The bribery trial of a Chicago banker who helped arrange millions in loans for former Trump aide Paul Manafort has surfaced a curious question about the most coveted gig in Washington: How much is a Cabinet post worth?
While some prospective presidential advisers might have considered the question in such crude terms, it seems unlikely that taxpayer dollars were expended to address it — until now.
As the trial of Federal Savings Bank founder Stephen Calk plays out in a Manhattan courtroom, one of the issues in contention is whether the various positions Calk aspired to — including secretary of the Treasury, Defense and Commerce — amount to things of value under a federal law prohibiting bribery of the officials of federally insured banks.
The criminal case highlights how the legal system has grown increasingly tolerant of the kind of access-marketing and horse-trading politicians often engage in, sometimes in close proximity to the receipt of big money to aid their campaigns. It’s also a reminder that those practices can still spell serious legal trouble when they stray into more regulated arenas, such as banking.
Calk faces two felony charges claiming he loaned Manafort $16 million in exchange for the Trump campaign chairman’s efforts to get the bank executive a high-level job in the Trump administration. Calk ultimately got an interview with a Trump transition group called the “Tiger Team” and was considered for undersecretary of the Army, but never landed a nomination or a job.
Because the charges are felonies, to convict Calk, the jury must find that what he received from Manafort was worth more than $1,000. If Calk is convicted, he faces up to 35 years in prison, but would likely get a lower sentence under federal guidelines.
According to court records, prosecutors have retained an expert to bolster their case that the kinds of jobs Calk was seeking are of substantial value: a Florida consultant who specializes in executive compensation, Jeff McCutcheon.
McCutcheon, who has more than 37 years of experience in the human resources field, concluded that top administration jobs can indeed be financially lucrative, even though many who take them take a pay cut when leaving the private sector.
“That a presidential appointment is valuable beyond the immediate salary should not be in question,” McCutcheon wrote in an 11-page report prepared for federal prosecutors. “Executives from some of the largest companies in the U.S. often accept government appointments that require a substantial reduction in earnings and often a restructuring of their investments, all for a position with long hours, exceptional public scrutiny and reputational risk, and a salary of under $200,000 per year.”
The prosecution expert said that the top two civilian Army posts Calk was seeking would each be worth far more than the amount needed to trigger the felony bank bribery statute.
“Either appointment would be of material benefit to Mr. Calk and the Bank, and worth some value exponentially in excess of $1,000,” McCutcheon wrote.
McCutcheon’s report focuses on the campaign post Calk won and the Army roles he was considered for and doesn’t explicitly discuss his aspiration to lead a major federal agency. However, the compensation expert discusses the financial prospects of Cabinet members and also appears to miscategorize the secretary of the Army position as a Cabinet post.
McCutcheon studied the career trajectories of several recent Army secretaries. He noted that Sec. David Fanning parlayed that position into a $1,000,000-a-year job as head of the Aerospace Industries Association. Fanning’s predecessor, ex-Rep. John McHugh (R-N.Y.), headed to law firm K&L Gates after serving in the Pentagon job. McHugh likely made more than $400,000 in the lobbying position, the expert said.
McCutcheon also concluded that Calk’s appointment to a Trump campaign economic advisory board was worth “well in excess of $1,000” due to the social status, connections and publicity that came along with such service. The expert said the expenses participants on such a board were willing to incur out of their own pockets demonstrate the value of that sort of appointment.
When former White House communications director Anthony Scaramucci was on the stand last week, prosecutors got him to underscore that being named to the advisory group would add to Calk’s cache.
“It’s a prestigious thing,” Scaramucci said.
McCutcheon did acknowledge that high-profile U.S. government jobs don’t always help the reputations of those who hold them. “Some appointees leave in disgrace,” he noted.
Prosecutors said their expert, McCutcheon, has testified on compensation issues in several legal proceedings, but they didn’t list any previous assignments trying to ascertain the value of an alleged bribe.
“It is surely permissible for a longtime executive compensation expert to make qualitative judgments about the value of prestigious positions based on his experience in evaluating candidates and formulating compensation packages,” prosecutors wrote.
Calk’s main defense is that there was no linkage between the job he was seeking and the loans to Manafort, but his attorneys have also disputed whether Manafort’s help was out of the ordinary and whether it has any discernible financial value.
In a court filing, Calk’s lawyers trashed McCutcheon’s methodology, calling it “totally lacking in rigor.”
“McCutcheon’s methods are, at best, unreliable and, more often than not, totally illusory,” defense attorneys Paul Schoeman and Darren LaVerne wrote.
However, U.S. District Judge Lorna Schofield ruled in advance of the trial that McCutcheon’s opinions were admissible. He has yet to take the stand in a trial expected to last several weeks.
Defense lawyers have also stressed that the only thing of value Calk conceivably received and the only thing Manafort was able to offer was “assistance applying for the position,” not the job itself.
While the government’s case is still underway, the prosecution seems to have acknowledged that the benefit Calk was seeking from Manafort really wasn’t a job but help getting one. During opening arguments in the case, Assistant U.S. Attorney Alexandra Rothman argued that what the bank executive illegally sought in exchange for the multimillion-dollar loans was not a job or even a job interview, but “favors” from Manafort.
“Stephen Calk took a bribe from Paul Manafort. Manafort gave him political favors and Calk gave him bank loans, this for that — loans for political influence,” Rothman said.
In recent years, the Supreme Court and other courts have looked askance at a series of alleged political corruption cases, often narrowing the authority prosecutors claimed they had to pursue what they viewed as corrupt deals.
In the so-called Bridgegate case, the justices threw out the prosecution of two aides to then-Gov. Chris Christie of New Jersey, a Republican, over the intentional creation of traffic snarls on a federally funded bridge as a form of political retaliation against an uncooperative mayor. And in the prosecution of former Virginia Gov. Robert McDonnell, a Republican, the justices said arranging a meeting or granting an invitation to an event wasn’t the kind of official act that could give rise to bribery charges.
A federal appeals court also tossed some charges against former Illinois Democratic Gov. Rod Blagojevich after concluding that trying to trade a Senate vacancy for a Cabinet job in the Obama administration wasn’t a crime — even though Blagojevich was seeking the job for himself. The 7th U.S. Circuit Court of Appeals said such trades are commonplace political “logrolling.”
While those sorts of rulings may seem to undermine the notion that seeking political favors in exchange for a bank loan is a crime, legal experts said the conduct alleged in the Calk indictment is probably still illegal even though a similar trade-off for a campaign donation probably wouldn’t be.
“The Supreme Court has a special standard distinguishing a campaign contribution from a bribe,” said Northwestern Law professor Albert Alschuler. The justices view it that way because they see it as “a necessity to collect money to finance political campaigns,” he said. “Here the idea is it is stealing from a bank. … So, there’s no reason for that theory to apply.”
Perhaps inadvertently, McCutcheon’s report provides some comparisons that highlight how the case against Calk contrasts with the lax approach the law often takes to mixing of money and actions in the political arena. For example, McCutcheon suggests many ambassadorships are more or less traded for campaign contributions.
“Service in a prestigious role is viewed by itself as something of value. This is evidenced by large campaign donors receiving ambassador roles in [a] pleasant environment,” the compensation expert wrote.
Although such arrangements may well be illegal, criminal cases over such a trade are nearly unheard of. (Back in 1974, a lawyer for President Richard Nixon, Herbert Kalmbach, pleaded guilty to taking a $100,000 campaign contribution in exchange for getting an ambassadorial nominee’s post switched from one in the Caribbean to somewhere in Europe.)
Manafort, who won a pardon from Trump in December, served about two years of a combined seven-and-a-half-year sentence on various charges involving underpaid taxes, unreported foreign bank accounts and acting as an unregistered foreign agent. While a jury found him guilty on some charges and Manafort pleaded guilty to others, the jury deadlocked on the four counts of bank fraud and conspiracy over the loans from Calk’s bank, leaning 11-1 for conviction.
Manafort is not expected to be called as a witness at Calk’s trial, nor has he been charged with bribing Calk to grant the loans. Calk’s defense has seized on Manafort’s alleged lies about his financial condition to argue that the banker wasn’t trying to push bad loans on the bank and was deceived about Manafort’s finances.
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