Major legal issue remaining is whether Aaron Marshbanks’ life insurance policies will go to banks that were duped or to his family
Editor’s note: This article has been revised to correct the amount of return to banks based on assetsobtained so far.
LINCOLN — Nearly 10 months after Lincoln businessman Aaron Marshbanks was found dead under suspicious circ*mstances, some things are becoming clearer in what is perhaps the largest bank fraud case in state history.
Over the past several weeks, a judge has certified more than $30 million in claims against Marshbanks’ estate from banks that maintain they were duped into issuing loans, secured by financial assets that didn’t exist.
Another $22 million in claims, concerning other loans that were secured with rental properties, have been resolved by the sale or return of real estate — including a half-finished luxury home and barndominium being built in east Lincoln.
Legal dispute over life insurance proceeds
So far, only about $318,000 of assets have been obtained to satisfy the more than $30 million in claims still owed to 15 banks and savings and loans, a business partner and the University of Nebraska Medical Center — enough to return about 1 cent on the dollar.
But, according to Lancaster County Court records, another $3.5 million in proceeds from life insurance policies taken out by Marshbanks might also be used for creditors. The policies list a trust as the beneficiary rather than Marshbanks’ widow, inspiring a legal dispute. There are also questions about whether funds obtained fraudulently were used to pay insurance premiums. A judge ultimately will decide who gets the proceeds.
Ed Hotz, the Omaha lawyer assigned by a judge to find remaining assets of the estate to pay off creditors, said he’s working to discover how much of Marshbanks’ ill-gotten funds might be stashed away in cryptocurrency and other accounts.
He said he has identified some unusual properties — a condo in Puerto Rico, a home in Florida and part-ownership of an airplane — that will be liquidated to help pay off creditors.
“I think we’ve gotten a lot done in the last seven months,” Hotz said.
‘A unique case’
“This is a unique case. We’re not quite sure what all the assets are,” he added.
Marshbanks’ death, and the subsequent revelations about dozens of loans he obtained through banks in Nebraska and Iowa by showing investment assets that didn’t exist, sent shockwaves through Lincoln and among those who knew the devout Christian.
How, people wondered, could a 6-foot-6 former star basketball player at Lincoln Christian High School, who was a former member of its school board and active in charitable causes, have fooled so many financial institutions?
Many of the loans approached $2 million each and were made in the name of limited liability companies he had created, ostensively, to purchase and rehabilitate rental homes in Lincoln and Omaha, and as far away as New Orleans and Wyoming.
Some of the LLCs created had religious sounding names, such as 1 Chronicles 29:11, which refers to a Bible verse that exalts in the greatness of the Lord. One in Wyoming called Heavy Ventures was set up by a lawyer who bills himself as one of the leading authorities on cryptocurrency in a state that has been aggressive in seeking investments in digital currency.
Federal indictment expected
The Nebraska Department of Banking, which continues to investigate, has said that millions of dollars Marshbanks had transferred to his financial adviser had dwindled to nearly nothing by early 2022 due to “a highly aggressive options trading strategy” by the adviser, Jesse Hill of Hickman.
Federal criminal indictments against Hill could be coming soon — civil lawsuits filed against him by a handful of banks hoping to recover their funds have been suspended until next month “to allow the criminal matter to proceed,” as one lawsuit put it.
The Examiner first broke this story in December 2022, in what has been described as possibly the largest bank fraud case in Nebraska history.
In previous stories, bankers have said Marshbanks presented himself as a legitimate and persuasive businessman. He sometimes was accompanied by Hill, who presented a statement showing that Marshbanks had $6 million in an investment account.
But some financial institutions, the Examiner learned, refused to loan money to him, seeking more proof that he really had collateral to cover the borrowing.
One banker told the Examiner that a check of Marshbanks’ credit report should have shown a “red flag” — that he had several loans from several banks. But, he added, it also appeared that he had more than enough money in some investment accounts to cover his loans.
It was only after Marshbanks was found dead that it was discovered that the financial statements had been forged and the accounts didn’t exist.
Hotz, who was appointed personal representative of the complicated Marshbanks estate, said only a few matters remain in establishing who is owed money by the estate.
The task of finding the remaining assets in the estate — a search that has required investigation across the country and into Puerto Rico— continues, he said.
“We continue to try to identify assets and collect assets,” Hotz said, Some lawsuits, he added, may have to be filed to recover some of them.
Just how long that may take, and when creditors will get partially repaid, is hard to predict, he said.
“I’m hoping to recover millions of dollars,” Hotz said.
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