Banking and Finance Law Daily Wrap Up, CRIMES AND OFFENSES—Former bank officer files reply brief in ongoing challenge of bribery conviction, (Aug 19, 2024)

By Joe Cox, J.D.

The former bank officer is seeking appellate review by the U.S. Supreme Court on his previously affirmed conviction on bank bribery charges.

In early August, former bank officer Stephen Calk filed a reply brief to the federal government's opposition to his petition for a writ of certiorari before the U.S. Supreme Court. Calk is seeking review of his previously affirmed conviction for financial institution bribery and for conspiracy to commit the same crime. Calk raises most of the same arguments in his reply brief as he has previously raised—mostly centering on the interpretation of a potential political appointment as a “thing of value” and on the nebulousness of whether Calk had acted “corruptly” in arranging loans for the Trump campaign in exchange for consideration for political office (Calk v. United States of America, No. 23-1149 (U.S. Aug. 6, 2024).

History of the case. Calk, formerly the Chairman and CEO of The Federal Savings Bank (TFSB) and a principal shareholder of National Bancorp Holdings, Inc., which owned TFSB, was tried by a jury and convicted of financial institution bribery and conspiracy to commit financial institution bribery. The government had charged Calk of using his influence to obtain loans for Trump Associate Paul Manafort despite the fact that Calk ultimately did not secure a position with the Trump administration.

After being convicted, Calk moved to set the conviction aside on the basis that the evidence did not show that he received a “thing of value” or acted “corruptly” in violation of the financial institution bribery statute, 18 U.S.C. § 215 (the bribery statute). The trial court denied the motion, sentenced Calk to 366 days in prison with two years of supervised release and fined him $1.25 million. Moreover, Calk's arguments to the U.S. Court of Appeals for the Second Circuit were unsuccessful as well, and now he is petitioning the Supreme Court for certioriari.

Arguments on appeal. Calk now seeks review on two issues. First, he argues that political influence, having no commercial or objective value, should not be construed as a “thing of value” per 18 USC §215. Calk submits that failing to mandate an objective monetary value in the statute could make it “impossible for ordinary citizens to identify any clear demarcation between things with value and things without.”

Secondly, Calk argues that the status of corrupt acts should not be met by acts (even if otherwise improper) which are taken with a good-faith belief that the acts would benefit the bank in question. Calk argues that the current “non-definition” of corrupt intent is essentially standardless, and that it raises due process concerns. Calk has characterized the Second Circuit's ruling as creating “an amorphous, malleable concept” which would risk arbitrary enforcement and deprives citizens of fair notice as to what constitutes corrupt intent. Calk submits that statutory language and history require that corrupt intent demonstrate an intentional breach of duty (see Banking and Finance Law Daily , April 29, 2024).

In its response to the petition, the federal government argued that the definition of a thing of value was intentionally broad as characterized as “any” thing of value. The evidence of the case, argued the government, allowed the jury to find value which could translate into money in excess of $1,000, as required by the statute. Likewise, the government disputed Calk's argument about the definition of “corruptly.” The government noted that Congress had defined “corruptly” as “acting with an improper purpose.” Accordingly, the government argued, the possible simultaneous presence of a proper purpose did not cancel out improper purposes of Calk's action, and a bank officer could not accept bribes even if the corrupt transactions turned out to be profitable for the bank (see Banking and Finance Law Daily , July 25, 2024).

In his reply brief, Calk has essentially reiterated his prior arguments. He accuses the government of ignoring statutory structure, history, and due process in arguing for a non-financially determined definition of “thing of value.” Calk characterizes his recommendation from Paul Manafort as “informal,” akin to a recommendation letter to a college admission officer from a celebrity. Calk also argues that all Manafort received were the bank's standard loans, as backed by substantial collateral.

Calk also continues to back his argument that the lack of definition of “corruptly” should cause the conviction to fail on vagueness grounds. Calk submits that the bank bribery statute is not intended to regard “every trivial conflict of interest or breach of a technical banking regulation,” but only those in which a duty was breached.

Attorneys: Alexandra A. E. Shapiro, Daniel J. O'Neill, and Avery D. Medjuck (Shapiro Arato Bach LLP) and Paul H. Shoeman and Darren A. Laverne (Kramer Levin Naftalis & Frankel LLP) for Stephen M. Calk. Elizabeth B. Prelogar, U.S. Department of Justice, for the United States of America.

Companies: National Bancorp Holdings, Inc.; The Federal Savings Bank

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