ALSO SEE: The Manafort scramble: Raising Millions for Himself
Even as He Ran Trump’s Campaign

Bank CEO Wanted Manafort to Secure Him a Cabinet Post in Trump's Administration, Witness Testifies

By Rachel Weiner, Matt Zapotosky, Lynh Bui and Devlin Barrett, The Washington Post

11 August 18

 

bank CEO who helped President 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 bank employee, Dennis Raico, was called as a witness after a confusing morning at Manafort’s trial in Alexandria, Va., during which U.S. District Court Judge T.S. Ellis III huddled privately with prosecutors and defense attorneys, delaying the start of testimony until midafternoon. A transcript of those discussions was sealed.

No reason was offered for the delay, but when Raico finally took the stand, he described how the CEO, Steve Calk, was willing to depart from bank policies to approve loans for a friendly and well-connected political operative.

Raico, a former vice president at Federal Savings Bank, testified with immunity from prosecution for any statements he made as a witness. Prosecutors say Manafort lied to that bank and others to secure millions of dollars in loans in 2016 when his political consulting business had run out of clients willing to pay for his services.

Manafort, 69, has been on trial for two weeks. He faces bank fraud and tax evasion charges. His trial is the first to grow from special counsel Robert S. Mueller III’s investigation into whether any of Trump’s associates conspired with Russia’s efforts to influence the 2016 presidential election.

Raico described how Manafort won approval for loans as part of a process that featured unusual involvement from Calk, the bank’s CEO and chairman. Calk was seeking a role in the Trump administration and sought to make that known to Manafort, Raico testified.

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 cash-out 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 takeout 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.

“I knew Steve was interested in politics,” he said. Calk, Raico said, wanted to meet the potential client in person.

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. During the dinner, Calk and Manafort also talked between themselves, Raico said.

In July 2016, Raico said he had a video conference with Manafort and Manafort’s son-in-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 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,” he told the court.

There was an outstanding credit card bill of more than $200,000 that Manafort said stemmed from having loaned the card to a friend — apparently his business partner Rick Gates — to purchase season tickets for the New York Yankees. A Yankees official would later testify it was Manafort who purchased the tickets, and that the team had no record of Gates having done so.

That wasn’t the only concern.

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.

A few days later, Manafort sent Raico a sheet titled “Terms of Loan,” which outlined the $9.5 million line of credit. Raico forwarded the terms to another bank executive with the message, “Take a deep breath.”

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.

The exchange was the latest instance in which the judge has expressed skepticism about evidence elicited by prosecutors.

Raico also testified that Manafort sent him a statement showing 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 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 the email between Raico and the bank’s president referenced a different loan — one with Manafort’s son-in-law that was not issued.

Raico said the $9.5 million loan issued to Manafort made him uncomfortable, and Calk’s involvement “was not the norm.”

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.”

Mueller’s team had hoped to finish their case Friday, but the delay made that impossible. The prosecutors had asked Ellis to instruct the jury to ignore a comment the judge made Thursday questioning the importance of testimony concerning a bank loan Manafort did not get. But the judge gave no such instruction to the panel Friday.