Gilbert Lundstrom, 74, was the CEO of TierOne Bank, a $3 billion publicly traded company. In November, Lundstrom was convicted of 12 counts out of 13 charged, including conspiracy to commit wire fraud and securities fraud, conspiracy to falsify bank entries, wire fraud, securities fraud and falsifying bank entries, the DOJ reported.
According to the DOJ, Lundstrom orchestrated a strategy to expand TierOne’s portfolio beyond traditional lending into riskier areas – including commercial real estate
in Las Vegas, which took a beating when the financial markets imploded. In response, Lundstrom and his co-conspirators intentionally concealed more than $100 million in losses from investors and regulators, and provided inflated numbers in its reports to the Securities and Exchange Commission and the Office of Thrift Supervision.
Lundstrom also learned that the bank needed to increase its reserves and “loan loss allowance” by between $34 million and $114 million, but concealed that information as well, the DOJ alleged. He also misrepresented TierOne’s capital reserves and whether the bank had applied for TARP funding furing a shareholder meeting.
In June of 2010, TierOne was shut down by the FDIC. As that time, the bank had more than 750 employees working at its Lincoln, Nebraska, headquarters and 69 branch offices in Nebraska, Iowa and Kansas, the DOJ reported.
“Today’s sentencing shows the Justice Department’s commitment to prosecuting individuals who abuse their corporate positions to commit fraud,” said Assistant Attorney General Leslie R. Caldwell. “Gilbert Lundstrom and his co-defendants’ crimes not only contributed to the collapse of a major regional bank during the financial crisis, but also destroyed the jobs of hundreds of bank employees and led to massive losses for the bank’s shareholders. The defendants recklessly gambled with bank assets and lied to shareholders and government regulators, and through their actions drove a respected regional bank into the ground.”
In addition to his prison sentence, Lundstrom was also ordered to pay a $1.2 million fine.
A former bank CEO was sentenced today to 11 years in federal prison for orchestrating an effort to conceal more than $100 million in losses on loans and real estate, according to the Justice Department.