Former bank president sentenced to 18 months for bank fraud

LINCOLN, Neb. -- Jackie Poulsen, also known as Jack Poulsen, 71, of Ericson, Nebraska, was sentenced to 18 months in federal prison on Aug. 1, 2024, for bank fraud.

Poulsen's sentence will be followed by five years of supervised release. He was also ordered to pay $815,000 in restitution. Federal parole is not available.

Poulsen served as the President of Ericson State Bank (ESB) from June 2010 until September 2019 and was a member of the bank’s Board of Directors. In his role, he was responsible for overseeing all ESB’s affairs and managing ESB’s day-to-day operations.

ESB, like all banks in Nebraska, was subject to regular examinations by the Nebraska Department of Banking and Finance (NDBF). The bank passed its examination in October 2017, but the next review in April 2019 revealed severe deterioration in its condition.

The NDBF’s April 2019 report indicated that the decline in ESB’s condition was largely due to mismanagement and disregard for banking laws and regulations. Investigations following this examination found significant statutory lending limit violations, many involving accounts and loans associated with Poulsen’s relatives. It was discovered that a loan to Poulsen’s relative had exceeded the legal limit since November 2017, shortly after the 2017 examination. The investigation also found that Poulsen made multiple unauthorized advances to this relative and improperly charged off portions of the loans.

Further examination revealed that violations of lending limits had increased substantially through the extension of operating lines of credit, additional advances, and payments of overdrafts. By August 2019, loans had repeatedly been extended without proper documentation, borrowers’ financial information was inadequate, and collateral was either nonexistent or poorly managed. Poulsen’s fraudulent activities continued until September 2019 when he was removed from his positions at ESB and his banking license was revoked.

By the end of 2019, ESB had assets totaling approximately $110,879,000. However, on Feb. 14, 2020, the NDBF closed the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as its liquidator and receiver. Mark Quandahl, NDBF Director, commented on the closure, saying, “The failure of Ericson State Bank resulted primarily from large out-of-territory commercial loan losses and poor management practices which led to a deterioration of the bank’s capital. When the capital was not replenished, the Department was left with no option but to place the insolvent institution into receivership.”

The FDIC facilitated a purchase and assumption agreement with Farmers and Merchants Bank of Milford, Nebraska, which assumed all customer deposits from ESB. At the time of its failure, the bank's insider-related loans, primarily attributable to Poulsen’s actions, resulted in a loss of $815,000.

The investigation and prosecution of Poulsen involved multiple agencies working with the U.S. Attorney’s Office for the District of Nebraska.

After the sentencing, U.S. Attorney Susan T. Lehr stated, “The people of Nebraska expect their monies to be safe when they choose to place their trust in local banks. No bank officials should be permitted to abuse that trust for the sake of their and their family’s personal gain.”

FBI Omaha Special Agent in Charge Eugene Kowel said, “Not only did Jack Poulsen’s financial scheme of insider-related loans lead to his sentence to federal prison, it also led to the collapse of a bank that had served rural Nebraska for 60 years. The FBI is committed to working with our federal, state, and local partners to hold accountable those who exploit their positions of trust to defraud financial institutions.”

Jon Ellwanger, Special Agent in Charge at the Office of Inspector General for the Federal Reserve and Consumer Financial Protection Bureau, noted, “His sentencing sends a clear message that bank executives who commit fraud will be brought to justice for their actions.”

Korey Brinkman, Special Agent in Charge of FHFA-OIG’s Midwest Region, emphasized the ongoing commitment to investigating frauds impacting Federal Home Loan Banks. Meanwhile, FDIC OIG Special Agent in Charge Justin R. Bundy highlighted the importance of holding those who undermine the integrity of financial institutions accountable.

The case was investigated by the Federal Housing Finance Agency – Office of Inspector General, FDIC – Office of Inspector General, Federal Reserve Board – Office of Inspector General, and the FBI.