Marathon Pundit: Ill. GOP press release: Giannoulias under fire

Tuesday, February 09, 2010

Ill. GOP press release: Giannoulias under fire - When will Alexi come clean?

Even though troubled candidate Scott Lee Cohen has been forced off the general election ballot, Illinois Democrats still have to contend with a controversial nominee, Alexi Giannoulias.

From an Illinois Republican Party press release:

Under the FDIC's January 25th consent decree for Broadway Bank, Alexi Giannoulias and his family were required to put at least $19 million back into the bank within 10 days to cover the bank's allowance for loan and lease losses. By April 24th, the Giannoulias family must recapitalize roughly $94 million in order to raise the bank's tier one leverage capital ratio to at least 9%. (Consent Order DB No. 2009-DB-92)

Despite Alexi Giannoulias' promise to answer questions about his banking practices if he won the Democratic primary, Giannoulias now enters his 12th day of silence. Even his new campaign chairman Senator Dick Durbin is calling on Alexi to "come clean" about his shady past.

Did the Giannoulias family meet the FDIC's deadline to replenish $19 million (the deadline was February 4, 2010)? Did Alexi contribute to the replenishment?

Why did Alexi and his family withdraw $70 million from the bank just before the institution incurred heavy loan and lease losses -- ultimately leading to the FDIC consent decree? ("Alexi Kin Cash In At Broadway," Crain's Chicago Business, 9/7/09)

How many of the bank's losses were from loans and leases Alexi Giannoulias approved when he served as the bank’s Chief Loan Officer from 2002-2006?

Due to Alexi's continuing silence, we still do not know the answers to these basic questions.

Just in case Alexi Giannoulias is still scrambling to find money to replenish the family bank, the National Republican Senatorial Committee would like to help. We have successfully located $12.9 million in losses that we think voters should know about – loans Alexi Giannoulias personally approved as the bank's Chief Loan Officer.

Broadway Bank is trying to recoup $12.9 million from two Chicago crime figures, rekindling a controversy as the bank's former chief loan officer, state Treasurer Alexi Giannoulias, gears up to run for the U.S. Senate. In recently filed foreclosure suits, the Giannoulias family-owned North Side bank alleges loan defaults by four companies whose owners include two convicted Chicago bookmakers—one also convicted of promoting a nationwide prostitution ring. The loans are on a hodgepodge of properties, including a SouthBeach hotel and a South Side shopping center that has lost its grocery anchor. The defendants include 1201 South Western LLC, a Berwyn-based company whose activities include making short-term real estate loans at interest rates of 1% a week, property records show. ("Suits Awaken Old Ghosts For Giannoulias," Crain's Chicago Business, 7/13/09)

Questions about Mr. Giannoulias' role in the loans surfaced in 2006, when he overcame concerns about his youth and inexperience to be elected treasurer. He defended the loans as sound business decisions, a claim undermined by the foreclosures. ("Suits Awaken Old Ghosts For Giannoulias," Crain's Chicago Business, 7/13/09)

The borrowers were worthy at the time these loans were issued,' Broadway Bank says in a statement. "However, when they failed to make their loan payments, the bank took legal action . . . just as it would do in any situation involving a customer who did not repay a loan." Broadway alleges $2.9 million in loans are in default on the Lorraine Hotel in Miami Beach. The property is owned by a venture that includes Michael Giorango, 56, who was convicted in 1991 of federal bookmaking charges in Chicago. He also was convicted in 2004 in Miami of promoting a nationwide prostitution operation. Broadway also alleges that a nearly $6-million loan is in default on a shuttered restaurant along the Intracoastal Waterway in Hollywood, Fla. The potential development site is owned by a venture that includes Mr. Giorango and Demitri Stavropoulos, 41, who was convicted in 2004 in Chicago of running a betting operation that grossed more than $3 million in about three years. ("Suits Awaken Old Ghosts For Giannoulias," Crain's Chicago Business, 7/13/09)

That's $13 million down - $81 million to go.

Learn more about Giannoulias' record by visiting the NRSC's new web site.

In 2006, Giannoulias, then a 29 year-old political neophyte, ran for state treasurer on the strength of his experience as a banker.

More on Alexi and Broadway Bank can be found in this Fox Illinois report: