Ericson State Bank President Sentenced to 18 Months in Prison for Fraud that Led to Bank Failure
August 9, 2024
Delaney Sexton
Contributing Editor
Ericson State Bank President Sentenced to 18 Months in Prison for Fraud that Led to Bank Failure
“The people of Nebraska expect their monies to be safe when they choose to place their trust in local banks,” says United States Attorney Susan T. Lehr. “No bank officials should be permitted to abuse that trust for the sake of their and their family’s personal gain. The United States Attorney’s Office thanks all law enforcement agencies who worked diligently on the thorough investigation of this case.”
Jackie Poulsen served as both the President and a member of the Board of Directors at Ericson State Bank. He oversaw the bank’s affairs and managed its daily operations. In October 2017, the bank successfully passed an examination by the Nebraska Department of Banking and Financing (NDBF). However, by April 2019, the situation drastically changed with the NDBF reporting a significant decline in the bank’s condition within that year and a half. The decline was attributed “in large part to [ESB] being operated without regard for laws, regulations, prudent banking policies, and practices.”
This prompted an investigation that uncovered many violations of the Nebraska statutory lending limits. They also found that Poulsen either personally made or was directly responsible for many of the questionable loans and lines of credit, as well as the coverups of overdrafts, that violated the law. His actions were jeopardizing the “safety and soundness of ESB.”
Many of the violations pertained to one of Poulsen’s relatives and their business entities. There was one loan that consistently exceeded the statutory lending limit since November 2017. Since May 29, 2019, Poulsen made several advances to this relative and charged off portions of the loans without completing the necessary documentation or seeking approval from the bank’s Board or loan committee.
Following the NDBF examiners’ visit to the bank on May 29, 2019, the violations of the lending limits only escalated with further advances, payment of overdrafts, and/or increases in lines of credit. By August 2019, the maturity dates on loans had been extended repeatedly without proper documentation; there was insufficient financial information from borrowers; collateral for loans was either absent or poorly documented and managed; and deposit accounts, including those held by his relative, were frequently and significantly overdrawn.
Poulsen’s misconduct continued until he was removed from his positions of authority in September 2019, at which point his license was also revoked.
As of the end of 2019, Ericson State Bank had almost $111 million in total assets, but the NDBF closed the bank and appointed the FDIC as liquidator and receiver of the bank. The NDBF Director, Mark Quandahl, issued a statement, saying: “The failure of Ericson State Bank resulted primarily from large out-of-territory commercial loan losses and poor management practices which led to a deterioration of the bank’s capital.”
Farmers and Merchants Bank entered into a purchase and assumption agreement and took over all of Ericson State Bank’s customer deposits. At the time of the bank’s failure, a loss of $815,000 was linked to insider-related loans involved in Poulsen’s scheme.
“Not only did Jack Poulsen’s financial scheme of insider-related loans lead to his sentence to federal prison, it also led to the collapse of a bank that had served rural Nebraska for 60 years. The FBI is committed to working with our federal, state, and local partners to hold accountable those who exploit their positions of trust to defraud financial institutions,” says FBI Omaha Special Agent in Charge Eugene Kowel.