Menu Close

Government seeks to block distribution of funds to former CEO, president of TierOne Bank

This post was originally published on this site
{{featured_button_text}}

Great Western Bank took over TierOne after the Lincoln bank failed in June 2010.

Federal prosecutors are seeking to block the FDIC from disbursing nearly $3 million to Gilbert Lundstrom and James Laphen for unpaid retirement benefits and deferred compensation at TierOne Bank, which they allegedly didn’t disclose to the court.

The men, who led TierOne as CEO and president respectively, both got prison time for a scheme to conceal losses on real estate loans from regulators and shareholders, which ultimately led the bank to fail in June 2010.

Gilbert Lundstrom

James Laphen

Lundstrom is serving an 11-year prison sentence on house arrest after being convicted at trial. Laphen pleaded guilty for his role in the plot, testified at Lundstrom’s trial and got 34 months. He finished serving his sentence in 2018.

Between them, they were court-ordered to pay $2.6 million in restitution, in addition to $500,000 in fines.

As of June 28, they still owed $1,144,321 restitution and more than $200,000 in fines, Assistant U.S. Attorney Amy Blackburn said in a brief filed last week.

TierOne 10 years later: Looking back at Nebraska’s biggest bank collapse

She said while the court ordered them to pay their fines immediately, they were allowed to pay the restitution on a monthly payment schedule. While they’re current on their $2,500 monthly payments, they still have sizable fine and restitution balances, Blackburn said.

She said the government recently learned that they both filed claims with the FDIC as receiver for TierOne Bank in 2010 that were approved.

Laphen filed one for $227,390 for deferred compensation, plus $13,850 in accrued interest. 

Lundstrom filed five, including one for $481,697 in unpaid retirement plan benefits, which the FDIC paid him last October. Blackburn said the FDIC still owes him $2,748,561, plus interest, on the others.

The discovery prompted her to ask a federal judge to amend the order to make the restitution due and payable immediately and to order the FDIC to pay funds owed to Lundstrom and Laphen to the clerk of the court.

Ex-TierOne CEO set to be released from prison to home confinement because of COVID-19

“Although the FDIC funds were not yet available to Lundstrom or Laphen at the time of sentencing, as an account receivable, the claims for the funds should have been disclosed by defendants. Indeed, defendants were required to disclose such allowed claims, but failed to do so,” Blackburn wrote in a brief filed last week in U.S. District Court.

She called Lundstrom’s receipt of the money in October and failure to inform the court “deceitful.”

Attorneys for the men haven’t yet responded to the filing. 

Blackburn said, in theory, Lundstrom and Laphen could spend or transfer the money to try to avoid paying restitution. 

“The interests of justice require modification of the restitution order so that the victims of the defendants’ crimes may be repaid in a timely manner,” she said. 

Reach the writer at 402-473-7237 or lpilger@journalstar.com.

On Twitter @LJSpilger