March 23, 2016 / 10:21 PM / 3 years ago

Ex-CEO of failed Nebraska bank gets 11 years prison for fraud

March 23 (Reuters) - The former chief executive of TierOne Bank, a publicly traded Nebraska lender that failed in June 2010, was sentenced on Wednesday to 11 years in prison for fraudulently concealing loan and real estate losses during and after the financial crisis.

Gilbert Lundstrom, 74, was also ordered by U.S. District Judge John Gerrard in Lincoln, Nebraska to pay a $1.2 million fine, the U.S. Department of Justice said.

Lundstrom is among only a handful of U.S. bank chief executives to be convicted at trial for defrauding investors and regulators shortly before, during or after the financial crisis.

A federal jury in Lincoln had last Nov. 6 found him guilty on 12 of the 13 counts he faced, including securities fraud, wire fraud and conspiracy.

Daniel Collins, a lawyer for Lundstrom, did not immediately respond to requests for comment.

TierOne had about $2.8 billion of assets and 69 branches when the Lincoln-based lender was closed on June 4, 2010, ending roughly a century in business.

Prosecutors said Lundstrom and other senior officers hid more than $100 million of losses from investors and regulators, after the bank had boosted exposure beyond its home base to riskier areas such as Las Vegas commercial real estate.

A U.S. Treasury Department watchdog also said Lundstrom misled investors at TierOne’s 2009 annual meeting about the bank’s health, and whether the bank had applied for federal bailout money.

James Laphen and Don Langford, respectively once TierOne’s chief operating officer and chief credit officer, have pleaded guilty to charges and would be sentenced on Thursday, the Justice Department said.

The defendants “recklessly gambled with bank assets and lied to shareholders and government regulators, and through their actions drove a respected regional bank into the ground,” Assistant Attorney General Leslie Caldwell of the Justice Department’s criminal division said in a statement. “They have now been held accountable.”

The Federal Deposit Insurance Corp was appointed TierOne’s receiver. Great Western Bancorp Inc of Sioux Falls, South Dakota assumed most of the bank’s deposits.

The case is U.S. v. Lundstrom, U.S. District Court, District of Nebraska, No. 14-cr-03136. (Reporting by Jonathan Stempel in New York;editing by Grant McCool)

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