Bank CEO who discussed loans, Trump administration positions with Manafort is indicted

Federal prosecutors have unsealed criminal charges against Federal Savings Bank CEO Stephen Calk, accusing him of corruptly approving high-risk loans to U.S. President Donald Trump's former campaign chair, Paul Manafort, in exchange for trying to secure a top job in the Trump administration.

Lawyer says Stephen Calk 'has done nothing wrong,' plans to fight financial institution bribery charges

Stephen Calk leaves Federal court in New York Thursday. Calk is charged in New York with issuing loans to win a role in U.S. President Donald Trump's administration has pleaded not guilty. (Mary Altaffer/Associated Press)

A banker whom prosecutors say tried to buy himself a senior post in U.S. President Donald Trump's administration by making risky loans to former Trump campaign chairman Paul Manafort pleaded not guilty Thursday to a financial institution bribery charge as his lawyer said he's done nothing wrong.

Stephen M. Calk, 54, was released on $5 million US bail after making a brief appearance in Manhattan federal court.

Calk, who lives in Chicago where the Federal Savings Bank is headquartered, was told by Magistrate Judge Debra Freeman to have no contact with bank employees except for his brother until prosecutors next week submit a list of individuals with whom he cannot communicate. 

The small bank where Calk was CEO when he allegedly carried out the scheme said in a statement that Calk already had no involvement with the bank and is on a leave of absence.

In a statement, Calk attorney Jeremy Margolis said Calk will be exonerated on the "baseless isolated charge." He called the arrest a "travesty."

He said the bank his client founded and Calk were "victims of Mr. Manafort's ongoing fraud. Mr. Calk did not commit any offence with him."

Another defence lawyer, Daniel Stein, said outside court: "These loans were simply not a bribe for anything."

Federal prosecutors described the charge in a release, saying Calk abused his bank position by approving $16 million US in high-risk loans that were ultimately downgraded by the bank's primary regulator.

Paul Manafort, seen on April 4, 2018, was convicted later in the year of bank fraud and is now in a federal prison in Pennsylvania. (Andrew Harnik/Associated Press)

William Sweeney, FBI assistant director, said in a statement that Calk went to "great lengths to avoid banking violations."

"His attempt at petitioning for political favours was unsuccessful in more ways than one – he didn't get the job he wanted, and he compromised the one he had," said Sweeney.

Calk's brother, John Calk, is currently serving as Federal Savings Bank's CEO, according to the bank.

Calk provided Manafort with a ranked wish list of government jobs that he wanted, starting with treasury secretary and followed by other top jobs in the Treasury, Commerce and Defence Departments, prosecutors said. Federal Savings Bank is based in Chicago.

Manafort was one of the first people in Trump's inner circle to face charges brought by special counsel Robert Mueller as part of his now-completed investigation into Russian interference in the 2016 U.S. election and Trump campaign contacts with Moscow.

Manafort was convicted of bank and tax fraud in the Virginia trial, and pleaded guilty to other charges in Washington. He is now serving a 7½-year sentence in a federal prison in Pennsylvania.

Recommended by Manafort to Kushner

Evidence at the trial included a November 2016 email sent by Manafort to Jared Kushner, Trump's son-in-law and adviser, after Trump won the presidential election. In the email, Manafort recommended three candidates for administration posts, including Calk.

Kushner responded within minutes to Manafort's recommendations by email: "On it!"

The prospect of Calk facing charges emerged in a transcript of a bench discussion during the Manafort trial.

"Mr. Calk is a co-conspirator," Greg Andres, a prosecutor on Mueller's team, said during a discussion with the judge at the bench, according to a transcript of the discussion. "And he participated in a conspiracy to defraud the bank."

"There was an agreement between Mr. Manafort and Mr. Calk to have the loans approved," Andres said. "They were approved and, in turn, Mr. Manafort proposed Mr. Calk for certain positions within the administration."

Calk appeared on Fox News and Fox Business News several times in 2016, billed as an economic adviser to Trump.

He reportedly did secure an interview during the Trump administration transition for undersecretary of the army, but was not chosen.

The exchanges between Manafort and Calk caught the attention of House Democrats who sat on that body's financial services committee in April 2018.

"Although Mr. Calk ultimately was not given a position … reports that he was being considered for a high-level and highly sensitive national security position within the Trump administration as part of a quid pro quo with Mr. Manafort raise serious concerns that, completely apart from special counsel Robert Mueller's investigation, warrant scrutiny by our Committee," Democrats Stephen Lynch and Maxine Waters wrote at the time.

With files from CBC News


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