A federal judge has sentenced former bank CEO Stephen Calk to just over a year in prison, denying a request that he avoid incarceration in a bribery case involving former Trump campaign chairman Paul Manafort.
The judge, Lorna Schofield of the Southern District of New York, sentenced Calk on Monday to 366 days in prison and fined him $1.25 million. He will also be subject to two years of supervised release and be required to perform 800 hours of community service.
“Today’s sentence sends the message that those who corrupt federally regulated financial institutions will be held to account,” U.S. Attorney Damian Williams said in a press release.
A jury last year convicted Calk on bank bribery charges, which stemmed from some $16 million in loans that he approved to Manafort during and shortly after the 2016 presidential campaign. Calk is the former CEO of The Federal Savings Bank, a small lender based in Chicago.
Prosecutors
Prosecutors had asked the judge to sentence Calk to 51 to 63 months in prison. In a filing ahead of Calk’s sentencing hearing, they argued that there is “simply no substitute for prison time” to deter future offenders against similar actions.
“The bank bribery laws were intended to keep the national banking system free from this sort of corrupting influence,” they wrote. “To enforce those laws, this Court’s sentence cannot send the message that it is tolerable for a banker to trade federally insured financing for the prospect of power.”
Calk’s lawyers asked the court to spare him from prison time, saying he has led a “thoroughly decent and law-abiding life” that has included military service, countless examples of serving his community and helping veterans get loans.
The defense lawyers also contrasted Calk’s bribery case with the typical “case of a bank official taking a personal payment in return for ‘buddy’ loans.” They said that the loans were proper, that Manafort’s job reference had no monetary value and that Calk’s desire to join the Trump administration was motivated by his interest in helping the military.
Calk’s lawyers noted that as the bank’s majority owner, he “had the most to lose if the loans failed.” And they argued there is no risk of Calk reoffending, saying that his conduct was part of a “confluence of events that will never occur again” and calling Manafort a “skilled con artist who pleaded guilty to defrauding Mr. Calk’s bank.”
Calk “has been deeply humbled by the events of this case, which have left him a convicted felon who can never work in banking again,” his lawyers wrote. “There is nothing in Mr. Calk’s background, or in his conduct since the indictment, that raises any concern that he will ever again be in this position.”
Meanwhile, prosecutors wrote that Federal Savings “was only spared millions of dollars in losses” as a result of Trump’s pardon of Manafort, stating that the pardon prompted other federal prosecutors to drop earlier attempts to seize Manafort’s properties.
The prosecutors in Calk’s case also wrote that it is “hardly unprecedented” for the government to bring bribery charges when the bank does not experience a loss, saying that Federal Savings only avoided losses because Manafort’s pardon amounted to “a stroke of luck.”
Calk’s lawyers, however, said the loans were “extremely well collateralized” and that the government and Manafort’s lawyers had always agreed that the collateral would be used to repay the bank.
The Office of the Comptroller of the Currency
Calk’s brother, John Calk, is now chairman and CEO of the bank. He signed the Oct. 29 agreement with the OCC, which did not list any financial penalty for the bank.
In a statement at the time, John Calk said that Federal Savings has been "working closely with the Office of the Comptroller of the Currency to upgrade our policies and procedures" and that the "enhancements have and will make the bank even stronger."
