Franklin Attorneys Say Case Isn't Over - June 18, 1991 - Omaha World-Herald
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June 18, 1991 Franklin Attorneys Say Case Isn't Over; [Sunrise Edition] David Thompson. Omaha World - Herald. Omaha, Neb. pg. 1
Full Text (1049 words)
(Copyright 1991 Omaha World-Herald Company)
The principals in the Franklin credit union collapse have been sentenced to prison, but the case is not over, prosecuting and defense attorneys said Monday.
One criminal case is pending, and a federal prosecutor said more may be filed, although they will not be major cases. More civil lawsuits are likely, a defense attorney said.
Lawrence E. King Jr., the manager-treasurer of the Franklin Community Federal Credit Union, and his wife, Alice Ploche King, received maximum prison terms Monday from U.S. District Judge William Cambridge for their roles in the diversion of $39 million from the Franklin treasury.
King, 46, was given 15 years - three sentences of five years each to be served one after the other - for conspiracy, embezzlement and making false entries on the books of a federally insured institution.
Mrs. King, 44, was sentenced to three years for filing a false tax return for 1986.
During the four months between the Kings' guilty pleas to felony charges and their sentencing, federal investigators began looking at "financial irregularities in certain accounts," said First Assistant U.S. Attorney Thomas Thalken, the chief federal prosecutor.
"These involve small amounts by individuals not previously mentioned," he said. "They are not major players."
King was accused of being the architect for the diversion of $39 million from the credit union between 1976 and Nov. 4, 1988, when Franklin collapsed.
Mrs. King was accused of helping her husband cover up the losses and, as part of a plea bargain, admitted making a false statement on a 1986 federal income tax return.
Mrs. King's court-appointed defense attorney, Jerold Fennell, said he expects more civil cases arising from Franklin.
"I think there is going to be more litigation by the National Credit Union Administration that will point out other responsible parties who perhaps did not properly carry out their duties," he said.
NCUA civil suits against former directors of the credit union are pending in federal court, although an NCUA spokesman said the agency does not expect to recover much of the $39 million sought.
Another criminal case is also pending. Sandra Rohde Prucha, King's administrative assistant, faces trial in September on a bank fraud charge based on allegations that she diverted credit union money to her own account.
A mother and son, Mary Jane Harvey and E. Thomas Harvey Jr., began prison sentences in May for their part in looting Franklin. Harvey, Franklin's chief accountant, is serving four years and three months for embezzlement and federal income tax evasion. Mrs. Harvey, 70, is serving three years and 10 months for the same crimes.
Earlier, a bookkeeper pleaded guilty to embezzling $33,000 from Franklin, and three development officers pleaded guilty to filing false tax returns. They were accused of failing to report commissions they received for selling certificates of deposit for Franklin.
The Kings were sentenced during separate hearings Monday, and there were marked contrasts between them.
After the sentencings they were taken to separate jails - King to the Douglas County Correction Center, Mrs. King to the Sarpy County Correction Center - to await transportation to a federal prison.
During King's hearing, his attorneys made detailed arguments about why he should receive less than a maximum sentence. They said he was unable to admit his guilt because of personality disorders from which he suffered when he committed the crimes.
King left the arguments to his lawyers and said he did not want to make a statement.
He showed no apparent emotion as the sentence was pronounced.
Mrs. King made an emotional plea for leniency. Her voice shook and broke as she apologized for her actions.
"I admit my guilt," she said in a quavering voice.
"I know it is wrong. . . I did it because I felt this was a way to keep my family together. I am sorry."
Alluding to her own childhood - her father died when she was 6 years old, and her mother died a year later - she asked not to be separated from her son.
She cried when Cambridge pronounced the sentence.
Earlier, the judge had indicated he was considering a prison sentence, because he asked her whether she had made arrangements for someone to care for her son.
She said the child's paternal grandparents, Lawrence E. and Venita King, would take care of him.
"There is no question the child is going to suffer as a result of both parents being in prison," Cambridge told her. "The court isn't causing that situation. You and your husband did."
During the hearings, Thalken argued for maximum sentences.
He said King "plundered" the Franklin treasury, and the magnitude of the loss and its effect on the community called for a maximum sentence.
Mrs. King lied to investigators and "led them down different paths," Thalken said. She cooperated only when it suited her purpose, he said.
"Only when the yacht was sinking did Mrs. King get in the rowboat with her son and try to save herself," the prosecutor said.
During King's hearing, Cambridge rejected defense attorney Steven Achelpohl's arguments that King suffered from diminished mental capacity when he committed the crimes and that he should receive less than the maximum sentence.
"There is no question that the defendant is suffering one or more personality disorders," Cambridge said, "but so, probably, is just about any other poor soul who is in prison in the United States today."
King's attorneys, Achelpohl, Marilyn Abbott and Alan Stoler, said King probably will serve about 10 years in prison when prison officials subtract time for good behavior, credit him for seven months he was held in prison hospitals for mental examinations and then place him on parole.
Mrs. King will be eligible for parole after serving one year of her sentence, but her release would have to be approved by the U.S. Parole Board.
Cambridge said King must spend three years on supervised release after he completes his prison term.
While under supervision, King cannot consume, possess or dispense alcohol, and he can be searched and given breath or urine tests to determine whether he is complying with that order, the judge said. Alice King . . . Three-year sentence. Larry King . . . The Franklin executive received a 15-year sentence. His attorneys said he probably will serve about 10 years in prison.