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Attorneys Say Trial of Kings Wouldn't Unearth Surprises - Feb12, 1991 - Omaha World-Herald

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Feb 12, 1991 Attorneys Say Trial of Kings Wouldn't Unearth Surprises; [Metro Edition] Robert Dorr. Omaha World - Herald. Omaha, Neb. pg. 1

Full Text (1800   words)
(Copyright 1991 Omaha World-Herald Company)

A trial of Lawrence E. King Jr. and his wife, Alice, would not have uncovered any gold mine of secrets about the Kings or the Franklin Community Federal Credit Union collapse, attorneys in the case said Tuesday.

"There would have been no surprises," said First Assistant U.S. Attorney Thomas Thalken, lead prosecutor in the King case.

The Kings pleaded guilty Monday in U.S. District Court in Omaha to a reduced number of charges related to the collapse of the credit union and the disappearance of $39 million from it.

King, Franklin's top executive, probably will serve at least 10 years in prison for his part in looting the credit union, his plea bargain with prosecutors indicates.

Sentencing May 13

Mrs. King could be sentenced to a maximum of three years in prison. How much, if any, prison time she is likely to receive was unclear after a two-hour hearing Monday before U.S. District Judge William Cambridge.

Mrs. King's attorney said he hopes to convince Cambridge that Mrs. King should not receive much, if any, prison time so that the Kings' son, Prince, 10, won't be separated for long from both parents.

Cambridge said he will sentence the Kings May 13 after a pre-sentence investigation by the U.S. Probation Office. The Kings will remain free until sentencing.

The guilty pleas mean the long-awaited trial of the Kings won't happen. The trial, which was scheduled to start March 4, could have lasted 2 1/2 months to six months, attorneys involved in the case estimated.

If the Kings had been tried, Thalken said, the two cornerstones of his case would have been:
The testimony of E. Thomas Harvey Jr., Franklin's chief accountant, on how Franklin was looted.

A detailed financial breakdown by a National Credit Union Administration consultant showing where Franklin's money went.

'There's Nothing There'

Harvey's testimony and the financial breakdown would have amounted to a "regurgitation of all those matters that already have been talked about," Thalken said.

The prosecutor noted that the Franklin case has gotten massive publicity. Two grand juries have issued reports, and a U.S. House of Representatives oversight subcommittee conducted a hearing in Omaha.

Alan Stoler, one of King's attorneys, said he agreed with Thalken. "I don't think there's anything hidden or sinister that hasn't been reported."

The idea some people have that some matters have been covered up "is a misperception," Stoler said. "There's nothing there."

Jerold Fennell, Mrs. King's attorney, said a trial would not have brought out anything about the Franklin case that the public doesn't already know.

In his plea agreement, King took responsibility for crimes that led to Franklin's financial collapse Nov. 4, 1988.

'Responsible'

"I was ultimately responsible for overseeing the day-to-day operations of Franklin," King said in a prepared statement. "I hereby admit responsibility for (Franklin) funds which were used for my personal expenses."

Federal authorities alleged that the King family spent $10.8 million from 1984 through 1988 to support a lavish lifestyle that included driving a $70,000 white Mercedes and buying a $17,000 green ostrich-skin coat and matching slacks.

Thalken told Cambridge that the original 12 charges against Mrs. King related to Franklin would have been difficult to prove.

There was "substantial conflict" on whether Mrs. King was a participant in the Franklin offenses, Thalken said. "There would be difficulty in proof."

King, 46, who was indicted on 40 charges May 19, 1989, pleaded guilty to three: one count each of conspiracy, embezzlement and making false bookkeeping entries.

Mrs. King, 44, pleaded guilty to a new charge of filing a false tax return for 1986.

Other Charges Dropped

All other charges against the two were dropped.

The parts of King's plea agreement dealing with his potential sentence contain these points:
King cannot be sentenced to more than 15 years in prison.

He falls into a category of criminals who should serve a prison sentence between a minimum of 10 years and one month to a maximum of 12 years and seven months. Such a sentence would comply with federal sentencing guidelines.

To partly accomplish that goal, he should receive a maximum prison sentence of five years each on two charges under federal sentencing guidelines. Those two terms would be served one after the other. Parole is not possible. That 10-year term could be reduced by about six months by good conduct in prison.

He committed one of the three offenses to which he pleaded guilty before federal sentencing guidelines took effect. A sentence up to five years is possible on that offense. That sentence would be served after the other two. If he receives the five-year maximum, he normally would serve about one-third of that sentence, or about 20 months, before receiving parole. If all the above points come to pass in that manner, King would serve 11 years and two months in prison.

Judge's Judgment

However, Judge Cambridge made it clear that he will exercise his own judgment in imposing a sentence. Under federal rules, Cambridge must sentence a defendant within the sentencing guideline range unless he has good reasons to deviate.

The plea agreement specifies one possible reason for Cambridge to reduce King's sentence. It says King will be permitted to produce evidence that he had "reduced mental capacity" that contributed to his committing crimes at Franklin.

If King makes that claim, the government will have the right to pick a psychiatrist to examine Franklin's former top executive, the agreement says, giving the government a chance to rebut King's claim of diminished mental capacity.

The question of whether King was mentally competent was raised a year ago when U.S. Magistrate Richard Kopf ordered King to undergo a mental competency exam. He first was found to be incapable of cooperating with his attorneys but ultimately was determined competent to stand trial.

Stoler, King's attorney, said after Monday's hearing that if King is given the maximum 15-year term, "that is not a light sentence."

"Would you like to spend 15 years away from your family?" Stoler asked.

The maximum sentence for the charges to which King pleaded guilty also includes a $750,000 fine if the judge chooses to impose it.

'Consideration for Wife'

There were indications that King's guilty plea resulted partly from his desire to get a light sentence for his wife.

On his signed plea agreement, King said his first reason for pleading guilty was "consideration for his wife and son."

One part of the plea agreement - a part committed to orally by both sides - tied King's agreement to plead guilty to Cambridge's acceptance of Mrs.

King's guilty plea.

Stoler said King wanted the continuity for his family that his wife's presence at home would provide if she isn't sentenced to prison time.

The Kings came into the courtroom separately Monday but left together. They declined to speak to reporters as they left.

Original Focus

The collapse of Franklin has generated waves of news coverage - first on the allegations of financial misdealings and later on rumors and allegations of child sexual abuse.

Two Franklin grand juries found no substantiation for child sexual abuse allegations that had been made to a legislative committee investigator.

The hearing Monday dealt only with charges relating to the credit union's financial collapse, returning the Franklin case to its original focus.

Cambridge questioned King, his attorneys and Thalken on the sentencing portion of the plea agreement. All agreed that the calculation of the sentence contained in the agreement was not binding on Cambridge.

All parties said Cambridge could decide to impose the maximum penalty of 15 years in prison for the three counts.

Under the agreement, King waived his right to appeal the sentence he receives.
In accepting the guilty pleas and the agreement, Cambridge said the three counts encompassed most of the other charges in the 40-count indictment against King. "By pleading guilty to conspiracy, all of the relevant conduct is accounted for," Cambridge said.

The admissions in the plea agreements, Cambridge said, "adequately reflect the seriousness of the underlying offense."

Maximum Sentence

Cambridge indicated from the bench that had the case gone to trial and King been found guilty of all 40 counts, the maximum sentence could not have been much more than 15 years.

After the hearing, Thalken confirmed that the conviction of King on all 40 counts would have brought a maximum sentence in the neighborhood of 15 years.

Cambridge questioned the Kings at length about their understanding of the crimes they had pleaded guilty to in the agreement.

For a brief time, King was reluctant to tell the judge that he had, in fact, committed all the crimes mentioned in the three counts, including the conspiracy offense, which referred to 11 separate violations.

Cambridge asked King, "Did you commit them?"

King, whose voice was barely audible in the ninth-floor courtroom, referred to his signed plea agreement.

"I won't accept that," Cambridge said. "I want to know if you did commit these offenses."

King Whispered

King then whispered to his lawyer, Stoler, for several minutes.

Cambridge told King: "I do not want to take your plea of guilty unless you are guilty. Are you, in fact, guilty?" The judge then asked King again whether he was guilty of committing the offense contained in the three counts.

"I am," King said.

Cambridge: "Are they true?"

King: "Yes!"

Cambridge: "Do you still want to plead guilty?"

King: "Yes!"

King's signed statement also acknowledged that he was aware that Harvey "had instituted a bookkeeping system to prevent the National Credit Union Administration from determining the actual status of funds in (Franklin)."

"Although I was not aware of the intricacies and the actual bookkeeping entries that were made by Tom Harvey, I was responsible for aiding those acts which furthered the misapplication of funds from (Franklin) and not taking appropriate action to prevent it," he said.

King's statement said he did not dispute the amounts of money determined by the government to be looted from Franklin and used by King for his personal expenses and his businesses.

Signature on Checks

Fennell, Mrs. King's attorney, told Cambridge that handwriting experts were prepared to testify that Mrs. King's signature had been forged on the checks the prosecution intended to use against her.

The possible sentence for Mrs. King on the single charge to which she pleaded guilty is three years in prison and a fine up to $250,000.

She admitted signing an income tax return for 1986 showing total income for her and her husband of $122,642, a year in which their correct income was $2.7 million - meaning that the under-reported amount was nearly $2.58 million.

Mrs. King stated in writing that her reason for not going to trial was this: "I fear if I go to trial I may be convicted of one or more counts which would result in a prison sentence of great length.

Credit: World-Herald Staff Writer


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