Bank CEO Stephen M. Calk sentenced to one year and one day for corruptly soliciting a post in the presidential administration in exchange for approving $16 million in loans | USAO-SDNY
Damian Williams, the United States Attorney for the Southern District of New York, today announced that STEPHEN M. CALK has been sentenced to one year and one day in prison for corruptly using his position as director of federally insured bank to issue millions of dollars in high-risk loans to Paul Manafort in exchange for personal benefits: CALK’s placement in Donald J. Trump’s 2016 presidential campaign and Manafort’s assistance to try to get a leadership position in the incoming presidential administration. On July 13, 2021, CALK was found guilty of bribery at a financial institution and conspiracy to commit bribery at a financial institution following a three-week trial before U.S. District Judge Lorna G. Schofield , who also handed down today’s sentence.
US attorney Damian Williams said: ‘Stephen Calk abused his position as CEO of a federally insured bank to try to buy himself prestige and power by trading millions of dollars in high-risk loans against influence with a presidential campaign and consideration for positions at the highest levels of the Ministry of Defense. Today’s sentence sends the message that those who bribe federally regulated financial institutions will be held accountable.
As stated in the indictment, documents previously filed in the case and evidence presented at trial:
CALK, the Federal Savings Bank and Paul Manafort
STEPHEN M. CALK was President and Chief Executive Officer of Federal Savings Bank, a federal savings association headquartered in Chicago, Illinois, with an office in New York, New York. The Bank was wholly owned by National Bancorp Holdings, a Chicago-based bank holding company, and CALK was the chairman and CEO and owner of approximately 67% of the holding company.
Paul Manafort was a lobbyist and political consultant. From or around March 2016, Manafort held a leadership position in Donald J. Trump’s 2016 presidential election, and from June 2016 to August 2016 he served as Presidential Campaign Chairman. After Manafort’s official role in the presidential campaign concluded in or around August 2016, Manafort continued to be involved informally in the campaign. Beginning in or around November 2016, when Donald J. Trump was elected President of the United States, Manafort provided informal input to the Presidential Transition Team.
The corrupt scheme
Between July 2016 or around January 2017, CALK engaged in a corrupt scheme to exploit his position as head of the Bank and the holding company in order to secure a valuable personal benefit, namely the assistance of Manafort to obtain for CALK a management post in the presidential administration. During this period, Manafort requested millions of dollars in loans from the Bank. CALK understood that Manafort urgently needed these loans in order to end or avoid foreclosure proceedings on several properties owned by Manafort and Manafort’s family. Additionally, CALK believed that Manafort could use his influence with the presidential transition team to help CALK secure a senior executive position.
CALK therefore sought to leverage its control over the Bank and the loans sought by Manafort to its own personal advantage. Specifically, CALK offered and caused the Bank and the holding company to provide $16 million in loans to Manafort in exchange for Manafort’s request for assistance in obtaining a high-level position in the presidential administration. For example, and while Manafort’s loans were pending approval, CALK provided Manafort with a ranked list of government positions he wanted, which started with Secretary of the Treasury, and was followed by Deputy Treasury Secretary, Commerce Secretary and Defense Secretary, as well as 19 similarly ranked ambassadors starting with the UK, France, Germany and Italy.
In approving these loans to Manafort, CALK was aware of important red flags regarding Manafort’s ability to repay the loans, such as its history of defaulting on previous loans. Additionally, given the size of the loans, Manafort’s debt has become the Bank’s largest lending relationship. In order to allow the Bank to issue these loans without violating the Bank’s legal limit on single borrower loans, CALK authorized a maneuver never before performed by the Bank, in which the holding company – which CALK also controlled – acquired part of the Bank’s loans.
During the same period, Manafort provided CALK with valuable personal benefits. First of all, in or around summer 2016, during the presidential campaign – and just days after CALK and the rest of the Bank’s credit committee conditionally approved a proposed $9.5 million loan to Manafort – Manafort named CALK to a prestigious campaign-affiliated economic advisory board. And second, around the end of November and the beginning of December 2016 – after the election of Donald J. Trump as President, after the granting of the Bank’s first loan to Manafort, and while a second round of loans worth of $6.5 million sought by Manafort was pending approval by the Bank – Manafort used his influence with the presidential transition team to help Calk, recommending CALK for an administration position. Through Manafort’s efforts, CALK was officially interviewed for the post of Under Secretary of the Army on January 10, 2017 at the Presidential Transition Team’s main offices in New York, New York. CALK was ultimately not hired.
To conceal the illegal nature of his scheme, CALK made false and misleading statements to the Office of the Comptroller of the Currency regarding the loans to Manafort. For example, CALK falsely told OCC regulators that it was unaware that the Manafort properties had been seized before the loans were issued. CALK also said he never wanted a position in the presidential administration.
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In addition to the prison sentence, CALK, 56, was sentenced to two years of probation and 800 hours of community service. CALK was also fined $1 million for Count 1 and fined $250,000 for Count 2.
Mr. Williams commended the outstanding investigative work of the Federal Bureau of Investigation and the Office of Inspector General of the Federal Deposit Insurance Corporation.
This case is being handled by the Bureau’s Public Corruption Unit. Assistant U.S. Attorneys Paul M. Monteleoni, Hagan Scotten, Benet Kearney and Alexandra N. Rothman are charged with the prosecution.