U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23499 / March 25, 2016
US v. Gilbert G. Lundstrom, Case No. 4:14-cr-03136 (D. Neb. filed Dec. 9, 2014)
SEC v. Gilbert G. Lundstrom, et al., Case No. 8:12-cv-00343 (D. Neb. filed Sept. 25, 2012)
TierOne Bank's Former Chairman and CEO Sentenced to 11 Years Imprisonment
The Securities and Exchange Commission announced today that on March 23, 2016, Gilbert G. Lundstrom, the former chairman of the board and CEO of Lincoln, Neb.-based TierOne Bank, was sentenced to 11 years in federal prison and ordered to pay a $1.2 million criminal fine.
Lundstrom, along with TierOne's former chief operating officer James A. Laphen and former chief credit officer Don A. Langford, was criminally charged for orchestrating a scheme to defraud TierOne's shareholders and misleading regulators by concealing more than $100 million in losses on loans and declining real estate. Laphen and Langford both pled guilty and agreed to cooperate in the criminal case against Lundstrom. At Lundstrom's trial, the government presented evidence that Lundstrom was the architect of an aggressive strategy to expand the bank's portfolio beyond traditional lending in Nebraska to riskier areas like commercial real estate in Las Vegas. Once the financial crisis hit, Lundstrom's bet on real estate in riskier areas decimated the bank. Lundstrom and his co-conspirators then intentionally concealed the massive losses in TierOne's loan and real estate portfolio from its investors and banking regulators and provided inflated figures in its required reports to the SEC. Lundstrom was convicted on all but one count of the indictment.
In September 2012, Lundstrom agreed to settle parallel SEC charges. Lundstrom consented to a final judgment enjoining him from violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2, from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 12b-20, 13a-1, 13a-11, and 13a-13, and from controlling any person who violates Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13; barring him from serving as an officer or director of a public company; and imposing civil penalties of $500,921.
On March 24, 2016, Laphen and Langford were sentenced to 34 and 21 months imprisonment, respectively. Laphen and Langford's sentences took into account their cooperation against Lundstrom. Laphen also previously settled the SEC's parallel charges against him.
The investigation that led to the SEC's charges was conducted by Ian Karpel, Lee Robinson, Rebecca Franciscus, and Michael D'Angelo in the SEC's Denver Regional Office. The SEC's litigation against Langford, which is continuing, is led by Nicholas Heinke and Polly Atkinson.
For further information, please see Press Release No. 2012-198.