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The Franklin Scandal
A Story of Powerbrokers, Child Abuse and Betrayal
By Nick Bryant
Trine Day LLCCopyright © 2011 Nick Bryant
All rights reserved.
Webs of Corruption
I left Nebraska utterly devastated. I was beginning to believe that Franklin had been a killing field for the souls of innumerable children. The documentation I garnered revealed scores of victims and the harassment I encountered reinforced my burgeoning beliefs. Over the years, I've wavered on several investigative stories in the face of doubt — I wasn't convinced the stories were noble enough to stalk with reckless abandon. But the evil represented by Franklin unshackled me from any fetters of doubt.
I wouldn't be able to return to Nebraska for eight months, but in the meantime I started digging into the background of one Larry King. King's father, Lawrence King, Sr., grew up in Omaha and was tagged with the nickname of "Poncho" as a youngster. The nickname followed him into adulthood, and, as Poncho King came of age in the 1920s and 1930s, Omaha, the county seat of Douglas County, was on its way to becoming the world's leading livestock market — it overtook Chicago in 1955.
In Poncho King's later teens, he found employment in the meatpacking plants of the Omaha stockyards — like thousands of young men hailing from Omaha. Poncho King went to work in Omaha's Swift meatpacking plant; the Swift Company would employ him for over forty years. He started at Swift on the bottom rung, skinning hogs, but gradually worked his way into a supervisory position.
The founder of the Swift Company, Gustavas Swift, had revolutionized the meatpacking industry in the 1880s by using refrigerated rail cars to transport dressed livestock east. Swift's little trick was to harvest ice from the Great Lakes each winter and then build ice stations along the route. The sprawling Union Pacific Railroad was also headquartered in Omaha, and it was integral to providing the infrastructure for Omaha's booming meat industry.
Poncho King married his teenage sweetheart, Vineta Swancey, in 1942, and they ultimately settled into a clapboard house that was flanked by the roar of the Union Pacific Railroad and the wafting tang of the stockyards on the periphery of Omaha's economically depressed North Side. Poncho and Vineta King had six children; Lawrence Jr. was their second child and oldest son — he was born September 7, 1944. The Kings were devout Presbyterians, and they attended North Omaha's Calvin Presbyterian Church every Sunday. Larry Jr. was a tall, husky kid who was an excellent student and talented singer. King's parents encouraged him to take singing lessons as a youth, and he was a notable fixture in the church's choir.
As a student at Omaha's Central High School, King worked as a waiter at the ritzy Blackstone Hotel. The downtown hotel was a "symbol of elegance" and kept a small fleet of limousines for visiting dignitaries. The Blackstone Hotel offered the teenage, working-class King his first portal into the dazzling world of the rich. King went on to graduate from Central High School in 1962 and then enrolled at Omaha University, where he eventually took up pre-med studies. Becoming disillusioned with premed, he signed up for a four-year hitch in the Air Force in 1965, rising to the rank of sergeant. During his stint in the Air Force, King married Alice Ploche, whom he met in Chicago.
A 1973 article in the Omaha Sun was the first media mention I found of Larry King. According to the article, the Air Force sent King to Thailand to be an "information specialist" as the Vietnam War was raging, and he handled "top secret" military communications. King also told the reporter that after his honorable discharge from the Air Force, he took classes at the American Banking Institute in Omaha. King's résumé states that he was a 1972 graduate of the University of Nebraska with a Bachelor's in Business Administration, but the 1973 article made no mention of his degree.
At the age of twenty-five, King entered the "management training program" of First National Bank in downtown Omaha. The Omaha Sun reported that King, working in the bank's "computer section," and a janitor were the bank's only African -American employees. "I was dissatisfied with my advancement there," King said in the article. So in August of 1970, King left his job at First National Bank with no employment prospects in sight.
Later that year, a key organizer of the faltering, two-year-old Franklin Community Federal Credit Union asked Poncho King if he wanted to take it over — Poncho King had successfully headed the employees' credit union at the Swift Company. Poncho declined, but suggested that the Franklin Credit Union hire his son as its manager. Larry King was interviewed and given the job.
One of King's first moves as Franklin manager was conscripting the fair-haired Tom Harvey to manage the books. Harvey was a former high school teacher, and it was rumored among Franklin employees that he had been fired from his teaching job for fondling a male student. King had reportedly met Harvey at the University of Omaha, and both were ostensibly Presbyterians. Harvey's mother, Mary Jane, a Presbyterian Church bigwig, also came aboard at Franklin. She would eventually lend a hand to her son and King in the plundering of Franklin, and would likewise be convicted on related charges.
The 1973 Omaha Sun article lauded King for his diligence and industriousness as he worked "eighteen-hour" days to single-handedly save the sinking credit union. Interestingly, Warren Buffet owned the now-defunct Omaha Sun, and his wife, Suzie, was a benefactor of the Franklin Credit Union.
The Omaha Sun article was clearly written to puff up King's image, but the article contained a pair of peculiarities as it described up-and-comer Larry King. The peculiarities revolved around the Kings' relocation from North Omaha to a large, rambling home in the affluent Omaha suburb of Ponca Hills. The paper reported that "King renewed FBI acquaintances recently" when a heroin trafficker who lived in King's neighborhood was busted — FBI agents suggested to King that he move out of North Omaha. If the FBI "renewed" its "acquaintances" with King, that would imply that they already had a relationship. As this story unfolds, it will become all too apparent that the FBI had a vested interest in protecting Larry King ... and his dirty deeds.
The second peculiarity involved the Kings' relocating to a lavish house in an opulent suburb inhabited by millionaires. At the time of the article, the Franklin Credit Union's total assets hovered around $100,000, and Larry King reportedly never received more than $17,000 a year from the credit union.
Four years after taking the helm of Franklin, King created the Consumer Service Organization (CSO) as an affiliate of the credit union. The CSO became a mass receiver of welfare, disability, and social security checks for many residents of North Omaha. CSO officers set up Franklin accounts for the entitlement recipients and offered financial counseling. King vociferously extolled the virtues of the CSO for providing "a hand up and not a hand-out," and Franklin's coffers soon swelled with not only the entitlement monies but with grant monies too. The grants were given to Franklin for its good works in the community.
King and his Franklin underlings also started to peddle certificates of deposit around the country, offering interest rates 2% to 3% above the market rate — a Franklin executive raked in a cool $1 million in just one day by vending Franklin's high interest CDs. The Franklin CD con was a Ponzi scheme — Franklin perpetually pushed CDs so it could cover maturing ones.
Corporate powerhouses like Mutual of Omaha, Union Pacific, and the Kiewit Corporation (a Fortune 500 Omaha-based contractor) and several religious organizations, including Boys Town and the American Baptist Church, lined up to give Franklin grants or purchase its CDs. King also cultivated a relationship with President Ronald Reagan's Secretary of Housing and Urban Development, Samuel Pierce, whose political favoritism would later be exposed and give rise to scandal. Under Pierce, HUD would chip in many thousands of dollars to the Franklin Credit Union — Franklin solicited $1 million in HUD grants in 1981. The US Department of Health, Education, and Welfare also gave Franklin thousands. So King was ultimately glomming onto millions via his massive Ponzi scam and also via grants for all his good works.
Omaha World-Herald publisher, Harold Andersen, seemed to be a stalwart ally of King and the Franklin Credit Union. In addition to the World-Herald depositing thousands in the credit union, Andersen was Chairman of Franklin's Advisory Board. The tall, fair-haired Andersen attended Franklin's annual meetings, dispensing smiles and handshakes. In fact, Andersen headed a 1984 Franklin fund drive that raised $672,170, enabling King to build a bedroom in the credit union's basement.
The bedroom would be furnished with a brass bed, fluffy white comforter, a stereo, and a television. King told a Franklin employee that the bedroom served two functions — it allowed him to "unwind" and it also housed a live-in security guard. I talked to one of the "security guards" who briefly inhabited Franklin's basement bedroom — he alleged one of his first official duties as a Franklin security guard was performing oral sex on Larry King in the basement bedroom.
King referred to the credit union as "my baby," and his baby quickly became his personal, bottomless ATM. King flaunted his newfound wealth with all the pomp and garishness appropriate to a nouveau-riche vulgarian. He moved into a second Ponca Hill home, a mansion that overlooked the Missouri River. He eschewed his Corvette in favor of a sleek Mercedes, and sported several diamond rings and a bejeweled $65,000 watch. King's lifestyle was soon a succession of Lear Jets, limos, and five-star restaurants. He also had his hand in a diverse array of business ventures, including restaurants and bars. He bought Omaha's Showcase Lounge, which I'm told was a favored destination of pimps and prostitutes.
King's conspicuous consumption was certainly eyebrow-raising for those taking notice: In a thirteen-month period prior to Franklin's closing, money gushed from Franklin's coffers into King's hands. He racked up $1,131,229 on six different credit cards — $1,033,975 on American Express alone. He spent $186,395 on limos, $45,806 on chartered planes, $45,166 on jewelry, and various florists billed him a total of $145,057.
Though the National Credit Union Administration required federally insured credit unions to be audited every year, Franklin hadn't been audited during its last four years of operation. According to a former Franklin executive, when auditors would show up every now and then, King would holler, "Phone Washington!" After King talked to "Washington," the auditors begrudgingly made a hasty retreat. In December of 1988, a Des Moines Register article quoted an NCUA investigator discussing King and the Franklin Credit Union: "We'd sit around while having a beer in Omaha 10 years ago and wonder where he was getting all the money to pay for his lifestyle." So NCUA officials were apparently cognizant of the fact that King had been looting Franklin for years. But King got by with a little help from his friends — his friends in DC.
Early in 1984, a Franklin employee wrote a memo that documented King's embezzlement of funds. After the employee wrote the memo, he was summarily fired. The former Franklin employee then met with the Director of Nebraska's Department of Banking and Financing and even talked to a representative of the NCUA, but his tale fell on deaf ears.
In the 1980s, King started translating his ill-gotten wealth into political power. In his twenties, King had been a Democrat and die-hard supporter of Democratic Presidential candidate George McGovern, who was walloped by Richard Nixon in the 1972 presidential race. But as King's personal fortunes took a vertical trajectory, he switched his political alliances to the Republicans in 1981.
King was the founder and Chairman of the Nebraska Frederick Douglas Republican Council, which threw a 1983 reception honoring none other than Larry King for his "service to the Republican Party both locally and nationally." The reception, held at Omaha's upscale Regency Hotel, had presenters form ranks to praise and venerate King and impart plaques of recognition. The function had so many individuals extolling the virtues of Larry King that presentations were limited to a mere ninety seconds.
Hobnobbing with Nebraska's Republican elite was just an appetizer for King — he also started to become a force in Republican politics at the national level. His entrée into big-time Republican politics was through the National Black Republican Council. King reportedly wore several hats for the Council — he was Vice Chairman for Finance and also participated with its Nominating Committee and Development Committee. Moreover, King reportedly served as an adviser to its Youth Committee. King seemed to be particularly interested in children — his résumé acknowledged that he was on Head Start's Board of Directors, Regional President of the Girls Club, and on the Executive Committee of the Camp Fire Girls. King's résumé also mentioned that he was "Secretary/Treasurer" of the Planned Parenthood Federation of America.
As King became a fixture of Republican politics at the national level, he rented a swanky Washington, DC townhouse on California Street NW, near Embassy Row, and started to throw fabulous parties. A 1987 guest list from one of his DC parties boasted such luminaries as Supreme Court Justice Clarence Thomas, then Chairman of the Equal Opportunity Commission; United States Ambassador to the United Nations Jeanne Kirkpatrick; New York Congressman Jack Kemp; and Nebraska Congressman Hal Daub. Congressman Daub, like Omaha World-Herald publisher Harold Andersen, had a stint on Franklin's Advisory Board.
King also started to make hefty contributions to Republicans and their causes and sponsored Republican fundraisers. He shelled out $23,500 to Citizens for America, a conservative group run by the infamous lobbyist Jack Abramoff that assisted Oliver North in garnering support for the Nicaraguan Contras. King held a fundraiser for Congressman Hal Daub that was attended by HUD Secretary Samuel Pierce. King also gave a generous donation to Republican Kay Orr in her successful 1986 bid to become Nebraska's governor — he even sang the national anthem at her inaugural ceremony.
King's early musical training gave him a niche among Republicans when it came to belting out the "Star Spangled Banner." His national anthem debut for a Republican audience came in 1982 at a National Black Republican Council dinner. President Reagan and his wife were in attendance, and they were quite impressed with King's booming baritone. King then opened the 1984 GOP convention in Dallas with a spectacular rendition of the national anthem.
King had a busy time at that convention in Dallas. In addition to singing, he threw his biggest bash ever. He rented the Southfork Ranch — the fictitious lair of Dallas patriarch J.R. Ewing. Southfork's sprawling white mansion and grazing horses gave the six hundred people who attended King's party a hearty Texas welcome. Teenage cowgirls — wearing navy satin tights, vests, and cowboys hats — handed out yellow roses. A resplendent King, attired in white, sporting a thick gold chain, served the partygoers ribs, baked beans, coleslaw, and pecan pie.
HUD Secretary Samuel Pierce attended the shindig as did Reagan's daughter, Maureen, who was photographed with King in a very admiring embrace. Two months after Reagan's landslide victory over Walter Mondale in the 1984 presidential race, the Washington Post published an op-ed by King, "Why Blacks Should be Republican," wherein King touted the "substantial gains" made by African Americans under Republican policies.
As the Reagan administration was in its waning days, King apparently had high hopes for the presidential aspirations of New York Congressman Jack Kemp: the New York Post reported that King made his party rounds in New York City and DC proudly displaying a "Jack Kemp for President" button. King kicked in cash to Kemp's 1988 presidential bid and to a Kemp political action committee. King planned to host a Kemp fundraiser at his home — his florist said no expenses were spared for the Kemp fundraiser. Floral arrangements were scattered throughout the house and outside — King even had the florist float flower arrangements in the pool. Kemp, however, canceled the fundraiser at the last minute.
Excerpted from The Franklin Scandal by Nick Bryant. Copyright © 2011 Nick Bryant. Excerpted by permission of Trine Day LLC.
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