The head of a Chicago-based bank was charged in an indictment unsealed on Thursday with bribery and accused of approving $16 million in high-risk loans to President Donald Trump's former campaign chairman Paul Manafort in a scheme to land a top Trump administration post such as secretary of the U.S. Army.
"Stephen M. 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", Audrey Strauss, Deputy US Attorney for the Southern District of NY, said Thursday, "namely an appointment as Secretary of the Army or another similarly high-level position in the incoming presidential administration".
The indictment is the latest to target a Trump campaign associate and indicates that prosecutors are aggressively pursuing offshoots of Special Counsel Robert Mueller's probe into Russian interference in the 2016 election. Calk faces a maximum sentence of 30 years in prison if he is found guilty.
Calk, 54, pleaded not guilty during a brief appearance in Manhattan federal court after surrendering to authorities. He is also prohibited from contact outside the presence of his attorney with a list of witnesses that prosecutors are required to submit to the court within one week.
Calk could not immediately be reached for comment. Prosecutors have told a judge he provided evidence both to the special counsel's investigation and to matters being handled by other prosecutors.
A lawyer for a banker charged in NY with trying to issue loans to win a role in President Donald Trump's administration says his client has done nothing wrong. Federal prosecutors say Calk, who founded the bank and served as its CEO, used his clout to overrule underlings at the bank to push through the risky loans, which have resulted in losses.
"Calk believed that [Manafort] could use his influence with the Presidential Transition Team to assist Calk in obtaining a senior administration position", prosecutors said.
The indictment against Calk said he knew of "significant red flags" about Manafort's ability to repay the loans. The list included senior roles such as secretary of the treasury, secretary of defense and secretary of commerce. Prosecutors said Calk lied when questioned by regulators, saying he "never desired a position" in Trump's administration. "It means a lot to me", Manafort said in email to Calk. Calk served in the Army for 16 years, Margolis said. Calk charged in NY with issuing loans to win a role in President Donald Trump's administration has pleaded not guilty.
Manafort helped Calk to be formally interviewed for the position of Under Secretary of the Army in or about early January 2017 at the Presidential Transition Team's principal offices in NY. But he never got the job. Raico also said that Calk met with Manafort, the prospective borrower, without any other bank staff present. By August, Calk was named to a campaign economic advisory committee, "consistent" with Calk's "request" to "participate in the Presidential campaign", according to prosecutors.
The indictment is a reminder of the financial crush that was facing Manafort during the same months when he was working as Trump's campaign chairman, a job he won in part by arguing to Trump that he was independently wealthy and thus able to work free.
The transition official was not identified in the indictment, but emails produced as evidence in Manafort's fraud trial past year showed it was Trump's son-in-law Jared Kushner.
Manafort received a $9.5 million cash-out refinance from Calk's bank on November 2016 and an additional $6.5 million construction loan on a Manafort property in NY in January 2017.
Calk had also identified 19 potential ambassadorships, including plum assignments like Italy, France and the United Kingdom, which Calk thought was apt because he "grew up in London", according to documents revealed during Manafort's trial.