November 7, 2015 / 12:01 AM / 4 years ago

Ex-CEO of failed Nebraska bank found guilty of fraud

Nov 6 (Reuters) - The former chief executive of TierOne Bank, a publicly traded lender in Lincoln, Nebraska that failed in June 2010, was convicted on Friday for concealing loan and real estate losses during and after the financial crisis, the U.S. Department of Justice said.

A federal jury in Lincoln found Gilbert Lundstrom, 74, guilty on 12 of the 13 counts he faced, including securities fraud, wire fraud and conspiracy, after a two-week trial.

The verdict followed guilty pleas last year by James Laphen and Don Langford, who had respectively been TierOne’s chief operating officer and chief credit officer.

Lundstrom is among only a handful of top U.S. bank executives to be convicted at trial for defrauding investors and regulators before, during or after the financial crisis.

Daniel Collins, a lawyer for Lundstrom, was not immediately available for comment.

Prosecutors said Lundstrom and his co-conspirators hid more than $100 million of loan and real estate losses from investors and regulators, after the bank had ventured beyond its home turf into riskier areas such as Las Vegas commercial real estate.

They also said TierOne concealed its need to boost reserves, and that during its 2009 annual meeting Lundstrom misrepresented the bank’s health and whether it had applied for federal bailout money.

TierOne had about $2.8 billion of assets and 69 branches when it was closed on June 4, 2010 after roughly a century in business.

The Federal Deposit Insurance Corp was appointed receiver. Great Western Bancorp Inc of Sioux Falls, South Dakota assumed most of TierOne’s deposits.

Regulators use the term “tier 1 capital” as a measure of a bank’s core financial strength.

The case is U.S. v. Lundstrom, U.S. District Court, District of Nebraska, No. 14-cr-03136. (Reporting by Jonathan Stempel in New York; Editing by Tom Brown)

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