King Calls Allegations 'Garbage' - Feb 4, 1989 - Omaha World-Herald
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Feb 4, 1989 King Calls Allegations 'Garbage'; [Sunrise Edition] Robert Dorr. Omaha World - Herald. Omaha, Neb. pg. 1
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(Copyright 1989 Omaha World-Herald Company)
Three stories on one Basis record.
Lawrence E. King Jr., top executive of Omaha's failed Franklin Community Federal Credit Union, Friday characterized allegations against him as "hearsay" and "garbage."
"No one cares about where the money is or how to find the money. . . . No one has even asked me how to find the money," King said during a brief interview at the Showcase Lounge, 2229 Lake St.
Asked what he would say if authorities asked him what had happened to Franklin's money, King said: "I would say, 'Let's go back to the books and find out.' "
The National Credit Union Administration, the federal agency that regulates credit unions and insures each account up to $100,000, has alleged in a lawsuit that King diverted $34 million of Franklin's funds for his own purposes.
NCUA officials have said they can't find any Franklin assets beyond the $2.5 million listed on the credit union's books. They say they are eager to determine what happened to $38 million in missing Franklin funds.
J. Leonard Skiles, regional director for the NCUA, said Friday night that he met with Franklin board members last November shortly after the agency discovered money was missing. Skiles said he asked whether anyone knew where the money was.
"Larry King was there. He said he did not know," Skiles said from Austin, Texas. No director gave any information about the missing funds, he said.
In the three months since Franklin was closed, King said, his life has not gone well. "I'm not doing well. My businesses are not doing well. I'm losing everything."
He told two World-Herald reporters that the newspaper's stories have been "twisted" and "distorted." "The World-Herald has gone out of its way to create crap, junk," he said.
In an earlier story, The World-Herald reported that several Omaha merchants said King often lavished gifts on a number of young men who were associated with him. Three young men who declined to be identified said King outfitted them with clothing, furnished and paid the rent on their apartments, leased cars for them and took them on trips to cities around the country.
King said those comments were "just street talk."
"You are crucifying me and my family for something I haven't done," he said.
King was asked what he thought federal and state investigations would determine regarding the allegations against him.
"They will find out it's not true," he said. "It's all hearsay and it's all garbage."
First Assistant U.S. Attorney Thomas Thalken has said matters involving Franklin have been referred to a federal grand jury.
Some people were subpoenaed and appeared before the grand jury in December and January. Proceedings of the grand jury, which continues to meet periodically, are secret by law.
King said he hasn't been subpoenaed. Asked whether he would give testimony if subpoenaed, he said, "I don't know. I'll ask my attorney."
Erickson & Sederstrom, the law firm that represents King, has asked for court permission to withdraw from the case. King said he didn't know why. "You'll have to ask them."
In its court petition, Erickson & Sederstrom said King had failed to pay his bills for legal services and for other costs connected with his defense. U.S. District Judge William Cambridge hasn't ruled on the law firm's request.
Probers Describe Fate Of Some Franklin Funds
National Credit Union Administration officials say they are spending considerable time and effort to determine what happened to funds missing from the Franklin Community Federal Credit Union.
NCUA general counsel Robert Fenner provided a breakdown that he said represents preliminary estimates of where funds went for a few months:
- 40 percent: Personal spending by Lawrence E. King Jr., the credit union's chief executive, for jewelry, clothes, apartment rents, flower bills, chartered jets, limousines and other items.
- 16 percent: Expenses of King-owned business ventures. King owns or co-owns the King Co., a food catering service; Cafe Carnavale, a restaurant that closed last month; the Showcase Lounge; and Akasaka restaurant.
-18 percent: Interest paid to certificate of deposit holders.
-6 percent: Salaries at Consumer Services Organization, a Franklin- affiliated financial counseling service.
-20 percent: Other purposes still being determined.
Whether that breakdown will explain where Franklin's funds went over several years isn't yet known, Fenner said.
Commonwealth Veterans Help Trace Franklin Money
The National Credit Union Administration has retained two veterans of Lincoln's Commonwealth Savings Co. collapse to help determine what happened to funds at Franklin Community Federal Credit Union.
The two are John Queen, who worked for the State of Nebraska as deputy receiver in managing and disposing of Commonwealth's assets, and Bob Kirchner, assistant deputy receiver.
Queen and Kirchner have been assigned to "trace all the money coming in and where it went" from Franklin at least as far back as 1984, J. Leonard Skiles, NCUA regional director, said from Austin, Texas.
The federal regulatory agency wants a complete record of what happened at Franklin, he said. For one thing, he said, the information is needed to support the NCUA's lawsuits against Lawrence E. King Jr., his wife, Alice, and the affiliated Consumer Services Organization.
Outside help was needed because NCUA employees who worked in Omaha for a time after Franklin's collapse needed to return to their normal duties in Austin, Skiles said.
The failure of Commonwealth Nov. 1, 1983, ranks as the largest failure of a financial institution in Nebraska history. Assets fell about $40 million short of paying debts, even after $8.5 million in state tax money went to depositors of the state-chartered industrial loan and investment company.
KingCredit: World-Herald Staff Writer