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Ex-Franklin Worker Receives Probation - May 18, 1993 - Omaha World-Herald

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May 18, 1993 Ex-Franklin Worker Receives Probation; [Sunrise Edition] Kevin O'Hanlon. Omaha World - Herald. Omaha, Neb. pg. 9.sf

Full Text (534 words)
(Copyright 1993 Omaha World-Herald Company)

Sandra Rhode Prucha, a former employee of the Franklin Community Federal Credit Union, was sentenced to two years of probation Monday for filing a false tax return in a case that grew out of Franklin's 1988 collapse.

Ms. Prucha was the administrative assistant to Franklin's manager-treasurer, Lawrence E. King Jr. King was convicted of masterminding the diversion of $39 million from the Franklin treasury.

Ms. Prucha pleaded guilty in February.

U.S. District Judge Lyle Strom also ordered Ms. Prucha to perform 500 hours of community service and to resolve any problems she might have with the Internal Revenue Service stemming from the charges.

The tax charge to which Ms. Prucha pleaded guilty was part of a plea agreement. Under the agreement, a bank fraud charge alleging that Ms. Prucha diverted credit union money to her own account was dropped.

She faced a maximum of three years in prison, a $100,000 fine and a year of probation for not reporting $8,354 on her 1987 tax return.

Hers was the last criminal case to be disposed of in the Franklin investigation.

King and his wife, Alice Ploche King, were sentenced in June 1991 for their roles in diverting money from Franklin between 1976 and Nov. 4, 1988, when federal officials closed the credit union.

King was sentenced to 15 years for conspiracy, embezzlement and making false entries on the books of a federally insured institution. Mrs. King was sentenced to three years for filing a false tax return for 1986.

Mary Jane Harvey and her son, E. Thomas Harvey Jr., began serving sentences in May 1991 for their part in the diversion of Franklin funds.

Harvey, Franklin's chief accountant, was sentenced to four years and three months for embezzlement and federal income tax evasion. Mrs. Harvey was sentenced to three years and 10 months for the same crimes.

A bookkeeper earlier 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.

A lawsuit brought by a federal regulatory agency, alleging negligence by two dozen former directors and others connected with Franklin, was settled in January.

C.L. Robinson, the Omaha attorney who represented the National Credit Union Administration in the matter, said the total paid by the defendants was in the tens of thousands of dollars. Neither Robinson nor the defendants' attorneys would reveal specific amounts.

Still pending are a civil lawsuit against Ms. Prucha and suits against two banks and two law firms, Robinson said.

The NCUA originally asked for $39 million in its lawsuit, filed in late 1989. The original lawsuit named 24 directors, former directors and members of the supervisory committee, which was appointed by Franklin's board to supervise audits of the credit union.

According to the lawsuit, the directors relied on financial examinations by the NCUA and failed to have their own audits conducted from 1984 until Franklin's failure.

The lawsuit also alleged that the directors ignored NCUA warnings and delegated excessive authority and discretion to Franklin officials, particularly King and Harvey.

Ms. Prucha's civil trial is scheduled in June before Judge William Cambridge.

Credit: World-Herald Staff Writer


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