Former Nebraska banker sentenced to 18 months for insider loan scheme

Former Nebraska banker Jack Poulsen was sentenced to 18 months in federal prison on Aug. 1 for an insider loan scheme that led to the 2020 collapse of Ericson State Bank. .Poulsen, 71, was sentenced by U.S. District Judge Susan Bazis after he pleaded guilty to bank fraud in early May. Poulsen, president of central Nebraska-based Ericson State Bank from 2010-19, will be on supervised release for five years following his prison sentence and must pay $815,000 in restitution..According to the U.S. District Attorney's Office, Ericson State Bank established a lending relationship with someone related to Poulsen in 2012. Poulsen's relative and his businesses received loans and opened several accounts. .Beginning in 2015, Poulsen interfered with the insider-related loans and accounts to hide their unsoundness from the board despite being banned from being a loan officer on loans he had a personal conflict of interest in, according to the Attorney's Office. .Poulsen reportedly advanced bank funds on insider-related loans more than the approved loan amounts; manipulated data in the bank's computer system by advancing payment due dates and loan maturity dates to conceal from the board that they were past-due; and advanced loans over the approved note amounts and applied the funds to hide overdrafts on the checking accounts from the board..In the spring of 2019, Poulsen allegedly extended the maturity date on an insider loan without proper authorization. The loan was subsequently presented as not being past-due to the board despite being mature for six months and drawn to a balance of approximately $1.6 million over the authorized loan amount, according to the District Attorney's Office. .Also in the spring of 2019, the Nebraska Department of Banking and Finance found the condition of Ericson State Bank had deteriorated due to the bank "being operated without regard for laws, regulations, prudent banking policies and practices," according to the District Attorney's Office. .During a subsequent investigation, the Department of Banking and Finance found Ericson State Bank had significantly violated Nebraska statutory lending limits and that Poulsen "had personally made, or was directly responsible for, many of the loans, lines of credit, and coverups of overdrafts that were in violation of the law, and which were adversely affecting the safety and soundness of ESB.".The fraud continued until Poulsen was removed from his positions and his license revoked in September 2019..Ericson State Bank failed in February 2020. Nebraska Department of Banking and Finance Director Mark Quandahl later attributed the collapse to large out-of-territory commercial loan losses and subpar management practices leading to a deterioration in capital. .Ericson State Bank was founded in 1959 and had its sole branch in Ericson..The case was investigated by the Office of Inspector General for the Federal Housing Finance Agency, FDIC, Federal Reserve Board and FBI.