Credit Union Boss Sued for $34 Million : Reports Say Funds Allegedly Diverted to Pay for Lavish Life Style

A man accused of diverting $34 million from a credit union lived in affluence with chartered jets, limousines and a $5,000-a-month rented house, according to published reports.

Lawrence E. King Jr., 44, chief executive of the failed Franklin Federal Credit Union in Omaha, was ordered by a federal judge Tuesday to turn over most of his property to a court-appointed receiver while a $34-million lawsuit against King is pending in U.S. District Court.

The National Credit Union Administration filed the lawsuit last week, accusing King of diverting funds from Franklin for personal and business use through a “long series of fraudulent, dishonest and illegal acts.”

Declined Interviews

The lawsuit said King kept secret a second set of financial records to hide the existence of about $34 million in certificates of deposit.

King allegedly used the money to pay for chartered jets, jewelry, clothing, flowers and other expenses unrelated to the credit union, the lawsuit said.

King, who has declined requests for interviews, has proclaimed his innocence. His lawyer said King used his own money to support his life style.

Reports published by the Omaha World-Herald this week said King drove a new Mercedes-Benz with a retail price of $69,300. In Washington, he often stayed at a $5,000-a-month rented house just off Embassy Row next to the Venezuelan Embassy, the newspaper said.

U.S. District Judge William Cambridge empowered lawyer Keith I. Frederick to take possession of King’s stocks, bonds, bank deposits, jewelry and all real estate--except his catering business and his home overlooking the Missouri River.

The properties sought by the Credit Union Administration “are in danger of being lost, removed or materially injured,” according to the order signed by Cambridge.

Frederick was empowered to reclaim furniture and other belongings that King sold or removed recently from his rented home in Washington. He also was instructed to take possession of King’s jewelry, including a gold watch valued at $65,000, a $9,000 gold ring and a set of black pearl cuff links, tie tac and shirt studs valued at $1,000.

King’s attorney, William E. Morrow Jr., said the receivership issue hinders resolution of the lawsuit.

“I don’t think there is very much property for the receiver to get his hands on,” Morrow said.

King was an active Republican, working with the party’s Citizens for America and the National Black Republican Council and singing the national anthem at the 1984 GOP convention in Dallas.

Last summer, he orchestrated a party at the GOP convention in New Orleans for 1,000 people under the auspices of the Council on Minority Americans, a group he heads. Caterers estimated that the party cost $100,000.

King is described by friends as a “philanthropic person.” He has served with a variety of civic organizations, including Boys and Girls Clubs, YMCA, Campfire Girls, Head Start and the Salvation Army.

“All this comes as a surprise to us,” said Wida Stephenson, a member of Calvin Memorial Presbyterian Church, where King is an elder.