Target of loan fraud investigation was building multimillion-dollar residential complex
‘Barndominium’ with indoor basketball court among features on property purchased by Lincoln businessman
LINCOLN, Neb. (Nebraska Examiner) – The target of a state banking investigation into alleged fraudulent loans was in the process of building a multimillion-dollar residential complex on the eastern edge of the Capital City.
Aaron Marshbanks, who was found dead a month ago in a downtown Lincoln parking garage, obtained a $2.5 million loan to finance construction of a home, guest house and a “barndominium” featuring an indoor basketball court.
Alleged fraud of more than $30 million
Marshbanks, the Examiner reported Friday, is being investigated by the Nebraska Department of Banking for allegedly obtaining loans of between $30 million and $50 million by fraud from more than 20 banks, savings and loans and credit unions across the state.
Marshbanks, 45, listed the purpose of the loans as business expenses, and, for some loans, listed homes in Omaha, Lincoln, Bellevue and Ralston as collateral. But several of his loans were not secured with collateral, court records indicated, which leaves banks unable to obtain repayment.
According to Lancaster County records, Marshbanks, a former basketball star at Lincoln Christian High School who was involved in home construction/renovation and a duct cleaning business, purchased a property at 11700 E. Van Dorn St. in April of 2020 for $497,500. He promptly tore down the home and garage on the property, the records indicated, and eventually transferred ownership of the land, in a quit claim deed, from him and his wife to the Blossom Trust.
Now, the heavily-treed property includes a partially completed 1 ½-story home with a five-car garage and 4,769 square feet of living space, as well as a 6,666-square-foot “barndominium” that features an indoor basketball court, a golf simulator, a wet bar and two recreation rooms that overlook the court.
The land also includes a 2,312-square-foot “guest cottage” that, like the barndominium, was built in 2021.
The property, which was valued for property tax purposes at $593,000 in 2022, was developed with the help of a $2.5 million loan from Lincoln-based City Bank and Trust Co., according to Lancaster County property records.
Building permits taken out on the land in the past two years totaled $1.4 million. It was unclear if Marshbanks and his family were living at the Van Dorn complex. Court records indicate his residence as 1545 Sunburst Lane, a home with a property valuation of $230,100 in 2021.
Speculation around Lincoln centers on whether contractors working on the multimillion-dollar complex — which some have guessed would be worth $6 million to $7 million when completed — will be paid. Dozens of financial claims made in court against Marshbanks’ estate by financial institutions allege that his estate’s assets are insufficient to pay back the loans he made, which ranged between $2 million and $4 million each.
Case compared to State Title
How the money was spent, and how Marshbanks got into financial trouble, are also questions being raised around Lincoln, where the case is being compared to that of David Hunter, the owner of State Title Services, who took his own life two decades ago amid a check-kiting scheme involving millions of dollars.
If the fraudulent loans with financial institutions involving Marshbanks climb, as some expect, to well over $30 million, the case would rival two past scandals involving Nebraska financial institutions.
In 1983, more than 6,700 depositors lost $65 million in the collapse of Lincoln-based Commonwealth savings. In 1988, an estimated $38 million went missing in a scandal involving Omaha-based Franklin Credit Union and its manager, Lawrence King, Jr.
The Examiner first reported the probe into Marshbank’s financial dealings on Friday — dealings that a state banking association official described as a “pretty sophisticated fraud” that utilized several limited liability companies, of various names, as the entities seeking the loans.
Banks are financially sound
Richard Baier, the president and CEO of the Nebraska Bankers Association, as well as Kelly Lammers, director of the Nebraska Department of Banking and Finance, both have said that the financial institutions of the state are sound and should be able to withstand any losses.
Brandon Hamm, the attorney for the Marshbanks’ estate, has declined to comment about the case. Hamm is also listed as the trustee of the Blossom Trust, the listed owner of Marshbanks’ Van Dorn Street property.
Marshbanks, the married father of four children, was active in Christian and community activities in Lincoln, serving for a time as the treasurer of the nonprofit that operates the Lincoln Christian School and as a member of its school board.
Charity fought sex trafficking
He is also listed as the former vice president of business operations for Tiny Hands International, a charity that describes its mission as “to help rescue orphans, street children, and victims of sex-trafficking industry, and give them homes and teach them about Jesus Christ.”
The Lincoln-based organization, which now goes by the name Love Justice International, stated on its website that it “has established children’s homes across Nepal, India and Bangladesh.” Love Justice says that it has intercepted 35,000 children that were destined for sex trafficking.
A Facebook page to collect remembrances of 6-foot, 6-inch tall Marshbanks contained several glowing descriptions of him as a “gentle giant” who was always encouraging others.
“His generosity, kindness and encouragement are just a few of the things I will miss,” said one comment.
Other comments said that he had made more than one trip to Nepal, a country where Love Justice is working, and that one trip with the charity’s administrative team included stops in Dubai and Paris.
This article was originally published by the Nebraska Examiner.