U.S. Senate Candidate Involved in $250 Million Ponzi Scheme

Committee on Public Integrity

Tel: 202-374-3680
email: CommitteeOnPublicIntegrity@gmail.com

PRESS RELEASE
For Immediate Release

U.S. Senate Candidate Involved in $250 Million Ponzi Scheme

The Committee on Public Integrity, in a joint investigation with Integrity in the Courts Finds that Alexi Giannoulias, U. S. Senate Candidate in Illinois, Failed to Reveal That His Family’s Broadway Bank Paid Kick Backs in Mortgage Fraud Deals with Financial Ponzi Scheme Operators

The Senate Candidate Also Failed to Reveal that the Giannoulias Family Bank Paid a Settlement Valued at $6 Million to End the Lawsuit by U.S. Department of Justice and Securities and Exchange Commission

As part of its continuing full disclosure by federal candidates program, The Committee on
Public Integrity and Integrity in the Courts has discovered that Alexi Giannoulias, Democratic candidate for US Senate from Illinois has misrepresented the record of Broadway Bank, the Chicago bank owned by his family. The actual facts as revealed in litigation brought by the US Justice Department and the Securities and Exchange Commission reveal that Broadway Bank engaged in fraudulent loans with Wextrust, a finance company. Broadway Bank was subsequently seized by the SEC, and the chief officers of Wextrust are in jail.

During the last debate with Congressman Mark Kirk, Alexi Giannoulias was asked to comment on the activities of Broadway Bank, the main business asset of his family. Giannoulias said, “And let’s be clear, no one has ever suggested that the bank has ever done anything illegal, illicit, or improper. Never." He continued, "I will always tell you the truth. And that's what we need now more than ever. People are sick and tired of Washington, D.C. politics as usual."  Information is now coming to light that shows that Broadway Bank engaged in kick-backs and other lucrative deals with Ponzi scheme operators, who are now in jail.

Beginning in 2006, when Alexi Giannoulias was a loan officer at Broadway, the bank entered into a series of commercial loans in joint ventures with Wextrust Capital, a Chicago based lending company. Wextrust provided so-called “hard money” loans to developers, who could not find standard financing from banks. Hard money loans are provided at very high interest rates, up to 18-20% when the costs of so-called origination and finders fees are added.

Under the deals between Wextrust and Broadway Bank, evidence has been discovered showing that borrowers paid the bank high interest charges (12-14%), and then Broadway Bank kicked back 2-3% of the payments received to Broadway as part of a so-called loan servicing contract. Also, it’s been established that throughout its years of operation, Wextrust was insolvent, making all of its mortgage deals void and fraudulent. That meant that all the joint mortgage deals marketed byBroadway Bank and Wextrust were illegal, illicit and improper.

Wextrust was seized and placed in control of a federal receiver by the US Securities and Exchange Commission in August 2008 for operating a $250 MM Ponzi scheme. The SEC found that Wextrust operated a massive Ponzi-type scheme from 2004 that raised approximately $255 million from approximately 1,200 investors in the US and other countries. The Receiver confirmed that Wextrust diverted, co-mingled and misappropriated those funds, in a series of unauthorized transactions. The US Department of Justice filed criminal complaints against Wextrust's principal officers who were immediately arrested, and who remain in custody. The company president, Steven Byers, entered a guilty plea in April 2010, and is awaiting sentencing. Broadway Bank was a partner with Wextrust in the series of fraudulent loans. Alexi Giannoulias was a loan officer when Wextrust began its dealings with Broadway Bank. Evidence has been uncovered by the SEC showing that Alexi’s brother, Demetri, personally handled these mortgage loans with Wextrust.

In April 2010, just before being seized by the Illinois and US banking authorities, Broadway Bank agreed to forgo $5 million in claims and to pay up to $800,000 in cash to settle litigation with the federal Receiver of Wextrust. This Settlement clearly reflected a payment by Broadway Bank to settle claims by the Securities and Exchange Commission and avoid liability for illegal actions in connection with its financing transactions with Wextrust.

For additional information please contact: John T. White at 202-374-3680

About The Committee on Public Integrity
The Committee On Public Integrity reviews both past and present cases to provide an independent assessment and analysis of the facts. With respect to past cases, the committee will hear from persons who maintain that they have been treated unfairly and unjustly. As part of its efforts, the committee is actively seeking documentation and analysis of various issues. Committee members include individuals who through their personal and professional lives have established a reputation of responsibility and fairness.

Watchdog Groups Combine Efforts Against Corruption

COMMITTEE ON PUBLIC INTEGRITY

Tel: 202-374-3680

email: committeeonpublicintegrity@gmail.com

Web: www.committeeonpublicintegrity.com

PRESS RELEASE
For Immediate Release

Coalition of New York Court Watchdog Groups Combine Efforts by Jointly Founding Committee on Public Integrity – CPI

New Governmental Oversight Organization on Public Integrity Is Formed by Public Committee on Attorney Conduct and The Committee on Public Integrity Organizations.

New York, New York - The Committee on Public Integrity - CPI - has been founded as part of a national movement to hold New York State governmental organizations, officials and employees accountable under stringent standards of fairness, transparency and citizen review. The new organization has been established jointly by Public Committee on Attorney Conduct, Citizens United for Court Reform, a New York based rights administration organization and Integrity in the Courts, and other leading Internet blogs focused on attorney disciplinary process and procedures. Committee on Public Integrity is being headquartered in New York City. In announcing plans for the new oversight group, John T. White, president of Public Committee on Attorney Conduct stated, “For too long, we have allowed government to be controlled by officials and employees often to the detriment of the citizens they are expected to serve. Indeed, the system is often found to be dominated and controlled strictly by money, favoritism and cronyism. The keystone of this reform effort must be to change and in some cases replace the current failed system with new structures, directly answerable to the general public.” Mr. White stated that this new umbrella reform organization is being founded in part as a result of the growing number of federal whistle blower lawsuits. In New York State in particular suits have been filed to expose cronyism, self-dealing and fraud within and about the justice system. Mr. White noted, “Clearly, as suits against the court administration system and others in public service continue to be filed, the time has come for a top to bottom review of the fatally flawed government system which remains shielded from public scrutiny.” Mr. White continued, “In New York State, well documented complaints of malpractice, personal attacks and even theft, filed by individuals victimized by attorneys have revealed that the court system is corrupt to the core. The establishment of Committee on Public Integrity is a necessary step in a process designed to hold officials accountable for their illegal actions, which threaten to undermine the standards of fairness and integrity on which our system of government is founded.” According to the founding organizations, Committee on Public Integrity will include as members individuals, who through their personal and professional lives have established a reputation of responsibility and fairness. He added, “We are in search of a committee to be made up of members with broad and diverse business experience and expertise, as well as impeccable records of fairness and sound judgment to review breaches of law and ethics.”

Inquiries and documents should be sent to Committee on Public Integrity via email at CommitteeOnPublicIntegrity@gmail.com. Telephone inquiries can be directed to 202-374-3680. 
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