Franklin Suit Focuses on Lawyers' Role - Feb 20, 1994 - Omaha World-Herald
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Feb 20, 1994 Franklin Suit Focuses on Lawyers' Role; [Sunrise Edition]
ROBERT DORR.Â Omaha World - Herald.Â Omaha, Neb.Â pg.Â 10.B
Full TextÂ (547 words)
(Copyright 1994 Omaha World-Herald Company)
More than five years after federal agents raided the north Omaha headquarters of the Franklin Community Federal Credit Union, the government may soon get its day in court to try to prove that the embezzlement that forced Franklin's collapse could have been stopped in its early stages.
Lawyers in the Omaha firm of Erickson & Sederstrom saw Lawrence E. King Jr. spending lavishly while the Internal Revenue Service investigated him, the government contends, and should have told Franklin's board of directors.
King, 49, is serving a 15-year sentence in federal prison for embezzling money from Franklin and for other crimes linked to the collapse of the north Omaha credit union he headed.
Erickson & Sederstrom's response in court filings is that its lawyers had no solid information about the source of King's money, and that even if they did they were bound by ethics and state law not to tell Franklin's board.
Firm, Lawyers Sued
The National Credit Union Administration has sued Erickson & Sederstrom, four of that firm's attorneys, a former Erickson & Sederstrom lawyer and another Omaha lawyer. The lawsuit, filed in U.S. District Court in Omaha, originally named 35 Erickson & Sederstrom lawyers as defendants. Thirty-one - who were included only because they were shareholders in the law firm and not accused of acting negligently - have been dismissed from the suit.
In written arguments, the two sides debate whether attorneys suspected that the credit union was being looted, whether those lawyers should have done something to stop the looting and whether anything they might have done would have made a difference.
The National Credit Union Administration's lawsuit is expected to be tried before U.S. District Judge William Cambridge and a federal court jury in Omaha this year, perhaps as soon as March.
Erickson & Sederstrom, with its main office in Regency, is one of the state's most prominent law firms. Several Erickson & Sederstrom lawyers have been active in Republican politics: former Gov. Charles Thone; William Morrow Jr., former GOP national committeeman; Sam Jensen, political adviser to former Govs. Thone and Kay Orr; J Russell Derr, former state Republican Party executive director; and Samuel Clark, who was an aide to former 2nd District Rep. Hal Daub.
King sang the national anthem at the 1984 Republican National Convention and served as vice chairman of a national group of black Republicans in the 1980s.
A prominent Democrat, Mike Boyle, also worked for Erickson & Sederstrom for two years after his 1987 recall as Omaha mayor. Boyle lobbied alongside Thone in Lincoln on behalf of Erickson & Sederstrom clients.
Morrow, Derr and Clark are defendants in the lawsuit along with Erickson & Sederstrom, Erickson & Sederstrom attorney Gary Hoffman, former Erickson & Sederstrom lawyer Howard Kaplan, Omaha attorney Joseph Byrne and Byrne's law firm.
The NCUA said Erickson & Sederstrom attorney Derr flew on private jets and stayed in hotel rooms costing hundreds of dollars a night that were paid for by King.
Derr and King had a common interest in Republican politics, Erickson & Sederstrom says. Derr thought the expenses were paid by the black Republican political groups that King headed, Erickson & Sederstrom said.
"Derr never suspected King of illegal activity, embezzlement or otherwise," Erickson and Sederstrom said.
Credit: WORLD-HERALD STAFF WRITER