Rahm crony who helped bank in Manafort case get city grant got $700K in loans
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Mayor Rahm Emanuel and mayoral confidant Martin Cabrera Jr. played key roles in giving a taxpayer-funded financial lifeline to a Chicago bank now enmeshed in the tax- and bank-fraud trial of former Trump campaign chairman Paul Manafort, city records show.
The documents and emails show Cabrera, Emanuel’s Chicago Plan Commission chairman, helped broker the 2012 deal that gave $3.6 million in city job-training money to The Federal Savings Bank, run by Stephen M. Calk. It was the largest such grant the city has given.
Less than a year after Cabrera introduced Calk to the mayor, the bank began extending loans to Cabrera totaling more than $700,000.
Cabrera says that beyond making introductions he had “no role” in Calk getting the city grant.
But records obtained from City Hall under the state’s Freedom of Information Act show Cabrera exchanged a series of emails with mayoral staffers about Calk over several weeks, at one point stressing the urgency of reaching a deal “quickly” so the banker wouldn’t decide to expand his operation somewhere other than the city of Chicago.
“Maybe we can make an offer that he can move on quickly,” Cabrera wrote in one email to then-Deputy Mayor Mark Angelson.
Manafort, a central figure in special counsel Robert Mueller’s probe of Russian interference in the 2016 elections, went on trial Tuesday in Virginia in a separate case in which he’s accused of defrauding the IRS and several banks, including Calk’s, which gave Manafort $16 million in loans despite concerns from bank employees about his loan applications and “numerous false and fraudulent representations,“ court records show. The Manafort loans were approved, according to court papers, because of an unnamed “senior executive” who “factored in his own personal ambition.”
Calk — who owns 67 percent of his bank’s stock — landed a spot on Donald Trump’s campaign economics advisory committee. After Trump was elected president, Calk asked about a top position in his administration, according to prosecutors. News reports have identified the post, which Calk did not get, as secretary of the Army.
Prosecutors have named potential witnesses who have been granted immunity from prosecution for their testimony, including two who appear to be current or former employees of Calk’s bank.
The city subsidies given to Calk allowed him to convert what had been a West Loop mortgage banking operation into a full-service bank. The money — for worker training — came to about $8,800 per employee, which is more than five times the average per-worker cost of other such city grants.
Calk’s clout in Chicago began with Cabrera, the owner of a financial services firm that relies on municipal bond underwriting business from the city and other governments, records show. Cabrera had forged close ties to powerful City Council Finance Committee Chairman Edward M. Burke (14th) and former Mayor Richard M. Daley, who installed Cabrera as chairman of the board of the City Colleges of Chicago.
Cabrera also briefly served as chairman of the United Neighborhood Organization after its leader, Juan Rangel, was forced out following a 2013 Chicago Sun-Times investigation that revealed UNO insiders profited from two state grants to the politically connected charter-school operator.
In early 2012, Emanuel named Cabrera to chair the plan commission, which must approve most new major real estate projects in the city. The panel has no role in job-training grants.
That June, Calk appeared with Emanuel and Cabrera at a news conference and announced Chicago had won a nationwide competition to land his bank’s new national home-loan center and, with it, 400 jobs, according to a video of the event and City Hall news release.
Emanuel, who keeps a running tally of corporate relocations, hailed this as a coup that represented the “fourth headquarters we have announced” since he became mayor a year earlier.
Two years later, in another announcement regarding the bank’s Chicago operations, his administration declared it “the 27th corporate headquarters that has moved to the city of Chicago since Mayor Emanuel took office.”
But many of the bank’s jobs described as new went to employees of Calk’s former mortgage banking operation, Chicago Bancorp, located at 300 N. Elizabeth St., now home to The Federal Savings Bank, according to state records and a lawsuit.
Seven months after the city jobs announcement that Cabrera helped engineer, he and his fiancee got Calk’s bank to finance their $795,000 purchase of a home in Riverside, according to county land records. That January 2013 mortgage was for $596,000, records show. They got an additional $110,000 line of credit from the bank the following year.
In a written response to questions, Cabrera says he approached Calk for the loan and that the mortgage was “at or above market rate.”
Asked whether it was tied to his help in obtaining the city grant to Calk’s bank, Cabrera says: “This question is offensive in nature. Our application for a home loan was approved based on our finances…This wasn’t about anything other than helping a company bring more jobs to Chicago. Plain and simple.” Cabrera also owns a home in Pilsen that he claims as his primary residence.
Calk did not respond to questions. His bank sent a two-sentence written statement saying that it “adhered to all rules and regulations in the application process” and “met all requirements to be reimbursed for any training costs received under the terms of the grant.”
Emanuel’s planning department spokesman Peter Strazzabosco says the money “helped more than 400 workers improve and acquire a variety of skills.”
Cabrera has since refinanced the mortgage with another lender and repaid the line of credit, county records show.
During the time he was in debt to Calk’s bank, Cabrera also helped arrange a second news conference with Emanuel and Calk. At that February 2014 event, Emanuel said the bank would move its headquarters from Kansas City’s suburbs to Chicago and hire more workers.
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What’s now known as The Federal Savings Bank is the successor to the financially troubled Generations Bank, based in Overland Park, Kansas, which Calk and his brother John Calk bought in 2011.
At that time, Chicago Bancorp, the Calks’ primary business, was writing more than $1 billion a year in mortgages. Replacing it with a federally chartered bank by taking over the Kansas lender enabled the Calks to operate nationwide without having to comply with state-by-state licensing requirements for mortgage bankers.
Unlike regular banks, mortgage banks don’t take deposits. So they have to borrow money before lending it. The purchase of Generations altered that dynamic for the Calks, who renamed the bank and moved the center of its operations to Chicago, where the bulk of their business already was.
The deal for the city grant developed rapidly, beginning with a Feb. 6, 2012, meeting arranged by Cabrera involving Calk, Emanuel and Angelson, according to Cabrera and the mayor’s office.
Cabrera says he knew Calk through an executive networking organization and that when the banker said he was hoping to expand his business in Chicago, “I wasted no time in reaching out to Mayor Emanuel and his staff.”
Two weeks after that first meeting, Emanuel followed up, the City Hall emails show.
“Any updates on your convos with stephen calk? Mayor is asking,” read an email from an Emanuel aide to Angelson.
By that April, the city had made a preliminary offer to provide $4 million in job-training money — $10,000 per employee for up to 400 workers, according to a letter from the city to Calk. The actual cost came in about $1,200 lower.
Calk quickly accepted, and the deal was announced that June, with Emanuel publicly thanking Cabrera for bringing Calk to City Hall’s attention.
According to federal and state records, 150 of the 407 employees trained with the city money weren’t new hires. Calk dissolved his mortgage banking firm, fired the workers, then rehired them to work at the same location but for his revamped bank, the records show.
Chicago taxpayers then paid to teach the former mortgage banking workers, as well as new employees, about regulations governing federally chartered banks, records show. Some city money also subsidized instruction in basic office computer skills, including the use of Microsoft Word, Outlook and Excel, city records show.
The source of the city funding for Calk’s bank was a workforce-assistance training program called TIFWorks. It was the largest grant awarded with TIFWorks money since the city launched the program in 2003, according to city officials.
Chicago has spent $31.5 million overall on the program to help train 19,590 new and existing employees for businesses in the city. The average cost: $1,600 per worker. Which means the city spent five times as much to train Calk’s workers as it did the typical worker trained under the program.
Strazzabosco, the planning department spokesman, says the training expenses for the bank were reviewed before the grant was approved and found to be “cost-effective.”
The bank also won state approval for $9.5 million in tax breaks on the promise it would be adding hundreds of new workers. But it failed to cash in on the incentives, and, after the state notified the bank in March it might no longer qualify, its application was withdrawn.
Chuck Neubauer and Sandy Bergo are reporters for the Better Government Association.