Manafort loans got special care, bank exec says

Left him uneasy, he testifies

ALEXANDRIA, Va. — A bank CEO who helped President Donald Trump’s former campaign chairman Paul Manafort obtain $16 million in loans hoped for a Cabinet-level position in the administration, a bank employee testified in federal court Friday.

The testimony in Manafort’s financial fraud trial came after proceedings were halted for hours by mysterious backstage discussions between the judge and attorneys for both sides. Prosecutors now say they will wrap up their case against Manafort on Monday. Defense lawyers have not said whether they expect to call any witnesses after that.

It was a strange hiccup in nine days of proceedings that have been sometimes dramatic and featured tense exchanges between prosecutors and admittedly impatient U.S. District Judge T.S. Ellis III as he has pushed the government to speed up its case.

Ellis recessed the trial without explanation after huddling with his bailiff and attorneys from special counsel Robert Mueller’s office and Manafort’s lawyers for more than 20 minutes.

At one point, Ellis left the courtroom and headed

toward the jury room. After bringing court back into session, he reminded jurors several times that they weren’t to discuss the tax evasion and bank fraud case at all. That included telling them to not even comment on the attire of any witnesses.

The exchange came during a day in which jurors heard detailed testimony about Manafort’s bank loans and about his New York Yankees luxury season ticket purchases — paid for from an offshore account that prosecutors say he concealed from the Internal Revenue Service.

Dennis Raico, an executive at Chicago-based Federal Saving Bank who testified under an immunity agreement, detailed for jurors how he grew uncomfortable by the actions of bank chairman Stephen Calk in the handling of Manafort’s loans. Prosecutors have said that despite red flags, Calk pushed through the loans for Manafort because he wanted a job in the Trump administration.

Calk did not immediately respond to messages seeking comment.

Manafort received two loans from Federal Savings Bank totaling $16 million. One of them, a $9.5 million cashout refinance loan on a property in Southampton, N.Y., closed Nov. 16, 2016, shortly after the presidential election. The other, a $6.5 million construction take-out loan, closed on Jan. 4, 2017, weeks before Trump’s inauguration, Raico testified.

Raico testified that Manafort reached out to the bank around April 2016, inquiring about a loan for a project he was working on with his son-in-law. Raico said he contacted Calk about Manafort’s interest after learning that he worked in politics.

Raico said that he, Calk, Manafort and others dined together in New York in May 2016, where they discussed politics, loans and other subjects. At the time, Manafort was working on the Trump campaign.

In July 2016, Raico said he had a videoconference with Manafort and Manafort’s sonin-law to discuss properties they wanted to finance. The next day, high-level bank officials approved a loan for the two men — a quicker turnaround than Raico had ever seen before, he told the court.

Calk was directly involved in the negotiations, something Raico also had never seen before, he testified. Raico said he sometimes passed messages between Calk and Manafort, which made him uncomfortable.

On Nov. 11, 2016, for example, Raico said Calk called him to say he would “possibly be up for some role in the Trump administration,”

and asked Raico if he could inquire about that. The possible roles, Raico said, were treasury secretary, or as the head of Housing and Urban Development. Both are Cabinet-level posts.

Emails show that a few months earlier, Manafort requested Calk’s resume after Calk apparently asked if he could serve in the administration. Calk was named to a panel of Trump’s economic advisers during the campaign, and other evidence introduced in court shows Manafort sought to get Calk’s name on a list of candidates for Army secretary.

Raico told the court he did not tell Manafort about the positions Calk wanted.

“It made me very uncomfortable,” he testified. Raico also told the court that sometime during the loan process, he learned that Calk and Manafort had lunch together. After the lunch, Raico said he received an email from Calk, outlining terms for one of Manafort’s loan requests.

But there were problems with the information Manafort was providing to get the loans, Raico testified.

“A plus B didn’t equal C all the time,” Raico said of the discrepancies.

In previous testimony, witnesses have described other problems with documents Manafort submitted in attempts to obtain loans. And on Friday, prosecutors zeroed in on a letter he submitted to explain a $300,000 balance on his American Express card.

Manafort had provided the bank with a letter saying he lent the card to his longtime deputy, Rick Gates, so Gates could buy about $300,000 in season tickets. But Irfan Kirimca, a senior director of ticket operations for the New York Yankees, told jurors that the baseball team had no record of Gates’ ever making such a purchase.

Kirimca also testified that Manafort paid for luxury season tickets to the Yankees using an offshore bank account in the name of Global Highways Limited, one of the offshore shell companies prosecutors say Manafort failed to report on his tax returns.

As they neared closing on the $9.5 million loan, Manafort emailed to say he owed $3.5 million on his home in the Hamptons, when he had previously said it was $2.5 million. The bank had just learned that information on its own.

“I must have had a blackout,” Manafort said in explaining the discrepancy.

Just before the loan was to close, Raico said he was told Manafort had decided he wanted to renegotiate its terms. Instead of a construction loan for a project in California using the Bridgehampton home as collateral, he wanted a cash-out refinance loan on the Hamptons house.

Raico testified he “hadn’t seen a loan restructured at the closing table before, and I hadn’t seen Steve Calk approve restructuring of a loan.”

Ellis asked Raico whether there was anything wrong with Manafort dictating the loan’s terms.

“No,” Raico said, but it was not consistent with bank policy.

Raico also testified that Manafort sent him a statement showing that his profit for 2016 exceeded $3 million — a claim other witnesses have testified was false.

Raico said he was told by bank president Javier Ubarri that they should not pursue a loan agreement with Manafort and his son-in-law. He was instructed to tell Manafort the bank valued his relationship with Calk “immensely” but that the loan was too risky, Raico told the court.

But Raico testified that he soon got a call from Calk, saying they were moving forward with a loan to Manafort, which closed on Manafort’s terms on Nov. 16, 2016.

One of Manafort’s lawyers, Richard Westling, sought to shift the jury’s focus toward the collateral Manafort posted for the loans, which, Raico testified, was sufficient.

Under questioning from Westling, Raico also acknowledged that the email between Raico and the bank’s president referred to a different loan — one with Manafort’s son-inlaw that was not issued.

When the prosecutor and the judge pressed Raico on whether he believed Calk was “seeking something” from Manafort, Raico ultimately hedged, saying he could point to “nothing concrete.”

Friday’s proceedings also featured a lighthearted moment between Ellis and prosecutor Greg Andres, who have tangled during the trial.

While questioning a witness, Andres noted that he had forgotten to admit a document into evidence when he should have, prompting Ellis to retort, “Confession is good for the soul.”

Andres responded, “I think my soul is in pretty good shape after this process,” prompting laughter in the gallery.

Manafort’s trial is the first to emerge from Mueller’s investigation into Russian meddling in the presidential election, but neither Manafort nor Gates has been charged in connection with their Trump campaign work.

The prosecution has called more than 20 witnesses, including Gates, and introduced a trove of documentary evidence as they’ve sought to prove that Manafort defrauded banks and concealed millions of dollars in offshore bank accounts from the IRS.