Unpaid loans to slain Brooklyn, N.Y., slumlord Menachem "Max" Stark contributed to the demise of Chicago’s Broadway Bank, which served high-profile customers such as President Barack Obama and had ex-Chicago Bears quarterback Jim McMahon as a board member, the New York Post reports. Two sizable loans to Stark, in addition to 15 other bad bets by the mismanaged financial institution, led to $104 million in losses for the bank, which shut its doors in 2010. Stark’s burned body was found inside a dumpster on Jan. 3, according to WABC TV.
According to the Post, the loans included one at $1.5 million to Stark and business partner Israel Perlmutter in 2007 that was to be used to "provide working capital for the borrowers’ New York-based real-estate business," court papers showed. The loan, which was secured through a second mortgage on an apartment building the pair had bought earlier that year, was left unpaid after they defaulted on the first mortgage. The second loan, for $6.2 million, for construction of another project, also had no chance of being repaid, since financial statements showed that Stark and Perlmutter "were highly illiquid and unable to pay [it]."
The Post quoted a statement from the Federal Deposit Insurance Corp. that the bank’s board members "were grossly inattentive to the affairs of the bank, deferring excessively to the whims of the Giannoulias family." According to the Post, Broadway was run by Demetris and George Giannoulias, brothers of former Illinois state Treasurer Alexi Giannoulias, an acquaintance of Obama’s.