In July, after a three-week trial, a federal jury in Manhattan took just hours to convict Calk on two counts of corruption.
As Calk faces conviction in February, his lawyers seek to downplay the impact of his crimes. As part of this submission, they filed A declaration a bank official predicting that when the foreclosure is over, the financial institution will have recovered a tidy sum above its costs.
“TFSB will likely recover at least about $ 3,611,000 on top of the total principal amount of the Manafort loans,” wrote the bank’s chief operating officer Dan Semenak.
The bank has already recouped $ 9.3 million from the sale of the 10-bedroom, six-bathroom Bridgehampton estate in Manafort, whose carefully maintained trellises, moat and waterfall became symbols of excess in the trial of Manafort in 2018 in Alexandria, Virginia. The bank also raised $ 2.3 million on Manafort’s Waterfront Condo in that same town and $ 3.1 million in cash which was confiscated when it ceased. to repay his loan following his arrest in 2017 and a court-ordered asset freeze.
A third property – the Manafort brownstone in Brooklyn’s Carroll Gardens neighborhood – is still under “agreed foreclosure,” Semenak said. An appraisal and brokerage appraisal of this building projects a sale of nearly $ 5 million, which should mean the bank will have around $ 19 million in collateral to repay the loans. (Manafort never drew about $ 600,000 from the approved loans.)
The bank’s remarkable setback, which wiped the loans off its balance sheet entirely after Manafort’s arrest in 2017, was sparked by a number of factors, including the boom in house prices linked to the pandemic and the forgiveness of Manafort by Trump just before Christmas last year.
The Justice Department had attempted to seize the Bridgehampton and Brooklyn properties in what Mueller prosecutors described as a tight deal to have Manafort relinquish his real estate interests in favor of the government as proceeds of l tax evasion and the secret influence of Manafort. -the offenses of hawking. The bank and its holding company attempted to claim the properties in court, but prosecutors claimed Calk knew enough about the Manafort fraud that the bank should not recover the assets.
That legal battle ended abruptly in February, when the Justice Department concluded that Trump’s pardon had wiped out the government’s interest in those properties the federal government had yet to dispose of.
It’s unclear who will reap the $ 3.6 million windfall the bank says it expects from Manafort loans. In most foreclosures, the excess after a sale would be returned to the borrower.
“The borrower can get out of a foreclosure sale by receiving a check,” said Dale Whitman, real estate finance expert and professor of law emeritus at the University of Missouri. “It doesn’t happen very often, but it can happen.
However, a source close to Manafort told POLITICO on Tuesday that he did not expect to see any of the funds. The source said the expected surplus of $ 3.6 million underlines that the loans were not senior deals and included many guarantees for the bank.
It is possible that Manafort decided to sell his interest in the properties in exchange for the bank’s acceptance not to try to recover more of his personal funds, Whitman said. In this case, the bank would keep the profits it would realize following the final foreclosure. Manafort’s lawyers did not answer questions about making such a deal.
The Federal Savings Bank loans led to four of the 18 felony counts Manafort faced during his trial in Alexandria in 2018. While Manafort was convicted of two counts of fraud banking related to other loans, the jury was divided 11-1 over the four bank frauds and Manafort was charged with conspiracy to bank fraud in connection with the FSB loans. A judge later declared the trial quashed on these counts.
After reaching a plea deal with Mueller’s office, Manafort was sentenced to a total of around seven and a half years on various charges. Counting the time in pre-trial detention, he served nearly two years of his sentence before being returned to house arrest in May 2020 as federal prison authorities sought to downsize due to the coronavirus pandemic.
Just before Christmas last year, President Donald Trump pardoned Manafort of all the charges he had been convicted of, although some questions were raised as to whether the move succeeded in legally absolving Manafort of all the charges he was initially faced with.
For now, Calk, 57, is the one in most serious legal danger. He faces a maximum sentence of 35 years on charges he has been convicted of, although defendants without a criminal record often face sentences well below the maximum.
According to probation officials, non-binding federal sentencing guidelines call for Calk to be sentenced to around five to six and a half years in prison. However, this calculation is driven almost entirely by the amount of money the judge considers related to his crimes. Probation officials have asked Calk to be given a “significant deviation” below guidelines.
Prosecutors have yet to make their recommendation for Calk’s February 7 conviction before U.S. District Court Judge Lorna Schofield, appointed by President Barack Obama.
Calk’s defense argued at trial that Calk, who never got a job in the Trump administration, never reached a loan deal with Manafort. Calk did not testify, but his attorney Paul Schoeman said Calk was unaware of the false statements Manafort made during the process.
Schoeman insists the circumstances of the Manafort loans and the lawsuits that followed are so unusual that his client should not be sent to jail.
“This case is truly unique in the annals of bank bribery prosecutions,” Schoeman wrote in a court file On Monday. “Sir. Calk has not gained anything of monetary value for himself, the bank will profit from the loans, and he has not done anything intended to hinder or actually impede the criminal investigation into his. conduct.