LINCOLN — The majority of $3.6 million in life insurance proceeds for Aaron Marshbanks – the Lincoln businessman implicated in the largest bank fraud case in Nebraska history – will be divided up among financial institutions he was accused of deceiving.
Lancaster County Court Judge Holly Parsley approved a settlement that was agreed to by parties Wednesday morning. The settlement states that Marshbanks’ widow, Jennifer Marshbanks, will receive $975,000, while most of the remaining proceeds will go to Edward Hotz, who was appointed as personal representative of the Marshbanks estate.
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Hotz has been working to identify assets to pay off the roughly $34 million in approved claims still outstanding against the estate. The distribution of those assets remains undecided.
The claims against the Marshbanks estate were made by banks, savings and loans, and credit unions that loaned him money. They later discovered the collateral used to obtain the loans was fabricated.
Marshbanks was found dead inside his car in a downtown Lincoln parking garage in November 2022. The official cause of death was a drug overdose.
Investigators have said Marshbanks took out dozens of loans of $2 million and more from financial institutions in Nebraska, Iowa, Wyoming and Louisiana.
He primarily invested in residential properties, renovating them and then renting them, under dozens of limited liability corporations he formed with names like 1 Chronicles 29:11 LLC, which refers to a Bible verse, and Heavy Ventures LLC, which was set up by a Wyoming lawyer who specializes in cryptocurrency.
According to court records, Marshbanks named a family trust as the beneficiary of the six life insurance policies he took out in the years before he died.
William Lindsay of Omaha, an attorney representing Jennifer Marshbanks, previously argued that state law makes life insurance proceeds exempt from paying off creditors unless there was an explicit waiver of that exemption.
Amy Jorgensen, an Omaha lawyer representing a special administrator appointed to round up assets and pay off creditors, countered that the trust’s language states that the trustee shall “pay the allowed claims” of the estate — the banks — prior to paying the beneficiaries, who in this case are Marshbanks’ wife and his four children.
Lindsay did not object to the settlement reached Wednesday.
Jesse Hill, a financial advisor based out of Hickman, who helped Marshbanks fool the banks into loaning money, was sentenced last October to five years in federal prison after pleading guilty to conspiracy to commit bank fraud. A U.S. District Judge later ordered Hill to pay lenders more than $37 million in restitution.
Senior contributor Paul Hammel contributed to this report.
This story is provided by States Newsroom, a nonprofit state news network and Blox Digital content partner.
