Bank sped up Manafort loan approval as CEO sought Trump cabinet job: witness

[August 11, 2018]  By Nathan Layne, Karen Freifeld and Amanda Becker

ALEXANDRIA, Virginia (Reuters) - The head of a small Chicago bank was directly involved in approving $16 million in loans to former Trump campaign chair Paul Manafort while seeking Manafort's help securing a post in the new administration, a witness testified on Friday in Manafort's fraud trial.

Dennis Raico, a former Federal Savings Bank executive testifying under immunity, said the bank's chief executive, Steve Calk, expressed interest in such posts as Treasury secretary or Housing and Urban Development secretary.

Calk took a "personal interest" in Manafort's loan applications and expedited them, Raico said. One loan was approved a day after a July 27, 2016, call in which Calk let it be known to Manafort he wanted a role in the administration.

"I knew Steve was interested politics," Raico said.

Manafort later asked the incoming administration to consider tapping Calk for secretary of the Army, according to testimony earlier in the week. Calk, a retired Army officer and helicopter pilot, did not get any post in the administration, although he was named to a Trump campaign advisory panel in August 2016.

A spokeswoman for Federal Savings did not respond to requests for comment. Calk declined to comment.

Raico was one of just three witnesses called to the stand on Friday as the trial resumed after an unexpected recess that lasted into the midafternoon. The delay derailed the prosecution's plans to wrap up its case by the end of the week.

Greg Andres, a prosecutor on U.S. Special Counsel Robert Mueller's team, said he would call James Brennan, a vice president at Federal Savings Bank who was also granted immunity, and two other witnesses on Monday before resting their case.

It was not clear if Manafort, who has pleaded not guilty to 18 felony counts of bank fraud, tax fraud and failing to disclose about 30 foreign bank accounts, will call any witnesses. So far Manafort's lawyers have focused their defense on attacking Rick Gates, Manafort's former right-hand man who cut a plea deal and is cooperating with Mueller's probe.

Raico testified that Gates had nothing to do with the two Federal Savings loans in question - a $9.5 million mortgage on Manafort's estate in the Hamptons and a $6.5 million loan on a brownstone in Brooklyn. Prosecutors say Manafort lied about his income and provided other false information to get the loans.

Raico said Calk asked him to call Manafort shortly after the Nov. 8, 2016, election, to see if he could be a candidate for the Treasury or HUD posts. Raico said the involvement of Calk in the Manafort loans was unusual and made him uncomfortable. He said had never seen loans approved so quickly at the bank.

On cross-examination, defense attorney Richard Westling sought to show that the loans to Manafort were justified. Westling pointed out that the Hamptons property had been appraised at $13 million, well above the $9.5 million borrowed, and that Federal's credit committee had approved the loans.

LEGENDS SUITE

Raico said that a letter from Gates indicating that he, not Manafort, would be paying for Yankees season tickets in 2016 lowered his debts, helping him qualify for the Federal loans.

Former Trump campaign manager Paul Manafort departs from U.S. District Court in Washington, U.S., February 28, 2018. REUTERS/Yuri Gripas/File Photo

In the letter Gates said he had borrowed Manafort's American Express card to pay for the tickets, which cost more than $200,000 a year. Gates testified this week the letter was false and a "favor" to Manafort to help him get the loans.

Irfan Kirimca, senior director of ticket operations at the Yankees, testified on Friday that Manafort had purchased four season tickets since at least 2010 and that Gates never had an account with the Yankees.

Kirimca said Manafort paid for the Legends Suite package, which includes food service and cushioned seats. Kirimca testified about one email exchange in which Manafort instructed a Yankees employee to send the tickets to his Trump Tower address.

Andres also on Friday briefly questioned Andrew Chojnowski, chief operating officer of home lending at Federal, asking him whether Manafort had signed various documents warning that he could be prosecuted for giving false information to the bank. Chojnowski read one disclaimer which noted that mortgage fraud was punishable by up to 30 years in prison.

Andres said he plans to call James Brennan, a Federal Savings executive who like Raico was granted immunity, on Monday. He then wants to recall Paula Liss, a special agent for the Treasury Department’s Financial Crimes Enforcement Network, who testified earlier this week. Manafort's lawyers have opposed Liss taking the stand again, a matter on which T.S. Ellis, the judge overseeing the case, has yet to rule.

Ellis said the recess on Friday could not be avoided as he had matters to attend to. Without further details, courtroom observers were left to speculate about the reason for the break and a long bench discussion with attorneys from both sides.

Ellis, who reminded jurors in the morning in unusual detail about the need to "keep an open mind" about the trial and not to talk to anyone about the case, gave them the same instructions before dismissing them for the weekend.

"Put it completely out of your mind until Monday. I certainly plan to do that," Ellis said.

(Reporting by Nathan Layne and Karen Freifeld in Alexandria, Virginia; Editing by Jonathan Oatis and Cynthia Osterman)

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