Longtime lawyer and CEO of failed bank gets 11 years in fraud case
A longtime Nebraska lawyer who later served as the CEO of TierOne Bank when it became insolvent was sentenced Wednesday to an 11-year federal prison term. He was also ordered to pay a $1.2 million fine and undetermined restitution.
Gilbert Lundstrom, 74, was accused by the government of causing more than $50 million in losses by concealing the dicey state of the bank’s assets as the housing bubble burst and TierOne became the biggest bank to fail in state history. He was found guilty by a jury last year of 12 of 13 counts in a bank-fraud case.
Prosecutors had suggested a 30-year sentence and a much bigger financial penalty. Lundstrom’s defense counsel argued that the government was trying to blame him for bad loans that were not the result of his fraud, according to the Lincoln Journal Star and the Omaha World-Herald.
“There are no winners in this sad tale,” said U.S. District Judge John Gerrard at one point during the daylong hearing. “Only losers.”
A lengthy Lincoln Journal Star article talks about Lundstrom’s career, which included decades as a partner of Woods & Aitken, where he served as general counsel to the bank’s predecessor before becoming CEO of TierOne.
Initially, the bank did very well with Lundstrom at the helm, the Journal Star reports. However, it imploded during a national mortgage meltdown sparked by dubious loans and inflated housing values. During his three-week trial, subordinates of Lundstrom said he created fake accounts to conceal bad loans made to real estate developers as the housing boom was about to become a housing bust.
“Do not see me as an evil man. I never intended to hurt anyone,” Lundstrom told the judge, explaining that he never expected the bank to become insolvent and put employees out of work. “I truly believed that the market would turn around and we’d get out of this together.”
