Search Proves Fruitless Hunt for Franklin Funds Hits Another Dead End - May 2, 1990 - Omaha World-Herald
Not for commercial use. Solely to be used for educational purposes
May 2, 1990 Search Proves Fruitless Hunt for Franklin Funds Hits Another Dead End; [Sunrise Edition] Robert Dorr. Omaha World - Herald. Omaha, Neb. pg. 11
Full Text (492 words)
(Copyright 1990 Omaha World-Herald Company)
The National Credit Union Administration has reached one more dead end in its search for money taken from the failed Franklin Community Federal Credit Union, NCUA general counsel Robert Fenner said from Washington.
The latest thread that the NCUA thought might lead to missing money appeared on a videotaped statement provided to a Franklin legislative committee investigator by a 21-year-old woman who said she had been sexually abused as a minor.
The woman told of an alleged blackmail incident against Lawrence E. King Jr. several years ago. In her taped account, the woman said a man told King, then Franklin's top executive officer: "You have to give me some money."
King indicated he would have to go to Grand Cayman Island to get money, the woman said on a taped segment shown on WOWT-Channel 6.
But the NCUA hasn't been able to substantiate that King traveled to Grand Cayman Island to get money or that he ever had money there, Fenner said.
The Kings did travel to nearby Jamaica a number of times, he said.
At the NCUA's request, the legislative committee provided the federal agency a copy of the taped statements by the two young men, as well as the woman, who made sexual abuse allegations.
The NCUA hoped to learn bits of information that might lead to money or assets. But the search has been fruitless, Fenner said. "It didn't add anything to what we already knew. It was not helpful," he said.
Ever since Franklin collapsed on Nov. 4, 1988 - with a shortfall of $39 million - rumors have circulated that some money was hidden in a Swiss bank account or buried somewhere.
The NCUA, the federal agency that repaid depositors from its insurance fund, retained a private firm to trace Franklin funds. The amount unaccounted for has been reduced to $896,000, a recent NCUA report showed.
Most of that missing money was spent in ways that permit little recovery of assets, Fenner said.
The NCUA report on what happened to the $42.2 million the credit union needed to cover its obligations when it closed in 1988 was issued last month.
It said that between the beginning of 1984 and the closing of the credit union Nov. 4, 1988, $10.8 million allegedly went for the personal use of King and his wife, Alice; $2.1 million to King-owned businesses; $9 million to pay interest to depositors; $9.7 million to pay operating expenses of Franklin and its affiliate, Consumer Services Organization; $2.4 million for other Franklin expenses; and $783,000 for the personal spending of Mary Jane Harvey, 69, who helped King at the credit union and in some of his other ventures, and her son E. Thomas Harvey, who was Franklin's chief accountant.
The rest of the $42.2 million was accounted for by $3.2 million in assets the credit union had when it was closed and $3.3 million in losses before 1984, the report said.
Credit: World-Herald Staff Writer