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Senator: Ex-CEO of Franklin Was 'Frank' Schmit Says He Met With King - Mar 15, 1989 - Omaha World-Herald

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Mar 15, 1989 Senator: Ex-CEO of Franklin Was 'Frank' Schmit Says He Met With King; [Metro Edition] Henry J. Cordes. Omaha World - Herald. Omaha, Neb. pg. 9

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(Copyright 1989 Omaha World-Herald Company)


State Sen. Loran Schmit of Bellwood, who heads the Nebraska Legislature's investigation of the Franklin Community Federal Credit Union failure, said Tuesday that he met privately with former Franklin chief executive Lawrence E. King last month.

Schmit said he had a "frank" 40-minute discussion with King Feb. 18 in Omaha.

King had requested the meeting, Schmit said, apparently to give his side of the story behind the failure of Franklin. Schmit said he was surprised by the request for the meeting, which was arranged by a mutual friend.

Allegations Denied

"The questions I asked him he answered very frankly," Schmit said. "I'm not saying he answered them truthfully."

In the meeting, King denied allegations of misappropriation of funds, child abuse and drug abuse.

Federal regulators say $38 million in Franklin assets are unaccounted for. Franklin was closed Nov. 4.

"Mr. King told me he didn't think there was any $40 million missing," Schmit said. "He said there may be $15 million (missing)."

Schmit said he asked King where the $15 million King mentioned had gone. Schmit declined to disclose King's response, saying "some of the things we visited about I don't want to talk about right now."

King denied rumors of child sexual abuse and drug abuse that have circulated since Franklin's failure. King had said that when federal regulators had entered the credit union Nov. 4, they had been expecting to find "guns and drugs," Schmit said.

"He said he hated drugs," Schmit said. "He said, 'I like kids. I don't believe in (even) spanking kids.'

Offer Alleged

Schmit said King also told him that he had once offered to let Omaha Police Chief Robert Wadman stay in the $5,000-a-month townhouse King rented in Washington. King said Wadman had turned down the offer, Schmit said.

Wadman said in a telephone interview Tuesday that King's assertions are "absolutely false." He said King was attempting to establish credibility by associating himself with him.

Wadman said he had never been offered the use of the Washington apartment by King.

"I have had only passing contact with him when hundreds of people were there," Wadman said.

Schmit said King gave no specifics on when he had purportedly offered to let Wadman use the Washington townhouse.
said he had no way of knowing whether it was true.

Schmit said he met with King after he was contacted by a friend who had grown up in his legislative district. Schmit said he had not talked to the friend, whom he declined to name, for several years before the call.

'A Nice Guy'

The friend had worked for King and said he considered King "a nice guy." Schmit said the friend told him that King would like to meet with Schmit.

Schmit said he first spoke to Kirk Naylor, special counsel to the Legislature's Franklin investigation, to make sure nothing would be compromised by meeting with King.

"I will speak to anyone who wants to give me information," Schmit said.

He said King had indicated a willingness to speak again, but said he has had no other contact with King.

Naylor said he did not give Schmit specific advice about whether to meet with King. But, Naylor said, he believes Schmit and other members of the special legislative committee investigating Franklin "have every right to accumulate information that could be of use to the committee.

"I don't think it is appropriate to funnel all fact-finding through myself and through my investigators," Naylor said. "Legislators are in a unique position to have contact with people."

Credit: WORLD-HERALD BUREAU

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