November 06, 2015

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — TierOne Bank CEO Guilty of 12 Counts of Bank Fraud Relating to Nebraska’s Largest Bank Failure

The 74-year old founder and former chief executive officer of Nebraska’s largest bank failure has been found guilty of fraud.

Prosecutors say Lundstrom concealed delinquent and uncollectible loans from investors and regulators, making the bank look healthier than it was. At the end in 2010, when the bank was seized and shuttered by regulators, shareholders were left with worthless stock that had tanked from a high in 2006 of $35 a share. Loans not being paid as agreed ballooned to 22 percent of loans, many times the 3.2 percent that was the average for Nebraska banks at the time.

Lundstrom’s attorneys argued that while he had made bad business decisions, he never intentionally misled anyone about the bank’s condition and instead relied on information from executives at the bank who reported to him.
Two of those executives, former bank President James Laphen and former Chief Credit Officer Don Langford both pleaded guilty to similar charges and testified for the government in its case against Lundstrom. Their sentencing has not been scheduled.
Gil will remain free on bond until he Feb. 24, where he faces the prospect of spending the rest of his life in jail.