8 banks entangled in Trump-related probes

August 19, 2018 10:00 PM

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In the 1976 film "All the President’s Men," the shadowy character played by Hal Holbrook famously asserted that the key to unraveling the Watergate scandal that was enveloping Richard Nixon’s presidency was to “follow the money.”

Forty-four years later, the money trail is a key part of investigations that are dominating headlines in the Trump era.

Former Trump campaign chair Paul Manafort is on trial and the office of former Trump lawyer Michael Cohen was raided, all while special counsel Robert Mueller continues to investigate whether the Trump campaign had any connection to Russia's attempt to interfere in the 2016 election. Some of the probes involve the president directly, while others could be used by prosecutors as leverage to secure the cooperation of Trump confidants.

As investigators dig deeper, they are focusing attention on banks that have facilitated transactions for various people in Trump’s orbit. Here is a look at some of the banks that have been pulled into Trump-related probes.

The Federal Savings Bank

This small Chicago bank lent $16 million to Manafort, who is currently on trial on bank fraud and tax fraud charges, in late 2016 and 2017.

Prosecutors have argued that employees of the bank raised red flags after Manafort submitted false information, but that their objections were overruled by CEO Steve Calk, who was angling for a job in the Trump administration.

Lawyers for Manafort have contended that any inaccuracies in the loan documents were not material, while also arguing that the loans had sufficient collateral and got the unanimous approval of the bank’s loan committee.

Two people who were employed by Federal Savings Bank in 2016 testified at the trial under an agreement that granted them immunity. Calk was not called to the witness stand. The jury is scheduled to begin its third day of deliberations on Monday.

Citizens Bank

Manafort also sought loans from Citizens Bank as his financial situation worsened in 2015 and 2016, according to prosecutors.

A vice president at the Providence, R.I., bank reportedly testified that the Republican political operative would not have gotten a $3.4 million loan against a New York condominium had the bank known that it was an investment property rather than a second home.

A second Citizens employee testified about a separate loan application by Manafort, according to news reports. Taryn Rodriguez said that she discovered $1 million in loans outstanding on a Brooklyn, N.Y., property that Manafort had not disclosed.

Before the trial, a Citizens spokesman said, “While it’s our policy not to comment on ongoing litigation, we believe the evidence will clearly show that Citizens Bank did not engage in any wrongdoing and that we followed appropriate procedures.”

Banc of California

The Manafort trial in Alexandria, Va., also included testimony from a Banc of California employee.

Gary Seferian, a vice president at the Santa Ana, Calif., bank, reportedly said that if the bank had known that Manafort’s consulting firm earned only $400,000 in 2015, it would have affected the bank’s analysis, and that he believed the loan application would not have been approved.

Sterling National Bank

The Montebello, N.Y., bank has reportedly been pulled into a separate probe of Cohen, who served as Trump’s personal attorney until this year.

Federal prosecutors in New York are looking at Cohen’s relationship with the bank, which provided financing for Cohen’s taxi-medallion business, The Wall Street Journal reported this month. The story cited anonymous sources as saying that the probe is exploring whether any bank employees allowed Cohen to get loans even though he did not provide enough documentation.

In addition, The New York Times reported on Sunday that federal investigators are seeking to determine whether Cohen misrepresented the value of his assets in order to obtain more than $20 million in loans from financial institutions that include Sterling.

Sterling is among the New York-area lenders that cut their exposure to the taxi loan business as medallion values suffered in the face of competition from the likes of Uber. Still, businesses owned by Cohen and his wife, and secured by taxi medallions, owed Sterling as much as $12.8 million as of March, according to Bloomberg.

Sterling has repeatedly declined to comment on its dealings with Cohen.

First Republic Bank

Back in May, a leak of information from suspicious activity reports drew First Republic Bank into the Cohen saga.

Michael Avenatti, a lawyer who represents the adult film actress Stormy Daniels, released a report stating that a company established by Cohen, Essential Consultants LLC, which had an account at First Republic, made a $130,000 payment to Daniels.

During the April 2018 raid of Cohen’s office, the FBI was reportedly seeking information about the payment to Daniels, who alleges that she had an affair with Trump in 2006.

Trump has acknowledged the payment but denied having an affair with Daniels.

Avenatti’s report also alleged that the First Republic account was used to receive approximately $500,000 in payments from Columbus Nova, an investment management company linked to the Russian billionaire Victor Vekselberg.

First Republic, which reportedly flagged the transactions as suspicious, has declined to comment.

City National Bank

The $130,000 payment from Essential Consultants to Daniels was reportedly sent to an account at City National Bank in Los Angeles.

City National, which is a subsidiary of Royal Bank of Canada, launched an internal inquiry about the payment about a year after it was made, The Wall Street Journal has reported.

Avenatti’s report also alleged that an account at City National was used to receive payments from former Republican National Committee deputy finance chairman Elliott Broidy. Those payments were reportedly part of an effort to cover up an affair that Broidy had with Playboy Playmate Karen McDougal.

Both McDougal and Daniels were at one time represented by attorney Keith Davidson, whose Beverly Hills, Calif., firm had accounts at City National, according to Avenatti’s report.

City National has declined to comment on the alleged payments.

Signature Bank

Signature, which specializes in multifamily real estate loans, is reportedly drawing scrutiny from New York state regulators over its connections to President Trump’s daughter Ivanka and her husband, Jared Kushner.

The New York State Department of Financial Services is looking into whether the bank lent money to real estate developers, including Kushner’s family business, while knowing that they planned to use improper tactics to push out low-rent tenants, according to The New York Times.

“We recognize we are not perfect,” the bank’s chairman, Scott Shay, said in a statement to the Times. “However, any allegation that we knowingly or somehow actively abet tenant harassment is frankly a slander against Signature Bank and an unfair impugning of the reputations of many hardworking colleagues who strive to be a positive force for not only our shareholders and depositors but our community as well.”

Ivanka Trump served on Signature’s board of directors between 2011 and 2013. The New York bank has also provided financing for a Trump golf course in Florida and made loans to Cohen and Kushner, according to the Times.

Deutsche Bank

The German megabank has reportedly been President Trump’s go-to lender for decades, continuing to do business with the Trump Organization after other big banks soured on the relationship.

Rep. Maxine Waters, D-Calif., has been seeking more information about Trump’s ties to Deutsche Bank, which she says has lent more than $360 million to Trump’s businesses.

So far, her efforts have generally been stymied. But if Democrats win control of the House in November, Waters would likely become chair of the House Financial Services Committee and would gain the ability to subpoena information about Trump’s relationship with Deutsche Bank.

Mueller’s probe may also turn up more information about Trump’s ties to Deutsche Bank.

In December, Bloomberg reported that the bank turned over records to the special counsel’s team after receiving a subpoena and that the records relate to people affiliated with the president.

“Deutsche Bank always cooperates with investigating authorities in all countries,” the bank said in a statement to Bloomberg.