The bank's top brass knew about it. So did its senior credit committee. The deal was unanimously approved by top bank officials, and they even held a celebration lunch attended by then Bank President Robert Richley to toast the deal. First City even took out an advertisement in the Wall Street Journal in 1988 boasting about its partnership with Calumet. Prosecutors have also accused Lundy and Matthews of allowing Cihak to breed a mare with a high-priced stallion, Secreto, for one dollar.
Defense attorneys say the deal was never completed.
A painting by Picasso was supposed to be collateral, but Lundy never got it. The loan apparently enabled First City to avoid federal lending limits and kept one of its largest debtors from going into default. In return, prosecutors say, Lundy hoped the bank would help him with Calumet's debt, and he hoped to make interest off the transaction. But there's no evidence that Lundy knew the arrangement was illegal or that he received any benefit from the deal. In fact, the Spanish borrower never repaid Lundy.