The former chief executive of a Nebraska bank was convicted Friday by a federal jury for lying to investors and regulators about considerable losses tied to risky commercial real estate investments.
Gilbert Lundstrom, 74, led TierOne Bank to make hazardous investments, including construction projects in Las Vegas, resulting in loan and property valuation losses of more than $100 million in the aftermath of the financial crisis, according to a Justice Department announcement.
Then Lundstrom and other executives at the $3 billion publicly traded company concealed the losses to investors for more than a year, according to authorities. They did not disclose in financial statements that the Lincoln, Neb., bank needed $34 million to $114 million in additional reserves and loan loss allowance after finding out about the requirement in April 2009. And in a May 2009 annual shareholder meeting, Lundstrom did not clearly reveal the state of the bank’s capital ratios and reserves to investors, nor that it had asked for Troubled Asset Relief Program assistance, regulators contend.
By the end of the year, TierOne Bank had disclosed $120 million in loan losses to its shareholders, according to the Lincoln Journal Star. The 750-employee, 69-branch bank was delisted from the Nasdaq, and then shut down by the Federal Deposit Insurance Corp. in June 2010, the announcement said.