Banker recalls red flags on former Trump campaign chairman's loan application

James Brennan, a vice president at Federal Savings Bank, says Paul Manafort failed to disclose mortgages on his loan application

Paul Manafort's legal team arrive at court on Monday, where prosecutors for special counsel Robert Mueller were expected to conclude their case. Al Drago/Bloomberg

A bank executive said he found several red flags with Paul Manafort’s finances while the former Trump campaign chairman was being considered for $16.5 million (Dh60.61m) in bank loans.

The testimony, on the 10th day of Mr Manafort’s financial fraud trial, comes as the prosecution is expected to rest its case later on Monday.

James Brennan, a vice president at Federal Savings Bank, says Mr Manafort failed to disclose mortgages on his loan application. He said he also found several “inconsistencies” in the amount of income Mr Manafort reported for his business.

That information led senior executives to reject one of the loans. But Mr Brennan said Federal Savings Bank chairman Stephen Calk overruled that decision.

“It closed because Mr Calk wanted it to close,” Mr Brennan said.

Other witnesses have said Mr Calk pushed the loans through because he wanted a plum post in the Trump administration.

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Mr Brennan said the Chicago bank lost $11.8m because it had to write-off a significant portion of two loans it made to Mr Manafort. He said they were the two largest loans the bank had made when they were issued in late 2016 and early 2017.

Mr Manafort is accused of fraudulently obtaining the loans by inflating his income and concealing other financial information. He is fighting the charges.

Mr Brennan, who testified under an immunity deal, said the bank found several problems with the information Mr Manafort provided that should have raised questions about his character and whether he was providing inaccurate information to obtain the loans.

Chief among those problems, Mr Brennan testified, was that Mr Manafort failed to disclose that he had defaulted on two of his loans.

Mr Manafort checked "no" when asked on his loan application if any of his other loans were in default. But in fact, Mr Brennan testified, Mr Manafort was in default for a $5.7m loan he had taken out for a Los Angeles property and had also stopped paying on a $6.5m loan on a New York residence.

Mr Brennan said there also were other “red flags” that made Mr Manafort’s loan application look shaky. There were discrepancies between the income his company listed on a 2015 profit and loan statement and the income listed in Mr Manafort’s 2015 tax return. And Mr Brennan was concerned about an unpaid $300,000 American Express card debt for luxury New York Yankees season tickets.

Prosecutors said last week that they would wrap up their case against Mr Manafort on Monday. Defence lawyers have not said whether they expect to call any witnesses after that.

The proceedings were halted for hours on Friday by mysterious backstage discussions between the judge and attorneys for both sides. US District Judge TS Ellis III recessed the trial without explanation after huddling with his bailiff and attorneys from special counsel Robert Mueller’s office and Mr Manafort’s lawyers for more than 20 minutes.

At one point, Judge Ellis left the courtroom and headed toward the jury room. After bringing court back into session, he reminded jurors several times that they weren’t to discuss the tax evasion and bank fraud case at all. That included telling them to not even comment on the attire of any witnesses.

The trial is the first to emerge from Mr Mueller’s investigation into Russian meddling in the presidential election, but neither Mr Manafort nor his long-time deputy, Rick Gates, have been charged in connection with their Trump campaign work.

The prosecution has called more than 20 witnesses, including Mr Gates, and introduced a trove of documentary evidence as they’ve sought to prove Mr Manafort defrauded banks and concealed millions of dollars in offshore bank accounts from the IRS.