Bank that lent Manafort millions makes claim on his pricey real estate
A small Chicago bank that lent more than $15 million to Paul Manafort, the former Trump campaign chair who awaits sentencing on a variety of federal charges, is asserting a claim on two multimillion-dollar properties that secure the delinquent loans and are subject to forfeit.
The Federal Savings Bank is essentially trying to persuade a federal judge to look beyond the conduct of its own CEO, who allegedly approved the loans to Manafort because he wanted a job in the Trump administration.
Last month, U.S. District Judge Amy Berman Jackson declared that Manafort-owned properties in Brooklyn and the Hamptons were forfeitable to the U.S. government. Also deemed forfeitable was all of the cash — apparently $2.5 million — that Manafort had deposited in an account at Federal Savings.
But in a court filing earlier this month, the bank called itself an innocent third party that has an interest in those forfeitable assets.
“When it extended the loans to Mr. Manafort, the bank had no knowledge and no reason to know that Mr. Manafort had acquired any of that collateral as a result of his having engaged in any criminal activity,” the bank’s president, Javier Ubarri, wrote in a declaration to the judge.
Federal Savings, a $387 million-asset bank that specializes in mortgage lending, has been under a spotlight because of its entanglement with Manafort, a key figure in Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 election.
The bank’s efforts to recover on the New York real estate loans may be complicated by evidence and testimony that was presented at Manafort’s trial in Alexandria, Va., over the summer.
Prosecutors charged Manafort with bank fraud in connection with the Federal Savings loans, alleging that he submitted false information to the bank. They did not charge the bank's CEO, Stephen Calk, with a crime, but they did seek to implicate him in the political operative’s wrongdoing.
“Mr. Calk is a co-conspirator, and he participated in a conspiracy to defraud the bank,” prosecutor Greg Andres told Judge Thomas Ellis during the trial.
One former Federal Savings Bank employee testified that Calk expedited approval of a $9.5 million loan to Manafort in November 2016. Eight days later, Manafort sent an email to a Trump transition official urging Calk to be considered for secretary of the Army.
Manafort was found guilty in August on eight counts related to bank and tax fraud. A mistrial was declared on 10 additional charges, including four counts that were connected to the Federal Savings Bank loans, after a lone juror voted not to convict on those charges.
In September, Manafort pleaded guilty to two additional charges and agreed to cooperate with prosecutors, heading off a second trial that was scheduled to begin in the District of Columbia. Then on Monday the special counsel’s office said that Manafort had breached his cooperation agreement by repeatedly lying to federal investigators.
The Brooklyn property is a 4,000-plus-square-foot brownstone in the Carroll Gardens neighborhood that last sold in 2013 for $2.995 million.
Though the property is not on the market, a description on Zillow describes marble mantles, a spa bathroom and a wood-paneled game room.
Federal Savings said in its court filing that it has disbursed more than $5.9 million under two promissory notes with Manafort and his wife that are secured by the Brooklyn property.
The bank said that the Manaforts owe more than $795,000 in interest and late fees, plus the full principal balance. Interest continues to accrue at a rate of $1,483.56 per day, according to Federal Savings.
The Hamptons estate reportedly includes a 5,500-plus-square-foot house, a putting green, a pool house and a waterfall pond.
The Federal Savings Bank said that it disbursed more than $9.4 million under a promissory note secured by the Hamptons property, and that all of that money is due, plus more than $1.1 million in interest and late fees. Interest continues to accrue at a rate of $1,905.86 per day, according to the bank.
Federal Savings stated in its court filing that the bank is a victim of Manafort’s fraud. The longtime GOP operative allegedly submitted doctored profit-and-loss statements to the bank.
The bank’s filing does not mention the fact that Calk is a co-owner of The Federal Savings Bank. He and his brother, John, engineered the purchase of Generations Bank, a $44 million-asset institution in Overland Park, Kan., in 2011, and quickly renamed it The Federal Savings Bank.
Jackson has ordered prosecutors to respond to the bank’s filing by Jan. 24.