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Pages in the Franklin Story - Feb 11, 1991 - Omaha World-Herald

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Feb 11, 1991 Pages in the Franklin Story; [Metro Edition] Omaha World - Herald. Omaha, Neb. pg. 5

Full Text (1760 words)
(Copyright 1991 Omaha World-Herald Company)
The Franklin Credit Union Case

Chronology of events in the Franklin Community Federal Credit Union case:

Nov. 4, 1988: The National Credit Union Administration, a federal regulatory agency, closed Omaha's Franklin Community Federal Credit Union because it was engaging in "unsafe and unsound practices." Lawrence E. King Jr., Franklin's top officer, said the NCUA's allegation came as "a complete surprise."

Nov. 11, 1988: Although Franklin's records showed the credit union had assets of $2.5 million and liabilities of $2 million, the NCUA said $30 million was missing. Records showing millions of dollars in certificates of deposit sold at high interest rates were hidden from federal examiners, the NCUA said.

Nov. 14, 1988: The NCUA filed a $34 million lawsuit against Lawrence E. King Jr. contending he diverted money from the credit union for his personal use, to run his businesses and to pay interest and principal on unrecorded certificates of deposit.

Nov. 20, 1988: Lawrence E. King Jr. drove a $69,300 white Mercedes, often chartered jets and rode in rented limousines, The World-Herald reported. He rented a house in Washington, D.C., for $5,000 a month and gave lavish parties. His annual salary at Franklin was $16,200.

Dec. 1, 1988: NCUA officials raised their estimate of Franklin's potential liabilities to $39 million.

Dec. 15, 1988: Reacting to Franklin's large-volume certificate-of-deposit sales to outsiders, the NCUA's board in Washington, D.C., placed restrictions on deposits that any low-income credit union is permitted to accept from non-members.

Dec. 23, 1988: Accountants said Franklin had not been audited in more than four years. Two private accountants said they had been unable to complete their audits because they repeatedly were delayed by Franklin's chief accountant, E. Thomas Harvey Jr.

Jan. 1, 1989: In sworn answers to questions from the NCUA, Lawrence E. King Jr. said he didn't understand financial statements, did not know his salary at Franklin and usually worked at the credit union only three hours a day.

Jan. 1, 1989: Although many Omahans had believed that King's businesses and his wife's family in Jamaica provided the Kings with wealth to support their lavish lifestyle, King's businesses, in fact, were not profitable, and Alice King didn't have any affluent family members in Jamaica, interviews by The World-Herald indicated.

Jan. 11, 1989: The Legislature approved forming a seven-member committee to investigate the Franklin failure and allegations of child abuse. State Sen. Loran Schmit of Bellwood was named chairman.

March 5, 1989: The committee of Franklin Credit Union members responsible for doing annual audits of the credit union's finances seldom if ever met after 1984, The World-Herald reported. Members of Franklin's supervisory committee said they didn't know they had the duty of seeing that audits were done.

March 24, 1989: The South Dakota order of nuns that had more than $2 million on deposit at Franklin received $361,969 from the NCUA's insurance fund, leaving the order with a loss of $1.7 million. The NCUA said it paid more than the $`100,000-per-account limit because the order had certificates of deposits in several names.

March 26, 1989: In a World-Herald interview, Lawrence E. King Jr. said that Franklin kept two sets of books and that he didn't think either set was hidden from government examiners. He said he was a hands-off manager who trusted his employees.

May 19, 1989: A federal grand jury charged Lawrence E. King Jr. with 40 felony counts accusing him of crimes stemming from Franklin's financial failure. His wife, Alice, was indicted on 12 charges. Three employees of Franklin who sold certificates of deposit on commission were indicted on income-tax-evasion charges.

May 21, 1989: E. Thomas Harvey Jr., Franklin's chief accountant, began cooperating with federal agents soon after the credit union's doors were closed, Harvey's attorney said.

June 3, 1989: A financial consultant told a House Banking Committee oversight subcommittee that the missing $39 million from Franklin almost certainly was all spent. The NCUA, the federal regulation agency, might not have been fooled if it had heeded certain "red flags" in monitoring Franklin, the agency's regional director said.

June 11, 1989: Mary Jane Harvey, a retired Presbyterian Church staff member who had close ties with King, said she believed God had forgiven her for "my stupidity" in becoming entangled in wrongdoing at Franklin. She said she hopes people can forgive her.

June 13, 1989: Mrs. Harvey and her son, E. Thomas Harvey Jr., Franklin's chief accountant, each pleaded guilty to one count of embezzling and one count of evading federal income taxes. Their guilty pleas were part of their agreement to become prosecution witnesses if the Kings were tried. Dec. 1, 1989: The NCUA sued 24 people who were directors of Franklin or members of its supervisory committee. Audits were not done for more than four years before Franklin failed, the NCUA said.

Dec. 19, 1989: Franklin Committee Chairman Loran Schmit said his legislative committee had 21 hours of videotaped testimony from three young people who told investigator Gary Caradori they were victims of and witnesses to sexual and physical abuse when they were minors.

Jan. 30, 1990: Nebraska Attorney General Robert Spire said he would ask that a Douglas County grand jury be formed to determine whether child abuse allegations had any basis. He said he was concerned that names of alleged perpetrators were becoming public.

Feb. 7, 1990: U.S. Magistrate Richard Kopf ordered Lawrence E. King Jr. to undergo a mental competency exam to determine whether he was fit to stand trial. King was taken to a federal medical facility in Springfield, Mo.

March 19, 1990: The Douglas County Franklin grand jury, meeting in secret, began its investigation.

March 19, 1990: Lawrence E. King Jr. was returned to Omaha after a 40-day stay at the federal medical facility in Springfield. U.S. Magistrate Richard Kopf ordered him held without bail until a hearing could be held on his mental competency. Two psychiatric evaluations indicated King was incapable of cooperating with his attorneys.

March 25, 1990: Terry Wiese told The World-Herald that he had led a life of sumptuous parties and trips to Caribbean islands while he was King's homosexual companion in the mid-1980s. But he never saw King involved in sexual activity with minors, with homosexual prostitution or with the use or supplying of drugs, he said.

March 26, 1990: Alice King's attorney said Mrs. King held two part-time minimum-wage jobs and also sold cosmetics to support herself and her son. March 30, 1990: U.S. Magistrate Richard Kopf made a preliminary decision that King was mentally incompetent to stand trial. He recommended to U.S. District Judge William Cambridge that King be taken to the U.S. Medical Facility at Rochester, Minn., for treatment. April 4, 1990: U.S. District Judge William Cambridge ruled King was mentally incompetent to stand trial. King was immediately taken to the Rochester federal facility.

April 12, 1990: Mary Jane Harvey allegedly spent $689,547 in Franklin funds for personal purposes - more than seven times the $93,900 in personal spending attributed to her son, E. Thomas Harvey Jr., a financial consultant said.

April 22, 1990: Michael Casey, a former Omahan who led two Los Angeles Times reporters on a fruitless search through the Far East for kidnapped newspaper heiress Patty Hearst in the 1970s, resurfaced and became involved in the Franklin case. His main activity apparently was to pass information from one source to another.

May 1, 1990: Noel Seltzer, 37, of 3806 Patterson St., one of three Franklin certificate-of-deposit salesmen charged with income tax evasion, was sentenced to seven months in prison. Earlier, Robert F. Morley, 35, of Ashland, was sentenced to probation and five months of house arrest and was fined $1,000. Larry J. Murray, 40, of 4001 N. 42nd St., who pleaded guilty to filing a false tax return, later was sentenced to six months in prison.

May 15, 1990: Former World-Herald entertainment columnist and WOWT television personality Peter Citron pleaded no contest to two felony charges of fondling boys. He was diagnosed as a mentally disordered sex offender requiring treatment and was given a prison sentence of three years to eight years. The judge said the Citron case had nothing to do with the Franklin investigation.

July 11, 1990: A small plane piloted by legislative committee investigator Gary Caradori and carrying his 8-year-old son, Andrew, crashed about 2:30 a.m. into a north-central Illinois cornfield, killing both. Caradori and his son had attended the Major League Baseball all-star game in Chicago and were flying back to Lincoln.

July 12, 1990: Some members of the Caradori family and Franklin Committee Chairman Loran Schmit raised the possibility that the Caradori plane was sabotaged because of Caradori's Franklin work. But chief federal investigator William Bruce said he hadn't found any evidence of sabotage.

July 24, 1990: The Douglas County Franklin grand jury called the child sexual-abuse allegations a "carefully crafted hoax." Two men who said they were sex abuse victims recanted their stories. Alisha Owen and Paul A. Bonacci, who said they were sexually abused as minors, were indicted on charges of lying to the grand jury. The jury also indicted businessman Alan Baer on charges unrelated to the credit union.

Aug. 29, 1990: Lawrence E. King Jr., diagnosed by government psychiatrists as recovered enough from a mental disorder to assist in defending himself against criminal charges, returned to Omaha after being released from the federal medical facility at Rochester, Minn.

Sept. 26, 1990: A federal Franklin grand jury agreed with the county grand jury that the child sexual abuse rumors that had circulated in Omaha for more than a year couldn't be substantiated. The grand jury indicted Alisha Owen, whose allegations were at the root of many rumors, on eight perjury charges. Sandra Rhode Prucha, assistant to King, was indicted on one charge of bank fraud.

Oct. 24, 1990: A paternity lawsuit alleging that former Omaha Police Chief Robert Wadman fathered a 5-year-old girl was dismissed after genetic test results came back showing with 100 percent certainty that he wasn't the father.

Oct. 24, 1990: At a federal court hearing, Lawrence E. King Jr. said he was competent to stand trial. Prosecutors agreed with King. But King's court-appointed attorneys said there were questions about King's mental condition that might make it difficult for him to go to trial.

Dec. 7, 1990: U.S. District Judge William Cambridge ruled that Lawrence E. King Jr. was mentally competent to stand trial on 40 criminal charges stemming from Franklin's 1988 failure, upholding a recommendation made by U.S. Magistrate Richard Kopf.

Feb. 11, 1991: Lawrence E. King Jr. and Alice King pleaded guilty to certain charges.

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