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For Manafort Lender Calk June 22 Trial US May Argue OCC Places Importance on Regulations

By Matthew Russell Lee, Exclusive Patreon
Honduras - The Source - The Root - etc

SDNY COURTHOUSE, June 21 – Steven M. Calk of FDIC-regulated Federal Savings Bank was presented and arraigned on May 23 in the U.S. District Court for the Southern District of New York for financial institution bribery for corruptly using his position with FSB to issue $16 million in high-risk loans to Paul Manafort in a bid to obtain a senior position with the Trump administration, namely Undersecretary of the Army.

  On April 23 SDNY Judge Lorna G. Schofield held an oral argument, by telephone with Calk himself on the line from Chicago. Inner City Press covered it, below.

On June 10, Judge Schofield held a final pre-trial conference, including on the "batting order" of witnesses, and Inner City Press live tweeted from it, on @SDNYLIVE here and below.

Now docketed on June 21, this: "ORDER as to Stephen M. Calk: ORDERED that as to Paulson, the Government may elicit testimony that the OCC places importance on the regulations such that Paulson expects that bankers would be aware of them or the importance that the OCC places on them. It is further ORDERED that the Court intends to adopt the parties' jointly proposed limiting instruction to be delivered to the jury before Paulson's testimony. Just prior to calling Paulson, the Government shall remind the Court to do so."

On June 18 - Juneteenth, observed, with the SDNY courthouse mostly closed - Calk's lawyers asked for a June 21 conference, and the US' order of witnesses. They say, of proposed summary witness testimony, that "the government has totally sandbagged the defense."

From June 10: Judge Schofield: I am admitting certain individual emails, redact the rest. Others can be used to refresh recollection, but only that... In terms of public news articles, the Government wants only 1005 and 1013, I have excluded them. They could be asked about

 AUSA Hagan Scotten: Calk's military service claim is relevant, he tried to do anything he could to increase his appeal to try to get the job. It takes more than one thing to be Secretary of the Army. Mr. Calk was trying to get in place my lying about his service

Judge Schofield: I'm going to reserve [decision] on many of these. Some are offered to show that Mr. Calk was contacting many people to try to get a position in the Trump Administration. I'll admit Defense Exhibits 229 to 234, plus 237, with a limiting instruction

Judge Schofield: Manafort said Calk would take the position. Calk's statement is not hearsay. And with that, we are concluded. Have a good weekend.

 We'll be covering the trial, and the run-up. Watch this site.

 On June 1 the parties filed a letter including Calk's opposition to the admission of contemporaneous journal notes by Dennis Raico, TFSB's New York based lender to Manafort.

Raico wrote, for example, "Manafort 2nd appraisal came in at $11 million" and "Steve [Calk]: Trump Executive Council Secretary of the Treasury Check w/ Paul [Manafort]."  The US cites FRE 801(d)(2)(D). Watch this site.

  In March there was a superseding indictment, adding Count 2, "Conspiracy to Commit Financial Institution Bribery," citing a January 10, 2017 interview for Under Secretary of the Army at the Presidential Transition Team's Manhattan offices." This comes after Randall Rigby's motion to quash was denied and, on March 5, the government's February 22 letter belatedly made public.

 Now on May 6, exhibit lists have been filed. The US Attorney's Office list includes email from Donald J. Trump to Calk, photo here, while Calk's list has his own email with Scaramucci. We'll have more on this.

On January 26 Judge Schofield held a conference and Inner City Press covered it. It resulted in this order, docketed on January 27: ORDER [121] It is hereby ORDERED that, Defendant's motion to preclude Ms. Aguirre's testimony is GRANTED. It is further ORDERED that, Defendants motions to preclude Mr. Belanger's, Mr. Paulson's and Mr McCuthcheon's testimony are DENIED. It is further ORDERED that, the parties shall meet and confer and by February 10, 2021, jointly provide appropriate limiting instructions as to Mr. Paulsons testimony and Mr. Belangers testimony, as well as limitations on such testimony as discussed at the conference. To the extent the parties are unable to agree, by February 10, 2021, the parties shall file a letter outlining the partiescompeting proposals, the points on which the parties have reached agreement and the points on which the parties have been unable to reach agreement. It is further ORDERED that, the Governments motion to preclude Dr. Carron's testimony is DENIED. It is further ORDERED that, the Governments remaining motions to preclude certain arguments and evidence are DENIED as moot, as Defendant has not indicated he intends to make such arguments or offer such evidence, unless related to the case. It is further ORDERED that, by February 10, 2021, Defendant shall file supplemental disclosures as toDr. Carron's testimony, including those regarding Dr. Carrons projections and calculations regarding profit and loss. It is further ORDERED that, a trial in this matter is scheduled for June 28, 2021, at 10:30 a.m."

 Now on March 2, the trial date has been moved up six days: "ORDER as to Stephen M. Calk: ORDERED that the trial is rescheduled to begin on June 22, 2021, at 10:30 a.m. The Courtroom assignment will be provided closer to the date of trial. It is further ORDERED that trial will not be held on June, 28, 2021. The trial otherwise will proceed Monday to Thursday of each week until completed unless otherwise ordered."

From January 7: Manafort's lender Calk is arguing again that a Chicago and not  @SDNYLIVE  trial would be more convenient, with OCC witnesses. Will OCC get more aggressive?

Calk's lawyer: "Mr. Calk is in Florida today, but would have no problem being in Chicago whenever necessary."  AUSA: We're not sure the witnesses could testify by video of the defense's objections....

 Judge Schofield has just denied the motion to transfer the trial to Chicago. Calk's lawyers said they oppose Zoom cross examination. Case to proceed in SDNY.

Jan 7 podcast here.

On January 8, lawyer Robert M. Andalman of Chicago filed a memo of law to quash or modify the subpoenas to four employees of The Federal Savings Bank: James Brennan ("overweight"), Thomas Horn ("obese"), Matthew MacDonald and Javier Ubarri.

  It notes that "Illinois asks citizens to quarantine for 14 days after returning from 'red zones' like New York." So, two way video testimony is proposed, citing SDNY Judge Loretta Preska in US v. Donzinger and, further back, US v. Gigante in the 2d Circuit in 1999.

Now on January 11, Judge Schofield has "ORDERED that by January 19, 2021, the Government shall file any opposition, and Defendant shall file a response. Each submission shall state whether the party consents to remote two-way video testimony of the Illinois Witnesses. It is further ORDERED that the parties and the Illinois Witnesses shall appear for oral argument on January 26, 2021."

Watch this site.

On November 13 Calk again asked to transfer his case to the Northern District of Illinois, saying that "critical Chicago-based witnesses" will not come to New York due to travel restrictions and COVID quarantine rules.

Calk's filing listed Office of the Comptroller of the Currency witnesses Catherine Aguirre and four unnamed in the Chicago area and one in Virginia. 

Now on November 27, the day after Thanksgiving, Calk's lawyers have made a filing stating that "the infection rate in Illinois is high but may be cresting; in New York it is lower but clearly rising." Watch this site.

  On September 4 a trial date was set, after review by the SDNY assignment committee made up of Judges J. Paul Oetken and P. Kevin Castel and White Plains-based District Judge Vincent L. Briccetti: "ORDER as to Stephen M. Calk. It is hereby ORDERED that the parties are advised that jury trials will resume, and the jury trial in this action shall commence on December 2, 2020."

 But on September 11, the US Attorney wrote to Judge Schofield to put on the record the Illinois has been added to New York's (and the SDNY's) 14 day quarantine list, and says it may significantly impact the feasibility of a December trial. On September 17 Judge Schofield held a proceeding on this, and Inner City Press live tweeted it, here and below.

 Now on October 16, a new trial date (February 16) and reminder that plea negotiations will not change that: "it is hereby ORDERED that the parties deadline to file a joint statement as provided in the Courts Individual Rule H.1, a joint proposed voir dire, joint proposed requests to charge and a joint proposed verdict sheet, in each case noting any disagreements between the parties, is extended to January 15, 2021. It is further ORDERED that the final pretrial conference scheduled for November 20, 2020, is ADJOURNED to February 5, 2021, at 11:00 a.m. in Courtroom 1106 of the Thurgood Marshall Courthouse, 40 Foley Square, New York, New York 1007. It is further ORDERED that the trial scheduled for December 2, 2020, is ADJOURNED to February 16, 2021, at 9:45 a.m. (not February 8 as discussed at the conference). The parties are rem[ind]ed that any discussions regarding the possible disposition of this matter will not stay this schedule. (Signed by Judge Lorna G. Schofield on 10/16/20)."

AUSA Zolkind: We made proposals to the defense to make a December trial feasible, but there is no agreement.

Defense: We don't agree to virtual witnesses. But it is not clear the quarantine won't continue. We don't want to give up the December slot.

Judge Schofield: The Illinois numbers seem to be trending down. So I would propose we keep the trial date and see how things develop. Maybe the quarantine won't be in place in December. What control date shall we have, as the drop dead date?

Defense: Mid-October.

AUSA Zolkind: We prefer early October. We think there will be logistical difficulties even if Illinois comes off the list. We have witnesses in other states like Florida and Indiana. It seems there will be no vaccine by December

Judge Schofield: I've done a video trial and it worked. But here, the defense would have to consent. We'll have to convene again and decide what we do. Let's re-convene Oct 15. I'll leave all dates in place. 

Watch this site.

 In August, the US Attorney's office acknowledged to Judge Schofield more discovery "oversights," even as they are grilled by Judge Alison Nathan in US v. Nejad (another banker) and by Judge Katherine Polk Failla in US v. Ahuja and Shor. On Calk they say: "Additional New Material from SCO’s Discovery Productions to Manafort The discovery of the 30,000 uncategorized Manafort-related files described above also led the Government to further review SCO’s discovery productions to Manafort to ensure that no additional materials had been inadvertently overlooked. The Government had previously understood, based on extensive communications with members of the SCO team and its own review of the SCO’s file storage system, that, with several immaterial exceptions, the SCO discovery productions to Manafort were drawn from the sources that the Government had independently searched, including the FBI’s files as described above. However, after further reviewing the SCO’s discovery transmittal letters and copies of certain of the SCO’s productions, the Government has realized that certain discovery that had been produced to Manafort was apparently not contained within the sources the Government had searched in this case... We currently expect to transmit these materials to the defense within the next week.8 The Government regrets that the materials described above were not identified and produced at a much earlier stage of this case and, as detailed herein, is taking extensive steps now to ensure that no additional documents from the Manafort Materials have been inadvertently overlooked." Another "the Government regrets." We'll have more on this.

Back on July 2: Assistant US Attorney Paul Monteleoni rattled off COVID bad news, to request trial later in 2021. He says Broadway is closed through 2020, indoor dining pushed back, possible outbreak in Rockland County.

AUSA Monteleoni floats the idea of a witness having to go into 2 week quarantine. Notes that incarcerated defendants will get first trials. US Attorney does not want December 2020.

Judge Schofield: This is complex. There are 26 active judges, and senior judges, many trials waiting. So, I think what I'll do at the moment is set a December trial date with the understanding that we all need to talk with each other. We'll take the earliest date. I'll set it for Tuesday, December 1. Take it with a grain of salt. I won't schedule a conference now. Let's move on to the motions that are at issue. The motions to compel...

AUSA: They've asked us for a document and we're working on it.

 Judge Schofield: Let's move on to the issue of sanctions.

Calk's lawyer: Government wrote to you in August, for six weeks to give documents from the Special Counsel's office. They took longer; we did not complain. But in March we learned of millions of more pages. We only got the documents in April - but the government learned about them in December. We felt this was unfair, given the government an unfair tactical advantage for trial.

 Calk's lawyer: "The government has put on its witness list Mr. Manafort, Gates and Kushner."

Judge Schofield: The defendant's motion for sanctions for US discovery violations is denied. Court's examine the culpability and prejudice to the defendant. Miranda, 2d Cir, 1975. Here, the government was untimely, the argument goes. But it was not intentional.

Inner City Press will stay on this.

  On June 16 Judge Schofield ruled, "WHEREAS the parties have fully briefed Defendant’s motion for an order compelling the government (i) to identify its anticipated trial exhibits, any Brady material and trial witnesses; and (ii) to certify to the Court that its discovery production is now complete, and for any other relief as the Court may deem just and proper. It is hereby ORDERED that the parties appear for oral argument on July 2, 2020 at 10:50 a.m. The parties are advised that the Court may issue an oral ruling following argument." Some pre Fourth of July fireworks. Watch this site.

 Calk's lawyer said the loan to Manafort was at 7.25%, a subprime rate.

 Judge Schofield asked the government, There were certain interviews done that never made their way into any corrective affidavit to get the search warrant.

The Assistant US Attorney replied, It's hard for me to check my handwritten notes which are in my office and I don't have access to...

   Judge Schofield continued, The warrant was signed on June 26 and was supposed to be executed on the 27th, but wasn't until the 28th?

AUSA: We at SDNY didn't get any detailed download of the interviews with the bank officials until days later.  One interview was in California; we were involved in coordinating Federal Saving Bank approaches. The plan was to extract Mr Calk's phone.

   Judge Schofield concluded, on this, Why don't you get me a sworn statement, in two weeks. I assume we are all in our homes.

   Calk's lawyer said, We want your Honor to look at the Grand Jury material, in camera. Because we understand that Mr Manafort told the Grand Jury he proposed Mr Calk for the job not because of the loan but on the merits. This is a very unusual case

   Judge Schofield concluded, I will reserve decision. I will issue a short order about what I'd like from the government. Is everyone available September 3rd for trial? Motions in limine July 27, voir dire on August 3; Final Pre Trial Confernce on August 27 - depending on your vacations, of course.

   AUSA Paul Monteleoni intoned, We do not plan vacations in August, we are not sure it will be safe to travel. But we're not sure about this time, given social distancing requirements.

  Judge Schofield: I'll be cognizant of that, safety. We're adjourned. Inner City Press will continue to cover this case.

  Back on Friday, November 8 Calk filed a motion to move the case to his hometown of Chicago, arguing in part that his "business" there will be disrupted if the case is not transferred. He says he "remains an owner of TFSB." But as Inner City Press noted on November 8, he ignores the New York connections of his Manafort loans.

 Now on February 12, Calk's motion to move the case has been denied: "OPINION AND ORDER as to Stephen M. Calk: As the location of the Defendant is the only factor that weighs in favor of transfer, and that factor is not dispositive, Platt, 376 U.S. at 24546; accord Parrilla, 2014 WL 1621487, at *14, Defendant's motion for transfer is DENIED.The Clerk of Court is respectfully directed to close the motion at Docket No. 33. (Signed by Judge Lorna G. Schofield on 2/12/2020)."  Inner City Press will continue to follow this case.

  An August 26 filing in the case says that the SDNY prosecutors have as discovering "produced in excess of 1.2 million pages to date, the majority of which were from files of this Office" - in New York.

 Perhaps in response the SDNY prosecutors will more directly link Calk's case to wider Trump inquiries? Inner City Press, which has followed this case and the weak regulation of for example of Comptroller of the Currency Joseph Otting, will continue on this case. Watch this site.

   In these documents, more details of rogue banker Calk's pursuit of the "SECARMY" job have become public. They put the loose regulation of FRB by U.S. Comptroller of the Currency Joe Otting - how did he get that job, by the way? - into focus.

  On Dec. 5, 2016 Calk e-mailed Manafort, “President Elect Trump will be in Michigan on Friday. Should we arrange a meeting while he is near by? Do you think we are making any progress re: SECARMY?”  Manafort shot back, “He is not doing meetings on the road on these types of matters. I will be calling you later today with updates.”

   A cynic made add, to what was found in Calk's iPhone, "Oh and give me another loan" (under Otting's wink and nod).

     Calk wrote to Jim, presumably Mattis, that "I believe that Steve Bannon will be speaking to you again about me today." Then two days after  a 10 January 2017 interview at Trump Tower Calk wrote to Mattis' assistant, "I know that Anthony Scaramucci and others will be reaching out on my behalf as well.”

  One can only imagine Calk's communications to his regulators at the OCC - literally, only imagine since the OCC under Otting now reflexively denied and hinders FOIA requests from Inner City Press.

  Back on May 23 SDNY Magistrate Judge Debra Freeman in the U.S. District Court for the Southern District of New York accepted the government's proposal of $5 million bond with no co-signer (although that is usually required for moral suasion) and travel allowed throughout the United States (though more defendants are usually confined to the Southern and Eastern District of NY and one other district). Money talks.

  Afterward in front of the SDNY courthouse Inner City Press asked Calk's lawyers Daniel Stein and Jeremy Margoles about Manafort saying he had misstated his financial situation to get the FSB loans. When did Calk know? They did not answer. Video here, Facebook video here.  Inner City Press' Alamy photos here.

  Now in May 28 letter to District Judge Lorna G. Schofield, the government has requested the motions directed of their indictment of Calk be filed by July 12. Judge Schofield granted it only in part, saying that by June 21 Calk "shall file a pre-motion letter with a briefing description of any motion(s) he intends to file."

As of the morning of June 25, there is nothing in the docket in the case before SDNY Judge Schofield (who, as Inner City Press has noted and is inquiring into, unilaterally seals such proceedings as criminal sentencings, here.)

  While the OCC has yet to sufficiently answer, and is trying to hinder Inner City Press' reporting, we will stay on this case.

  On May 23, still from the SDNY courthouse covering other cases including one involving the death penalty, Inner City Press reported finding no U.S. Home Mortgage Disclosure Act data for "Federal Savings Bank." But there's more.

The Federal Savings Bank's website, while providing a generic link to the FDIC, and a statement "Member FDIC," has no link for the U.S. Community Reinvestment Act. (Nor does it mention the indictment of Stephen Calk, simply listing his brother John Calk now as CEO and Vice Chairman. Who is the chairman?)

  It lists a loan production office on Avenue J in Brooklyn, and two deposit taking braches in Illinois. Did it see some exemption from the CRA and other consumer protection laws? From fair lending laws?

  Earlier on the morning of May 24 Inner City Press asked the FDIC, "Having covered yesterday's arraignment of the Chairman of The Federal Savings Bank in the SDNY courthouse, including the FDIC's involvement, I checked the bank's website and found "Member FDIC" but no mention of the Community Reinvestment Act."

  The FDIC's spokesperson David Barr, to his credit, responded quickly, writing to Inner City Press: "The Federal Savings Bank, Chicago, is regulated by the Office of the Comptroller of the Currency. They would be responsible for CRA and regulatory oversight. You should contact the OCC for more information."

  Stephen Calk was quoted, at least in 2012, opposing regulation...

The case is US v. Calk, 19-cr-366 (Schofield)


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