After a several-week reprieve from bank-related headaches, Senate candidate Alexi Giannoulias has got a new one to deal with: a Chicago Tribune report saying that during his tenure as senior loan officer at the bank, it made $20 million in loans to Michael Giorango and Demitri Stavropoulos, even as the two were preparing to serve federal prison sentences.
The report isn't news for its names, but rather for identifying the extent and timing of the loans. From day one of the campaign, the National Republican Senatorial Committee has used the bank's connection to Giorango to depict Giannoulias as "connected." But the Tribune report reveals that the bank lent very large sums of money to the men while Alexi worked at Broadway and the men were coming on significant legal problems.
Broadway Bank had been lending to Giorango since the mid-1990s, when he was borrowing money to make real estate investments. The investments were successful, and Giorango got more ambitious, borrowing ever-larger amounts from Broadway. These loans, the report states, took place before and after Giorango's 2004 conviction for running a nationwide prostitution scheme.
Giorango also formed a business, according to the Tribune, with Demetri Stavropoulos, a man the newspaper says "recently worked as the $5,000-a-week consultant to a Bridgeview strip club ... and operated a real estate firm that listed properties of reputed Chicago Outfit figure Michael Sarno." Their firm, 1201 South Western LLC, was described to Broadway Bank as a real-estate company, and indeed bought and sold a number of properties in Chicago. But it also moonlighted as a so-called "hard money" lender, issuing loans to borrowers who wouldn't otherwise qualify.
Bank president Demetris Giannoulias, brother of the Senate candidate, explained to the Tribune, "There's no reason to believe there was anything going on but the acquisition of the real estate." Based on the terms of the loan, the bank could have looked further into the business to discover its shady lending wing, but saw no need to.
The Tribune also reprinted some of Demetris' answers about Giorango's criminal background:
"But we're a relationship bank," he said. "So somebody comes in and in all his dealings with the bank seem to be on the level, everything makes sense, nothing seems illicit or untoward. Just because somebody gets a bad article written about them there's no reason to say, 'Hey, listen, I'm going to kick you out the door because you don't win a popularity contest.' We didn't think he was doing anything illegal."
He said he asked Giorango about the convictions and Giorango said, "It's in the past. I don't do that anymore."
Demetris also defended Alexi, saying that his younger brother had little to do with the loans beyond filling out paperwork. Alexi has defended himself in the same way.
The bank, according to a Sun-Times report, has since sued Giorango and Stavropoulos, seeking to get much of the money it loaned them back. It also foreclosed on 1201 South Western. And it has widely condemned Giorango's and Stavropoulos' business practices in recent years.
Still, the new Tribune report shifts attention back to Alexi's involvement with the bank. After a spate of bad news in early March, including the bank's likely collapse and the arrest of campaign contributor and Boston Blackie's owner Nick Giannis, Alexi had succeeded in placing the focus of the campaign on his opponent. Specifically, he has repeatedly underscored Republican Mark Kirk's vehement announcement of (and quiet retreat from) his desire to repeal the healthcare reform law.
But with this news, and with the bank unlikely to survive the FDIC's April 24th deadline for paying back nearly $94 million, Alexi's Broadway connection will certainly be back in the headlines this month.
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