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Feds, bank battle over Manafort’s assets

By JOSH GERSTEIN 10/09/2019 06:34 AM EDT
https://www.politico.com/news/2019/10/09/feds-bank-battle-over-manaforts-assets-042176

The Justice Department and a Chicago bank are still fighting over former Trump campaign chairman Paul Manafort’s real estate and cash, more than a year after he pleaded guilty in the investigation headed by Special Counsel Robert Mueller.

Who wins the unfolding battle could have a significant impact for the ongoing political debate over the cost of Mueller’s probe and claims that it broke even financially.

In a court filing Tuesday, Justice Department attorneys and lawyers for The Federal Savings Bank said they’re at odds about how to proceed over the bank’s claim of ownership interests in three Manafort assets: his swanky Long Island estate valued at about $10 million, a Brooklyn, N.Y. brownstone worth about $4 million, and a $2.5 million bank account.

The bank’s lawyers say it was the victim of a massive fraud perpetrated by Manafort and they want U.S. District Judge Amy Berman Jackson to declare that the bank and its holding company are “innocent owners” of property the government is seeking to seize.

Government lawyers fighting the bank’s claims have been vague about their objection, but it appears to be that the bank was not quite as innocent as it claims. Federal prosecutors contend that the bank’s former CEO and founder, Stephen Calk, managed to get Manafort approved for about $16 million in loans despite numerous “red flags” related to his finances.

In May, a federal grand jury in New York City indicted Calk for scheming to use the loan approvals to win an economic advisory post on the Trump 2016 presidential campaign and to seek a job in the Trump administration. Calk even suggested himself for a Cabinet position. He was ultimately interviewed for Secretary of the Army, but did not get nominated.

Calk has pleaded not guilty to a felony charge of soliciting a bribe in exchange for aid from a federally regulated financial institution. His defense attorney has claimed that, like the bank, the executive was a victim of Manafort’s fraud.

“TFSB…submits that what the bank officers and owners knew at the time they provided the loans to the Defendant about Defendant’s criminal conduct is irrelevant,” Justice Department lawyers wrote, arguing that the bank’s position was “wholly inconsistent” with federal law.

Getting additional testimony about the bank’s knowledge “may be further complicated” by the pending criminal prosecution of Calk, the government said.

However, legal submission from the Mueller team in both Virginia and D.C. federal courts identified the bank as one of Manafort’s victims. The Virginia judge even ordered $15.3 million in restitution for the bank.

The bank’s attorneys told Jackson that the legal issue at stake “does not require discovery, or even a hearing.”

The bank’s lawyers also claim Mueller’s prosecutors never established that the assets in dispute were actually the product of the crimes Manafort admitted to, as opposed to properties simply offered up to facilitate his plea deal.

It’s unclear if Calk would benefit financially if the bank prevails in its legal quest to claim an interest in the Manafort properties. Calk owned about two-thirds of the bank at the time the loans went to Manafort.

If Jackson grants the bank’s request for first dibs on as much as $15.5 million in Manafort assets, that could dramatically affect public accountings of the overall cost of Mueller’s investigation.

Mueller’s investigation ran up about $32 million in direct and indirect costs before wrapping up in May, according to a report issued in August by the Justice Department. President Donald Trump has used a higher figure of about $40 million, which appears to have been based on budget estimates.

Some Mueller backers and various press accounts have countered that Mueller’s investigation was ultimately a wash or even a net plus for the federal treasury, once the money he took in was accounted for.

“The cost of your investigation to the taxpayers approaches zero,” House Judiciary Chairman Jerry Nadler (D-N.Y.) said to Mueller during a July hearing. Nadler credited the special counsel with pulling in up to $42 million in fines and forfeitures.
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https://www.politico.com/news/2019/10/09/feds-bank-battle-over-manaforts-assets-042176