Tribune: Broadway Bank Lent $20M To Felons While Giannoulias Worked There

By Marcus Gilmer in News on Apr 2, 2010 2:00PM

That sound you heard this morning was tens of thousands of the state's Democratic voters performing a *facepalm* upon reading a Tribune report that while Dem. U.S. Senate candidate Alexi Giannoulias was a senior loan officer at his family's Broadway Bank, the bank lent $20 million to convicted felons. Giannoulias himself didn't talk to the Tribune for the report but said in a statement that he was one of many senior loan officers at the time and didn't have anything to do with these particular loans. Meanwhile, Republicans around the state are saying, "We told ya so," as the story confirmed claims made in an ad launched the morning after this February's primary.

The loans in question were made to Michael Giorango and his business partner Demitri Stavropoulos in 2004, around the same time Giannoulias took the position at Broadway. According to the Tribune's report:

In the most complete examination yet of Broadway's loans to the pair, the Tribune found more than $27 million worth of mortgages to Giorango and his land trusts and companies since 1999. Stavropoulos took part in many of those deals. Broadway officials have cited privacy laws in declining to document the full extent of their business with the men. The new figures exceed reported totals by about $7 million.

Shortly after Broadway began lending money to a Chicago firm the pair formed, Giorango and Stavropoulos used that company to launch their own lending business and make more than 40 short-term loans to borrowers who might not qualify for traditional bank financing, the Tribune found. Such so-called hard-money loans are typically riskier than long-term mortgages offered by banks.

In his statement, Giannoulias said, "In retrospect, I think the added security of a background check would have been good, and I believe that many more banks — including Broadway — now include such checks as part of the loan-making process." His brother Demetris did speak with the Tribune and defended the loans, saying, "There's no reason to believe there was anything going on but the acquisition of the real estate." While Giannoulias' claim that he had nothing to do with the loans may be true, it's another mark against a campaign that's already taken a few hits, leaving Republicans feeling like they have a great chance to reclaim the Senate seat, health care flap or no.