King's Assets Frozen Credit Union Executive Lived Well, Records Show - Nov 20, 1988 - Omaha World-Herald
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Nov 20, 1988 King's Assets Frozen Credit Union Executive Lived Well, Records Show; [Sunrise Edition] Paul Goodsell. Omaha World - Herald. Omaha, Neb. pg. 1.A
Full Text (3260 words)
(Copyright 1988 Omaha World-Herald Company)
World-Herald Staff Writers Robert Dorr and Nicole Simmons contributed to this story.
In Omaha, Lawrence E. King Jr. drove a new Mercedes. When he traveled, he chartered jets. Rented limousines waited at airports for him and his party.
In Washington, D.C., he often stayed at a $,000-a-month rented house just off Embassy Row. In Los Angeles, he checked into a two-story suite in the Beverly Wilshire Hotel. The suite had a view of the Pacific Ocean.
Last week, federal authorities moved to freeze King's assets in the wake of a $4 million lawsuit they filed against King, chief executive of the failed Franklin Community Federal Credit Union.
Now, King's Mercedes is headed back to the dealer. He gave up about 20 acres of his wooded homesite last week to his attorneys, although he retained the house, valued at $82,800 for tax purposes. He vacated the Washington house and sold some of its furnishings.
King had planned to be host for a fund-raiser Friday night for the Bemis Foundation's program for minority youths. Known for catering and playing host for elaborate affairs in places like New Orleans' Mardi Gras World and Dallas' South Fork Ranch, King had offered to provide a cocktail party and dessert buffet. But the fund-raiser was scrapped hours before the event.
As a 14-year-old Omahan, King took out the garbage and did chores at the Blackstone Hotel. Today, at 44, King is struggling to defend himself against allegations that could wipe out his restaurants, catering business and affluent lifestyle, and affect his reputation as a credit union miracle worker.
Federal regulators accused King last week of diverting money from Franklin for personal and business purposes. In a civil lawsuit, the National Credit Union Administration said King kept a second, secret set of financial records to hide the existence of more than $3 million in certificates of deposit.
King allegedly used the money to pay for limousine rides, chartered jets, jewelry, clothing, flowers and other expenses unrelated to the credit union, the lawsuit said.
King would not be interviewed for this story. But his attorney, William Morrow, said King deposited his own money in the credit union and used it to pay the bills.
Morrow said the community is rife with rumors.
"It's more fun to leap to these evil, accusing assumptions," he said.
Friends and associates paint King in a different light. To them, he is a generous, sometimes flamboyant man who rose from modest beginnings to wealth and prominence.
"All this comes as a surprise to us," said Wilda Stephenson, a member of Calvin Memorial Presbyterian Church where King is an elder. "We've always held the family in high repute, and Larry too."
An Omaha native, King worked at a variety of jobs, served a stint in the Air Force and began work for First National Bank. He was in a management training program at the bank when Rodney Wead asked him to run the fledgling Franklin credit union.
Wead and others in north Omaha had started the credit union on a shoestring. Despite help from local churches, however, the credit union was struggling when King came on the job in July 1970.
On his first day, King recounted in previous World-Herald interviews, auditors were at the door threatening to shut Franklin down because of shoddy record keeping and cash flow problems. King convinced the auditors to give him time to put affairs in order and find backers to invest money in Franklin.
Later, he formed Consumer Services Organization Inc. to provide financial counseling, energy conservation information and other services to low-income residents. CSO also attracted grants from churches, businesses and foundations to subsidize losses at the credit union and pay Franklin employees.
King enlisted help from local churches and their national organizations, which deposited money in Franklin or made direct grants to underwrite Franklin and CSO services.
Franklin grew slowly, increased its worth to $ million by the end of 1983 and $.5 million - on the books - by the time it was closed this month.
In the meantime, King ventured into other fields of business. He operated a lawn service and catering business, managed the food and liquor service at the now-closed Cleopatra's nightclub, and became a partner in the Akasaka restaurant in the ParkFair shopping mall in downtown Omaha.
King has handled the finances for Akasaka, which reports gross sales of $,000 to $,000 a month, property manager Ray Scalise said. Kikue Jetter runs the day-to-day operation.
For four years, King has sent a representative - often his wife, Alice - to the restaurant daily to pick up receipts, Mrs. Jetter said. King paid the bills, Scalise said.
Now, however, Mrs. Jetter has set up her own bank account to handle restaurant finances.
Her attorney, who spoke on condition he not be identified, said King has not shown Mrs. Jetter a financial statement or income tax form for their company, MASA Inc., during the past four years.
Both Mrs. Jetter and King provided $5,000 each to start the restaurant, the attorney said, although a second mortgage filed with the Douglas County Register of Deeds indicates that King borrowed $0,000 from Omaha National Bank in 1984 for his MASA Inc. investment.
Last fall, King bought Cafe Carnavale at 7555 Pacific St. from Rusty Harmsen for $50,000, according to a purchase agreement filed in the City Clerk's Office.
Earlier this year, King paid $2,000 for the Showcase Lounge at 2229 Lake St., city records show. King does not spend much time at either the Showcase or Cafe Carnavale, employees said.
King and his wife, the former Alice Ploche, have upgraded their lifestyle since the early days of the credit union. They moved from 2021 Wirt St. - now the headquarters of King's catering business - to 4424 Manchester St., 725 Sunset Trail and finally to their current residence at 13232 N. River Road.
Contemporary in design, the house is well furnished inside but not pretentious, friends said. It sits on 26 acres of heavily wooded land overlooking the Missouri River to the east and a deep ravine to the west in the Ponca Hills north of Omaha.
King used to be partial to Chevrolet Corvettes, but now drives a white 1988 Mercedes 560 SEL, retail price $9,300, which the credit union leases for him. State vehicle registration records indicate that Franklin also leases a red 1986 Mercedes.
Morrow said the two Mercedes cars have been turned over to the National Credit Union Administration, which in turn will give them back to the leasing company.
King usually wears two or three rings, including a pinky ring with "a large cluster of diamonds," said City Councilman Richard Takechi, an Omaha jeweler who has known King for years.
Records filed in U.S. District Court indicate that King spent $9,769 at Landon's clothing store during a 13-month period in 1987 and 1988. Other spending during that time includes $7,000 at Omaha Jewelry and $9,512 at Borsheims, according to the records.
Court records also indicate that King paid more than $ million to American Express during that period.
When King had his 44th birthday party at the Omaha Press Club in September, the bill was $,000. At Christmas time, a florist has bee hired to decorate four Christmas trees in his house, according to people who have been there over the holidays.
And King's 8-year-old son, Prince, sported a diamond ring while serving as a page in the Ak-Sar-Ben Coronation Ball, said people attending the event.
King has explained his spending as part of being a positive role model for young blacks.
In a 1985 interview, King recalled that a 10-year-old boy told him that he admired drug dealers and others with flashy cars and expensive clothing.
" 'If you think I want to be the manager of a credit union, you're crazy,' " the youth told King.
Several of King's friends repeated the anecdote last week and applauded him for his efforts.
"I think it was a noble thing to be doing," said Chuck Sigerson, 2nd District Republican chairman. "It's easy to take your success and disappear into the community. He showed you can lead just as good a life as the people who do things illegally."
By all accounts, King did not disappear. He has served with a variety of civic organizations, such as Boys' and Girls Clubs, YMCA, Campfire Girls, Head Start and the Salvation Army.
King also represented Calvin Memorial church on the Presbytery of the Missouri River Valley, and serves on the planning and budget committee of the Presbyterian Church USA.
Mrs. King has been director of Camp Fire Girls and coordinator of the Volunteer Bureau of the United Way. A Chicago native, she works as bookkeeper for King's businesses.
Since Prince - formally known as Lawrence E. King III - attends the private Brownell Talbot school, King took charge of the school's annual fund-raising auction last spring. Held at Peony Park, the event featured horse-drawn carriages to bring people from the parking lot, clusters of orchids and other floral displays, gardenias for each woman, and tables heaped with shrimp, crab legs and fresh oysters.
Friends and co-workers said King goes out of his way to offer assistance to people.
Recently, for example, King sent a letter to acquaintances asking them to help provide a scholarship for a young man who wanted to finish college, Sigerson said.
"He is a philanthropic person, and he's got a big heart," he said.
Morrow said King also has guaranteed rental payments for several "young guys who work with him" and lack a credit history. He said landlords were reluctant to rent apartments to the employees without such a guarantee. Bemis Fund-raiser
Ree Schonlau, executive director of the Bemis Foundation, said King had approached the foundation offering to do a benefit for Cultural Arts Together, an outreach program for minority and culturally disadvantaged children who have artistic talent.
She said the Friday night event did not work out, and declined to give details.
Judy Carroll, Franklin's marketing director, said she didn't know exactly why the fund-raiser was dropped at the 11th hour.
Once chairman of the Black Democrats for presidential candidate George McGovern, King has become an active Republican - and on a national level. He is involved with the party's Citizens for America and the National Black Republican Council.
Several weeks before the November election, Sigerson said, King had a party at his house on behalf of Sen. Dave Karnes. He said King put his arm around Karnes and told those attending, "We need this man elected."
In 1984, King helped raise money for a party by black Republicans before the Republican National Convention in Dallas. The event was conducted before the convention on the South Fork ranch where "Dallas" is taped for television.
An accomplished baritone, King sang the national anthem at the 1984 GOP convention.
Last summer, at the Republican convention in New Orleans, King orchestrated a party for about 1,000 people under the auspices of the Council on Minority Americans, a group that he headed.
Held inside the building where Mardi Gras floats are stored, the reception featured ample helpings of food amid 50-foot-high Cleopatra statues and other Mardi Gras decorations.
King hired a Washington, D.C., public relations firm to help with the event and prepare a short film that was shown to guests. King's catering company provided food and Omaha florist Daniel Janousek took a staff to New Orleans to set up displays of exotic flowers.
"Clearly it was an expensive party," said David Carmen of Carmen, Carmen & Hugel Inc., the firm hired by King. In an interview from Washington, Carmen estimated that the event cost about $00,000.
Although the council was the sponsor of the event, Carmen said, he believes that the bills went to King. Court records indicate that Carmen's firm was paid $7,839 by King, but Carmen said not all that money was for New Orleans expenses. He said his firm also assisted King in applying for federal grants.
Carmen said King has hired other Washington consultants and public relations aides on other projects.
"Larry has a pretty high profile in Washington," he said. "He's donated to a lot of causes."
Karen Lloyd, a former CSO employee, said she went to Washington several times to work on a recent grant application. She said she flew in a private plane one trip, and used commercial flights other times. D.C. House
While in Washington, she said, she and others in the CSO-Franklin group stayed at King's house. King was not along for those trips.
King has rented the 4,662-square-foot house at 2441 California Ave. NW for about two years, said the owner, Nicole D'Amecourt. Located near Embassy Row, the Spanish-style stucco dwelling is next door to the Venezuelan Embassy. The Brazilian Ambassador to the Organization of American States occupied the house before King.
The two-story house, furnished with items such as Lalique crystal, rents for $,000 a month. It is assessed for tax purposes at $93,600.
Mrs. D'Amecourt said King was in town perhaps twice a month for several days at a time. When he was in Washington, the house was usually full with his entourage.
"He was a very good tenant," she said. "He kept the house immaculate."
King hired a housekeeper to take care of the house, answer the phone, and do some scheduling. "He liked the house to be watched," she said.
King moved out early last week without telling her and after holding a furniture sale, Mrs. D'Amecourt said.
Morrow said the move was prompted by King's attorneys.
"We suggested that he should cut his expenses," Morrow said.
About the same time as the Washington move, the Kings transferred ownership of their Ponca Hills property to the Erickson & Sederstrom law firm. Morrow would not say whether the property, which changed hands for $9,000, was intended to pay King's legal expenses. Apartments
The transfer took place Monday, the day before U.S. District Judge William Cambridge ordered King's assets frozen.
Besides his Omaha and Washington residences, King has maintained apartments at various locations around Omaha.
Recently, King had one of the penthouse apartments at the Twin Towers, 3000 Farnam St., as well as another apartment in the building for a time. He paid at least $,175 in rent in 1987, plus another $,200 during early 1988, court records indicate.
"He lived there part of the time," Morrow said.
In addition, he said, King used the apartment to house entertainers that he had brought into Omaha.
"It was cheaper than the Red Lion," Morrow said.
One former employee, who spoke on condition that he not be identified, said King traveled as often as weekly, mainly to Los Angeles, Chicago, New York or Washington. The employee said King usually had an entourage of five to 10 people.
King's favorite hotels included the Ritz Carlton hotels in Chicago, Washington and New York, and the Beverly Wilshire in Los Angeles, the employee said. He tended to reserve the same suite for return visits, the employee said.
'Treated as VIP'
At the Beverly Wilshire, King was considered a frequent guest and was at the hotel several times last summer, a hotel spokeswoman said.
"He's very much treated as a VIP," she said.
The spokeswoman described the townhouse-style suite where King stayed as "very elegant," with French antique furniture, fabric-covered walls and two-story glass windows facing the ocean.
"It's quite stunning," she said.
Several employees said that when King did not use a chartered jet, the party generally flew first class.
King recently has used Executive Jet Air, a charter company based in Columbus, Ohio. Before then, however, he hired planes from Omaha firms such as Kam Air, which received $4,952 from King from June through December 1987, court records indicate.
"He's really one of the best customers we've had," said Leslie Fey, who handles billing for the charter company. "He used to fly with us a lot. The pilots all enjoyed him."
King offered to tip the pilots, which is unusual, she said.
A round-trip by chartered jet to Washington could cost about $,500 plus charges for ground time, she said.
Morrow said the charter flights sometimes were the least expensive option for a group of six or eight travelers, considering the cost of commercial airfare for the group.
Old Market Limousine Service in Omaha received $48,375 from King during 13 months in 1987 and 1988, court records indicate. Owner Gail Holmes would not give details of King's limousine bills, but noted that the company arranges and bills for ground transportation for its clients when they travel to other cities.
North Omaha businessman Jesse Allen, who co-owned the Showcase Lounge before selling it to King earlier this year, said it doesn't matter that King's spending habits were far removed from those of his credit union customers.
"He may have lived a little flamboyantly," Allen said. "But I don't think he forgot where he came from."
Some people - including his friends - wondered how King could live so well as manager of a relatively small credit union.
"I always wondered," Takechi said. "I just figured he made some good investments."
One current board member, who asked not to be identified, said King's salary with Franklin was $6,200. CSO paid him $ a year, the board member said.
"How people come into money or how people have money is a private concern," Sigerson said. "Maybe somebody in the past hit a lottery."
Several people speculated that Alice King's family in Jamaica is affluent and has provided money to the Kings; Morrow declined to comment on that. IRS Attention
The Kings drew attention from the Internal Revenue Service in 1986 when it conducted an investigation of King's finances for 1982 and 1983, according to documents filed in U.S. District Court.
During that probe, IRS special agent Dale Bahney requested records from Franklin credit union, including nearly $6,000 in Franklin checks deposited in King's checking account at Omaha National Bank.
Bahney also asked for records of loans that were written off as bad debts "in order to determine whether they represented any income source" for King.
King filed a motion in U.S. District Court to quash the summons, but it was denied in September 1987.
Morrow said the records were provided to the IRS and a settlement ultimately was reached in the tax case. He declined to give details and would not say whether the current credit union problems are linked to the earlier IRS investigation.
IRS and FBI agents served search warrants Nov. 4 when they accompanied the National Credit Union Administration officials who took over Franklin.
Sigerson, like others, said he finds it difficult to believe that King has done anything wrong.
"I'll withhold judgment until I hear all the evidence," he said. "I haven't talked to Larry."
Said Takechi: "It's very confusing."
Over the years, he said, he has been fascinated by King's prolific entertaining. It isn't that King's parties are always particularly opulent, he said, but the fact that King has held such events so frequently.
"He seemed to enjoy having people around him," Takechi said.
Rich Janda/World-Herald King's Omaha residence at 13232 N. River Road . . . The house sits on 26 acres overlooking the Missouri River.The Associated Press The house King rented at 2441 California Ave in Washington, D.C. . . . Last week, he conducted a furniture sale and moved out of the house.