In my profession as a business ethics speaker and business ethics consultant and book author, I have been closely following the latest developments in crypto fraud. FTX and Sam Bankman-Fried are about to be hauled into a courtroom.
However, I always point out that fraud is multi-faceted. From an ethical point-of-view, it is important to be vigilant to all kinds of fraud, even within the same or allied industries. While FTX was rocking the nation’s finances, what could be the biggest bank fraud to hit the Midwest the Nebraska Department of Banking and Finance Nebraska has gone after the estate of the late Aaron Marshbanks.
The Estate
The amount of fraud associated with this scandal, may exceed $50 million after the investigation is concluded. The Nebraska Bankers Association, found that many of the loans pledged properties as collateral, “but many were unsecured or secured using a separate investment or equities account.”
One bank, the First Nebraska Bank of Valley is emblematic. Stated the article, the bank “was among several that have filed court claims in recent days seeking payment of unpaid loan balances of $1 million to more than $4 million.”
The loan was guaranteed by a Lincoln, Nebraska businessman who was backed up by a limited liability company. However, all of the information associated with the LLC was false. This pattern of taking out loans using false credentials was repeated throughout the state. The organizations that applied for the fraudulent loans were mostly faked. Only those banks that had loans using property to secure the loans have a chance of being reimbursed.
Marshbanks
It appears as though Aaron Marshbanks, who purported himself to be a deeply religious man, generated several bogus LLCs to gain funding. The father of four children was found dead in his car in a parking garage.
He “was involved in several commercial and community endeavors, according to an internet search, including a duct-cleaning service, a charity produce stand, home construction, and renovation of existing homes. He served on the Lincoln Christian School Board and for a time was the treasurer for the nonprofit corporation that operates the school.”
However, behind the scenes, he allegedly seemed to be a fraud. Neither his attorneys nor financial advisors have been available to answer calls from the media. Several banks have made claims against the state, ranging in loan size from just under $500,000 to more than $5 million.
The Marshbanks Persona
Interestingly, but in a different way, Marshbanks and Sam Bankman-Fried are different sides of the same personality. In the Bankman-Fried and FTX case, he was a charismatic, wild-haired, crypto genius almost everyone in the crypto-circle found “alluring,” sort of the pied-piper of crypto. He could do no wrong in their eyes.
Aaron Marshbanks was a one-time basketball star, charismatic, a devout Christian and a dedicated family man with several businesses in the community. He displayed attributes that many wanted to emulate.
Marshbanks, like Bankman-Fried, used the trust of others to advance their wealth and status. And, in both cases, they lived luxurious lives on money no one could quite trace.
The police found drugs in Marshbanks’ system when they autopsied the body. Bankman-Fried, while still quite alive, certainly committed a self-destruction of his reputation and credibility. Neither man, it seems, could own up to his own faults.
Marshbanks had the opportunity to steal by approaching banks with fake LLC’s, a few properties and a charismatic personality that was taken for granted. His need was a need for money and perhaps he rationalized his being by believing he was as other-world spiritual as some of his pals were led to believe.
As a business ethics speaker and business ethics consultant and book author, I know that fraud is all around us, often found in individuals who are neither challenged nor researched with diligence. While everyone was obsessed by crypto, Marshbanks was solidly into good, old-fashioned bank fraud.
