to comment on the indictment, saying in an email that the agency will not comment on such matters pertaining to specific individuals.

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.

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