THE FRANKLIN COVER-UP -- CHILD ABUSE, SATANISM, AND MURDER I

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CHAPTER 4: COVER-UP PHASE 1: THE POLICE

In July 1988, Omaha police officers in the Robbery and Sex Unit received an unexpected visit from their boss, Chief of Police Robert Wadman. According to the officers' own account, related by Nebraska Foster Care Review Board official Dennis Carlson in testimony to the Legislature's Executive Board, they took precautions to keep Wadman out of their work on Larry King.

Excerpts of Carlson's remarks, from the Executive Board minutes of December 19, 1988, show that the officers feared a police cover-up of King's activities, from within the department:

[Officer Carmean] told me some things which I found to be somewhat startling. I asked if he was interested in information regarding Larry King and he said, yes we are, we're conducting what he called a supersensitive investigation of Larry King and he said this investigation was so supersensitive that they were not even using the steno pool in the Omaha Police Department.

They were handwriting their police reports, and he also told me that Chief Wadman had come to their unit and directly asked if they were investigating Larry King. ... Investigator Carmean told me, we lied to the Chief and we said, no, we are not investigating Larry King. OK, so that conversation took place on July 20th of 1988.

After we were presented with that information we had some concerns as to what was going on in the Omaha Police Department. We were concerned about if we gave this information to the Omaha Police Department what would they do with it?

***

The investigation of Loretta Smith's charges did not go far, in Wadman's department. Neither did the career of Officer Carmean.

On the afternoon of June 28, 1988, immediately after Carmean's interview with Loretta, his supervisor, Sgt. Ken Bovasso, spoke by telephone with Dr. Kay Shilling, Loretta's psychiatrist at the hospital. According to Bovasso's write-up, Shilling

told this Reporting Officer that she has spoken with LORETTA SMITH since LORETTA'S discussion with Officer CARMEAN. ... LORETTA told DR. SHILLING that she only gave Officer CARMEAN general information, ... [but) that she had no problem talking with Officer CARMEAN. Reporting Officer told DR. SHILLING that sometime during the week of 04 July 1988 this Reporting Officer will assign Officer CARMEAN to revisit Loretta at the hospital in order to build up some rapport and possibly obtain more specific information.

Carrnean never came back to interview Loretta Smith again. As Loretta volunteered more horrific, detailed allegations during the summer, Richard Young Hospital and FCRB personnel were concerned about the lack of police interest. Dennis Carlson recalled, in his Executive Board testimony:

Loretta was making more allegations against Larry King and others and these were allegations of the most serious nature. She was reporting that she had witnessed homicides. Investigator Carmean was contacted by myself on one, possibly two or three, occasions. ... I'd tell him that this girl's making more allegations, that she's opening up, she's telling additional information, she's beginning to relate better to her case workers and social workers, would you please go out and re-interview this girl? ...

After Investigator Carmean received the information from the Foster Care Review Board, the information that I hand delivered to him, he never went back to interview Loretta Smith. In one of my telephone conversations with Investigator Carmean, I remember telling him that this girl was now reporting homicides, and he said, yes, I need to get out there and re-interview this girl. ...

[O)ne of my concerns Senator is the conduct of the Omaha Police Department. I don't know what's going on up there, I'm not familiar with the players in the Omaha Police Department, but I know that I hand delivered material to an investigator. ... Investigator Carmean and Investigator Hoch left my office and they seemed sincere, they seemed that they were going to investigate these allegations and later it was as if air had been let out of a balloon, that all of a sudden they had no interest in even re-interviewing a girl who was saying that she had witnessed homicides and I just don't understand it. ...

FCRB Executive Director Carol Stitt testified:

I would like to add something that was highly unusual in this case. Loretta's psychiatrist contacted the police in Omaha and asked them to come, Loretta's personal care worker, Ken Stoner, contacted the police, [Richard Young employee] Kirstin Hallberg contacted the police, as well as Adrienne Hart, who is Kirstin's supervisor. All those people had made contact and nothing was being done. ...

Not long after after his interview with Loretta, Officer Carmean was transferred out of investigations altogether, into a section called Research and Planning. At the same Executive Board meeting, Senator Ernie Chambers recounted a phone conversation with Carmean:

When I called [the sexual assault unit], they said he's no longer here and that's when they told me that he was with Research and Planning. ... I finally ... got him and I mentioned his enthusiasm at the outset, and that from what I had developed in terms of creditable information being given to me, I felt he'd been transferred because he was getting too close to something and his superiors did not want him to continue. So there was a silence, then he kind of chuckled, he said, well, no, uh, I wanted this transfer. I've known of Carmean for years and he's not the type of officer who'd want to be put into an office where he's the only one there, in fact that might have been the creation of the department. Didn't even have a secretary.

Carmean himself testified before the legislative Franklin committee in June 1989, that, although he had been pulled off the case, he thought Loretta's charges were "credible" and deserved follow-up.

Less than two weeks later, on July 5, 1989, Chief Wadman tried to get Carmean declared crazy. In a lengthy "Inter-Office Communication" to Omaha Public Safety Director Pitmon Foxall (a cousin of Larry King!), Wadman announced that Carmean needed a mental health evaluation:

I am requesting a supervisory referral for Officer Irl Carmean to see police psychologist Dr. Steven Sherrets. I am basing this request on the actions demonstrated by Officer Carmean that surfaced during the Larry King investigation. ...

Prior to Officer Carmean's assignment with Research and Planning, he was serving as an investigator with the Robbery and Sex Unit under the command of Lt. Guy Goodrich. While in that assignment, Officer Carmean was involved as an investigator and did participate in looking into matters involving allegations that Larry King was involved in some sexual improprieties with young people. The investigation never did come close to supporting the allegations sufficiently for a charge to be considered against Larry King.

One other Omaha policeman who was reported to have kept a file on Larry King, Officer Bill Skoleski, died of a heart attack.

***

In August 1989, Chief Wadman dismissed out of hand the criminal, satanic horrors that Loretta Smith and other children had described to authorities. On Omaha radio station KKAR, the city's chief law enforcement officer chalked up concern about these allegations to the fact that some Omahans have a "prurient interest of child abuse, of child sexual abuse, those kinds of things. ... I think that the media attention to that element of things is inappropriate."

Regarding Loretta Smith, Wadman said, "The primary witness was ... making statements that were very bizarre and were not founded in reality."

Wadman concluded his KKAR interview by stating that the OPD and other agencies had conducted a thorough investigation, but the allegations led to "a dead end."

***

Robert Wadman has sworn under oath that he barely knew Larry King, that he "had very few social contacts with Larry King." That's not what King says. In April 22, 1989 interviews with King and Wadman, Frank Brown of TV 7, Omaha, questioned them about an incident in which Wadman intervened at King's request, to order the release of a suitcase seized in a drug raid.

BROWN: King acknowledges he is a friend of Chief Wadman's. We asked King did he call the chief to get a suitcase released that had been seized in a drug investigation?

BROWN: You had that friendship where, you could. ...

KING: Yes.

BROWN: You could call the Chief of Police and get a piece of evidence released?

KING: I felt that I could call anyone in this city.

BROWN: What was that suitcase? I've always wondered what was in that suitcase and what was it about?

KING: Um, it's really nothing. It was a relative of mine and he was staying at a hotel, and I guess they had a drug bust or something. ...

BROWN: We asked Chief Robert Wadman if Larry King had ever telephoned him to get a suitcase released from police custody.

WADMAN: Yes ... I can't recall if it was this past year or the year before that he did call regarding a situation and that information was forwarded to the unit responsible for the request. ...

BROWN: That did not compromise any investigation?

WADMAN: Absolutely not. And I'm very disappointed that this situation continues to be protractive but it was a situation that was routinely handled. I receive literally hundreds of those requests and this situation was handled exactly the same way as the rest.

Switching back to Larry King, Brown raised another question about a smooth ride he seemed to have gotten from the OPD:

BROWN: The Omaha Police had an investigation last summer into an alleged pornographic. ...

KING: Uh, huh.

BROWN: And you were cleared?

KlNG: I didn't even know that they had one last summer ... [P]eople make up these things. People make up anything, you can hear anything about anyone. If you choose to believe it you will, if you choose not to, you don't. I choose not to listen to garbage and gossip.

King had indeed been cleared, with the blessing of Robert Wadman. The legislative Franklin committee's record of Wadman's own testimony to this effect dates from October 13, 1989. Besides Wadman, the speakers in this transcript are committee counsel John Stevens Berry and Robert Creager, and Wadman's attorney, Kent Whinnery.

BERRY: Are you aware whether or not there have been any ongoing investigations in Omaha regarding whether or not Mr. King has been involved with narcotics? ...

WHINNERY: May I just ask a point of clarification? Are you talking about ongoing but not concluded or --

BERRY: Well, I suppose I could ask a series of questions. Have there been in the past? Have there been any continuing?

Have there been any ongoing at all? Do you know anything about Mr. King or has Mr. King been a subject of a narcotics investigation? That's an area I want the Chief to address, and I'm happy to have him address it.

WADMAN: I'm unaware of any of those.

CREAGER: The answer is no?

WADMAN: The answer is no, yeah.

BERRY: Let me ask the very same broad question about Mr. King and the relationship to child pornography or pornography of any kind.

WADMAN: We had a situation where we were advised that there was a possibility of child pornography involving -- no, it came in as child pornography case. What happened is that there was a photographer who was taking photographs of young women, and in the course of that set of circumstances, a mother with her daughter called and filed a complaint with the police department, and the complaint involved a situation where her daughter was approached by the photographer to be photographed, and the photographer extended an invitation to this young woman's mother to come with her.

They went to the studio; photographs were taken; and in the course of that the mother became concerned over the photographs and some of the photographs that she observed at the photo studio and then filed a complaint of concern that this was a possible pornographic situation.

We investigated it, found the photographer to be, you know, legitimately involved in the photography business, legitimately involved in conducting the photographs, and getting signed releases and having a photography studio and so on.

The only involvement is that this individual had subleased his studio or apartment from Larry King, and that was the extent of our investigation into pornography-related activities involving Mr. King in any direct way.

This was the photographer, Rusty Nelson, described to Margo Georgiu by people who knew him as "a pervert," and proven by her to have lied about his professional experience and resume. The pictures in his studio were "frontal nudity" shots of adolescent girls. Nelson described King not as his landlord, but as his "boss." The investigating officers had compiled and filed accounts from several people about the lavish spending by King on Nelson's and other apartments, about his comings and goings in Mercedes Benz cars, and other evidence of an unexplained leap in King's income, and about the common knowledge that King was involved with drug dealers and was a homosexual who "liked young boys." Wadman, who had approached his officers with such curiosity about any investigations of Larry King that they might pursue, swore under oath, that he knew nothing about any of that.

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CHAPTER 5: JUST HOW BIG IS THIS COVER-UP?

The Nebraska Foster Care Review Board, which is not a law enforcement agency and is not equipped to investigate crimes, let alone prosecute them, in 1988 found itself by default the main recipient of reports of abuse from children and from case workers, which attested to the existence of an organized child exploitation ring in Nebraska, and stretching far beyond.

Expressing frustration and alarm that the Omaha Police had failed to investigate reports of child murders and other serious crimes, even after many urgent phone calls from personnel at Richard Young Hospital, FCRB Executive Director Carol Stitt on July 13, 1988 met with Nebraska's Republican governor, Kay Off, to seek help. Governor Off told her to "do whatever is necessary" to secure an investigation.

On July 20, Stitt wrote to Attorney General Robert Spire, to request that his office, the state's top prosecuting agency, enter the case. For the first time, somebody openly pulled together the testimony of Nelly Patterson Webb, Loretta Smith, and other children, whose reports of abuse all cited Larry King.

"Pursuant to the Nebraska Child Abuse Statutes, the State Foster Care Review Board is making a report of allegations of a child exploitation ring and respectfully requests an investigation," wrote Stitt. She noted that in December 1987, FCRB had reviewed the allegations about a child prostitution ring centered on the Webb family's foster home. Then:

On 5/17/88, the Foster Care Review Board received a phone call from Kirsten Hallberg ... who is a previous employee of Uta Halee Girls Village and currently works for Richard Young Psychiatric Hospital in Omaha. She was aware of Nelly and [her youngest sister] Kendra's reports to the Review Board. Ms. Hallberg told me about three Uta Halee girls, a 20-year old young man at Richard Young, and three youths at Boys Town who all reported inappropriate activities with Larry King of Omaha. She also reports that at a recent child exploitation conference in Kansas City a detective from Kansas City ... asked her when the Nebraska authorities were going to do something about Larry King.

On 7/20/88, Kirstin Hallberg reported a 15-year old girl at Richard Young who is talking about inappropriate activity with Larry King and also is alleging witnessing a murder of a young boy who said he was going to tell of the abuse he suffered.

Along with the letter, the Foster Care Review Board turned over its entire file on these cases to the attorney general. Spire assured the FCRB that he would do everything in his power to help, and assigned the case to one of his top assistants, Bill Howland.

As months dragged by with little apparent action by the attorney general, Stitt and Dennis Carlson demanded a meeting with Howland, which was held in his office on November 22, 1988. Stitt described the meeting to the Legislature's Executive Board, on December 19, 1988:

When Dennis and I were in this meeting it became clear to me that if Mr. Howland had ever read the materials we delivered to him in July, it was a long time ago. He didn't know major players' names in the case. ... Dennis did some rather tough questioning and it became clear to both of us that nothing had occurred. The file was just a mess. I grabbed the file from him. Reordered it. ...

Dennis and I both left that meeting, I mean, I can speak for myself, and I felt full of despair and I felt like all the optimism that we had had that something was going to happen, to not only help the kids who'd been abused, but to stop this from occurring to other kids, and many of the kids that I'm aware of were State wards, was not happening. Nothing was happening. ... Now we see that we were just being put off, "Yeah, we'll get out there," and "Yeah, we'll do this," and "Yeah, we're on top of it," but really none of the officials had organized their investigation.

Her fellow Executive Board member Burrell Williams added:

I think we became really baffled and puzzled on what was going on when you get all this information in front of you and nothing had, [or] is being done about it.

Dennis Carlson was also puzzled:

I ... don't know what if anything either the Omaha Police Department or the Attorney General's office actually did. ... If I were doing that investigation, the first thing I would have done with that information is contacted Loretta Smith who's making allegations that she had witnessed homicides, not a homicide, it's homicides. ... I ... talked to Loretta Smith's case worker at Richard Young Hospital on November 22 and she told me that the last person that interviewed Loretta was Officer Carmean and that took place on June 28, 1988.

On November 30, 1988, Stitt again attempted to contact the governor, to set up a still more urgent meeting, because of the failure of the attorney general's investigation to get off the ground. The governor's staff scheduled a meeting for the following week, but canceled the appointment the next day. The governor, according to her office, was "not willing" to meet, as Carlson recorded in his daily notes of December 1.

In the November 22, 1988 meeting, Howland once again claimed he would do everything he could, a claim undercut by the attitude of the governor. The Attorney General's Office put one investigator, Thomas Vlahoulis, on the case part time, but, as the Legislature's Franklin committee was to learn on June 22, 1989, he did next to nothing. In this transcript of his legislative testimony, Vlahoulis is questioned by committee counsel.

COUNSEL: As I understand what you told Senator Chambers, the information in your notes, which was important, was placed in the reports that you generated, is that correct?

VLAHOULIS: Yes, it was.

COUNSEL: Now, the conclusion I draw, after reviewing that information, is that you really didn't do anything between July and late November, except to collect some extraneous pieces of information about Mr. King's business interests and perhaps about ... his wife's citizenship status. That's my conclusion from reading the reports.

***

On December 20, 1988, Attorney General Robert Spire was quoted in the Lincoln Journal saying that his office had "acted promptly and professionally" on all the "sensitive information" received on child abuse six months earlier. Yet the Nebraska State Patrol, the agency that would be called upon by the attorney general in such an investigation, conducted its very first investigative meeting on the case on December 19, 1988, the day Spire was boasting to the Lincoln Journal about his alacrity!

In the face of official inaction, Carol Stitt and the medical personnel responsible for treating Loretta Smith grew concerned about her safety. She had already been threatened, and the new charges she was making put her in even more danger.

Stitt turned to still another agency, the Douglas County (Omaha and surroundings) Attorney's Office, and requested a protective order for Loretta. When the Douglas County attorney filed the order, however, it said that Loretta was making bizarre statements, that she had been on the streets for two weeks, and that she was suicidal! Not only were these allegations untrue, but they could help ensure that Loretta be discredited in any future court appearance.

The order had an even graver implication, as Senator Chambers observed during Stitt's December 19, 1988 testimony to the Executive Board of the Legislature.

SENATOR CHAMBERS: Neither you nor Miss Hallberg said that the child is suicidal.

STITT: No.

SENATOR CHAMBERS: But if that's in the court record, in the petition, an official document and the child winds up deceased then and if the result of [sic] a suicide then everybody would have had prior notice that this child is suicidal, if you would, by that report, by that petition and the court order.

Chambers was also familiar with the person in the Douglas County Attorney's Office who filed the order, Liz Crnkovich.

SENATOR CHAMBERS: Now this is some information that I have and maybe you don't, are you aware that Lynne [sic] Crnkovich has had information given to her by certain professionals about some of the things that these youngsters have been talking about and making allegations and she chose to do nothing. Were you aware of her involvement in that regard?

STITT: Yes, I was made aware of that while we were trying to see what we could get done in Omaha. ...

Vlahoulis, the part-time sleuth from the Attorney General's Office, later told Franklin committee investigators about another time Loretta ran afoul of Crnkovich. According to Vlahoulis' conversations with Crnkovich in January 1989, Father Val Peter of Boys Town "had been approached by Loretta Smith and ... she complained to him that the F.B.I. and Crnkovich had intimidated her to such an extent while she was at Richard Young Hospital that she had not provided them with all the information that she knew."

At the December 19, 1988 Executive Board meeting, Senator Loran Schmit asked Carol Stitt what effect the gross mishandling of her case might have on Loretta Smith. Stitt answered, "I'd like to say if the State continues to handle the case the way they've handled it, everything that this perpetrator has told them is being reinforced. That he has the power, there's nothing they can do, nobody's going to help them, and that certainly has been what's happened so far."

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CHAPTER 6: THE DESTRUCTION OF COMMONWEALTH SAVINGS, MODEL FOR NEBRASKA

Inaction by the authorities, a blind eye to children's pleas, failure to prosecute, a rush to cover up -- all this was happening in the heartland state of Nebraska. To understand how this could be, requires a good look at state politics during the mid-1980s, especially the Robert Kerrey administration of 1983-1987.

Early in the decade, the signs went up, billboard-size with flashing neon lights, that Nebraska was now, more than ever, a "wide open state," to use the terminology of the organized crime-controlled political machines in various parts of the United States during the 1920s and 1930s. Mafia control in those days was so tight in some cities, that opposition newspaper editors were gunned down in broad daylight. A June 1991 article in the Minneapolis Star Tribune recalled, about the history of Minnesota, "Alvin Karpis, onetime Public Enemy No. 1, once said, 'Every criminal of any importance in the 1930s made his home at one time or another in St. Paul. ... If you were looking for a guy you hadn't seen in a few months, you usually thought of two places -- prison or St. Paul. If he wasn't locked up in one, he was probably hanging out in the other.'" In order for the city to have this status, veteran St. Paul Pioneer Press reporter Nate Bomberg has said, "Everybody was in on the take. You can't have an underworld without an overworld. ... You can't have the rackets unless you have the mayor, the chief of the police, and the county attorney in your corner."

1983 was a banner year for Nebraska's building its credentials as a modern such safe haven for crimes and perversions, That was when the state seized Commonwealth Savings, forcing its owners, the Copple family, to ante up any and all company and personal assets to help redeem depositor losses. It was the first year of Bob Kerrey's term as governor of Nebraska.

The case haunts Kerrey to this day.

In 1990, as the price tag for cleaning up failed savings and loan institutions nationwide soared into the hundreds of billions of dollars, one of the loudest critics of the Bush administration's handling of the matter was freshman Senator Bob Kerrey, Democrat of Nebraska. An Omaha World-Herald headline captured the clashes: "Kerrey, Fitzwater Trade Allegations Over Handling of S&L Crisis." White House spokesman Marlin Fitzwater cautioned Kerrey that as many Democrats as Republicans were involved in the S&L fiasco, and then admonished him in personal terms. According to the July 16-22, 1990 Omaha Metro Update, Fitzwater "added that if Senator Kerrey is bent upon making S&L a campaign issue, it's one that could work against Kerrey. The White House apparently has some files on Commonwealth Savings and State Security Savings, but no details were given."

The mentioned institutions were two of Nebraska's largest industrial banks. They collapsed in 1983 and 1984, shortly after Kerrey's election as governor.

Kerrey knows about his vulnerability. Soon after the exchange with Fitzwater, the senator got himself interviewed by a friendly World-Herald reporter, to come clean about the events of 1983-84. Under the headline "Kerrey: My Errors in Insolvencies Will Not Diminish S&L Scrutiny," he admitted what he had fiercely denied at the time -- that his key adviser on the Commonwealth and State Security crises was his close friend, business associate, and chief financial adviser, Bill Wright. "Regarded by some as one of the cleverest and most ambitious financial operators in the state," according to a brochure from the Lincoln-based Concerned Citizens for Responsible Government, Wright was also a major shareholder and the president of State Security Savings. This relationship, Kerrey now said, may have led to "appearances of impropriety," but this all happened because "I was new to politics."

For informed Nebraskans, Kerrey's confession was a bombshell, as the Metro Update observed: "But what Kerrey -- faced with the absolute imperative to get his own past behind him if he is to have any credible role in the Democratic pursuit of President Bush's handling of the national savings and loan scandals -- told [World-Herald reporter] Kotok is breathtaking in implication. It is especially so for those whose depth of knowledge takes in the entire fabric of the Kerrey Administration: Commonwealth Savings Co., State Security Savings, Kerrey's own panoply of private business dealings, and, finally, the creation and uses of the Nebraska Investment Finance Authority."

According to information published in the Metro Update and other documentation, those implications are that Kerrey and Bill Wright used the powers of state government to: 1) loot State Security's depositors of at least $4 million and as much as $10 million, 2) deprive the depositors of Commonwealth of at least $40 million, 3) set up a new state agency, with the sole apparent purpose of giving Kerrey and his cronies millions of dollars in low interest loans, 4) cheat farmers out of $200 million in subsidized loans, and 5) peddle junk bonds to investors who thought they were getting high-grade state bonds.

The voluminous evidence of these activities can be found in a 1986 state Senate investigation, which I chaired, of the failures of State Security and an Omaha bank, the American Savings Company; in 1988 brochures of the Concerned Citizens for Responsible Government; in the Omaha Metro Update of July 16-22, 1990; in a set of three tightly documented reports submitted to the Nebraska Legislature in 1990 by a group of depositors from the failed Commonwealth bank, led by Reuben Worster of Lincoln and veterinarian Dr. Melvin Bahensky of rand Island; and in a 1991 tort claim filed by myself as attorney and on behalf of Commonwealth depositors.

According to his own account, Bob Kerrey entered politics to make money. In September 1981, as he was contemplating a run for the Nebraska governorship, Kerrey lamented to businesswoman Dana Saylor Robinson, that in business, "You have to know someone or cater to this or that politician, to get anything. The only way you are going to be able to make any money is to be in politics."

The record shows that, with the advice of financial genius Bill Wright, Kerrey fulfilled his ambition at the expense of the citizens of Nebraska.

***

Late one night in the last week of 1982, Democratic Governor-elect Kerrey and Bill Wright summoned Republican Paul Amen, the state banking director, to a meeting to ask him to stay on in the new administration, Anticipating the request, Amen brought with him "our highly confidential, secret, sensitive list of problem institutions," as he later told my legislative committee when we were looking into the State Security and American Savings failures.

High on the list were Commonwealth Savings, controlled by Lincoln businessman S.E. Copple and his son Marvin, and State Security, whose president and leading stockholder was none other than Bill Wright.

In 1986, testifying before my committee, Amen was asked if he hadn't felt a little strange showing the governor this list in the presence of Wright, whose own bank was on it. Amen replied, "No, Senator Harris, I didn't even think in terms of that. I thought in terms of the fact that Bill Wright was the Governor's principal adviser and the Governor had wanted him present at the particular meeting."

Wright was a prominent lawyer in Lincoln, a member of a wealthy, established family, and one of the rising stars in Nebraska politics during the 1970s. State Security, which he and associates acquired in 1978, in a highly leveraged buyout, had made many loans to businessman Bob Kerrey. Wright became the guiding force behind Kerrey's gubernatorial campaign, headed his transition team, and served as the governor's personal counsel. His law firm, Wright, Rembolt, and Ludtke, soon became official adviser to the Nebraska State Banking Department.

On October 31, 1983, while Banking Commissioner Amen was on the East Coast negotiating for a purchaser to buy the troubled Commonwealth bank, Governor Kerrey suddenly issued a late-afternoon press release which said, "We are monitoring the activities of Commonwealth; we are looking at that institution with more interest than we are the other institutions which we monitor."

The next morning, panicked citizens mobbed the bank. State authorities shut its doors by the afternoon. According to a release from Concerned Citizens for Responsible Government, "In the Lincoln Star of November 1, [1983] Kerrey himself was quoted as saying that he was barred by law from publicly indicating how serious the Commonwealth situation might be, that is to prevent a public official from creating a run on a financial institution. Yet, by his own words on television and in the newspapers, Kerrey caused exactly that result."

Commonwealth could have filed for reorganization under the bankruptcy code, to protect its depositors in the wake of the run. But Kerrey forestalled that action by securing a legal opinion from his appointees at the State Banking Department's legal counsel -- Bill Wright's law firm -- that bankruptcy should not be allowed, but that the state should seize the bank. By statute, Commonwealth also should have had ten days to find new capital, before being seized. The bank had at least two offers -- the one Amen was working on, and one from a local group of investors. S.E. Copple was willing to sell his controlling stock in the bank to this local group for $1, in return for an infusion of $8-10 million in capital, in order to save the bank. The bank, as Commissioner Amen later testified to the Legislature, would have been saved. Some $50 million of depositors' funds would have been preserved as well. But Kerrey's press release, the resulting run, and the governor's refusal to allow Commonwealth to be purchased after its seizure, preempted that possibility.

The failure of Commonwealth, the biggest collapse of a financial institution in the history of Nebraska, was a human tragedy of major proportions. Many of its depositors were elderly people, who had their life savings in Commonwealth. When it collapsed, some of them were left without even money to buy food. By 1991, eight years after the collapse, one-third of the depositors have died. Many of them died from heart attacks or strokes, within the first 90 days after their bank's doors were shut. Seven families with retarded children had put their life savings in the bank, to care for the children after the parents die; that money was all gone.

***

Kerrey claimed to have great compassion for Commonwealth's depositors, but his actions spoke otherwise.

Throughout 1983, the State Banking Department pressured Commonwealth president S.E. Copple to put up over $8 million of his personal assets and those of his son Marvin, to secure unsecured loans that Commonwealth had taken from other banks. In one instance, a multi-million dollar property got pledged, to secure an approximately $750 thousand loan. These were debts to, among others, Bill Wright's State Security Savings and the National Bank of Commerce, owned by Kerrey's associate Jim Stuart. Now, after seizing Commonwealth, Kerrey's administration pressured the 88-year-old man to dispose of whatever personal assets he had left, including his residence, to "pay back depositors." The bulk of Copple's substantial assets, however, were no longer available to the depositors. They had already been taken by Kerrey's friends.

The Copple family was descended from some of the first pioneers in Nebraska. It had a tradition of fierce independence from the state's financial establishment, whence Kerrey received campaign funding, The Copples' bank had been a source of liquidity for farmers and small and medium-sized entrepreneurs. When Federal Reserve Chairman Paul Volcker doubled interest rates to nearly 20%, in the fall of 1979, many Nebraska banks, including Commonwealth, landed in trouble. But there was a decision to attack the Copples, while sparing institutions tied to Kerrey.

The brouhaha over Commonwealth's collapse diverted attention from State Security Savings, which Amen testified had been in worse shape than Commonwealth. State Security escaped the kind of pressure applied to the Copples. Rather, Kerrey's permission for State Security to remain open until July 9, 1984 made possible its "milking and draining" by Bill Wright and other bank officers, in the words of our 1986 Senate investigation. (That investigative report was unanimously adopted by all members of the legislative committee by which it was prepared, Republicans and Democrats alike, including some of Governor Kerrey's previously staunchest supporters.)

Then, State Security was allowed to file bankruptcy, contrary to the standard set for Commonwealth by Wright's law firm via the State Banking Department. Wright's double standard was glaring. It was Wright, who took State Security into federal bankruptcy, which shielded it from possible attempts by local officials to investigate its affairs or to protect depositors. Yet Bill Wright's law firm, acting as official adviser to the Banking Department, had prohibited that same course from being followed by Commonwealth, by issuing its opinion that such a declaration of bankruptcy by Commonwealth would be illegal.

At the age of 88, S.E. Copple was stripped of everything he owned, sent to prison, and died a pauper, while Bill Wright quietly moved out of Nebraska, into a million-dollar mansion in Rancho Santa Fe, California.

***

While he was closing down Commonwealth, Bob Kerrey made money on business deals arranged by the institution he allowed to remain open, State Security.

On April 5, 1983, the governor, Wright and others formed a partnership called American Investment Group. The chief purpose of AIG was to acquire a choice block of Lincoln real estate, the Shoppers Fair shopping center. This business opportunity resulted from a maneuver by State Security. Bill Wright's bank had loaned businessmen Jerry Joyce and Robert Rentfro, the owners of Shoppers Fair, millions of dollars for other projects. It threatened to foreclose on all those loans, unless Joyce and Rentfro sold Shoppers Fair for a million dollars below its assessed value. When Joyce and Rentfro prepared to sue, State Security looked for another arrangement. Ultimately, Shoppers Fair was delivered to the Kerrey group, in return for State Security writing off $3 million of Joyce/ Rentfro debts. State Security financed the purchase by AIG with a loan at 4% under the prime rate.

The $3 million write-off of Joyce/Rentfro loans and the new below-prime loan to enable AIG to acquire Shoppers Fair, relieved State Security's depositors of substantial funds.

Those depositors lost millions in other financial swindles, which reveal the brutality of the Kerrey group's actions, masterminded by Bill Wright. Wright and others gained control of State Security in 1978 by purchasing its stock, through a holding company they owned, with a very preferential loan from First National Bank of Lincoln (FirsTier Bank, after its 1984 merger with Omaha National Corporation); the loan required no personal guarantee and carried no personal obligation, meaning that if it went "bad" and the company folded, Wright and his partners had no obligation to repay. Ultimately, they did not repay it.

Having gained control of State Security, they sold its most valuable asset, a downtown Lincoln office building, to themselves (using a disguised corporate name) for one fourth of its actual value. Since the depositors really owned the equitable value of the building, this transaction alone robbed them of a small fortune. Adding insult to injury, Kerrey's friends then effectively sold the building back to the selfsame depositors, using a long-term lease. The new owners leased it to them at the actual value, four times higher than what they had just paid for the building!

On May 28, 1986, with the statute of limitation on prosecution for these activities about to expire, several members of the Legislature's investigative committee wrote to Banking Director James Barbee and Attorney General Robert Spire, "We urge you to consult immediately with the appropriate law enforcement authorities to determine whether criminal prosecution is warranted."

Nothing was done. The disgust of Senators over such patent corruption shows up in the transcript of a subsequent hearing. Senator Higgins: "I am sick and tired of this pussyfooting around with these boys," Senator Schmit: " ... the statute will have expired and the people that needed to be protected will have been protected, that is putting it very bluntly."

Senator Higgins, incidentally, was the Legislature's most stalwart Democrat and Kerrey supporter. As a member of the investigative committee, privy to details that showed just how sordid the affair was, even she had had enough.

The senators subpoenaed Spire and other Kerrey-appointed officials, who stated that it was their prerogative to prosecute or not, and they chose not to.

We called Kerrey himself as a witness, and instructed him to bring his personal financial statements. According to the Metro Update, "Kerrey said he resented the request for his bank records. He parried the request by saying that the committee was essentially saying, 'It is OK if your banker tells us everything they know about you.' Kerrey eventually did consent to appear before the committee. Highlights included his denial of improper influence by William F. Wright. Key decisions of the administration were based upon advice from the Department of Banking [whose counsel was Wright's law firm] and other official channels, Kerrey testified."

Kerrey's AIG deal was already a scandal when it transpired, in 1983. Talking about his business affairs to my legislative committee in 1986, the governor claimed that he had taken every politician's routine precautions: "I prepared and executed a business trust that naturally moved all the assets physically that I owned, all the business assets, away from even indirect control." But somehow this did not prevent Kerrey from personally signing the papers to set up AIG. If it was supposed to be a typical blind trust, to shield a public official from knowledge of how his assets are being managed, Governor Kerrey's trust had at least one eye open. Metro Update described it, "Kerrey's blind trust: It was his sister, Jessie, and her husband, Dean Rasmussen, Kerrey's very active partner in Prairie Life, the restaurants and other business deals. How can you have a blind trust with a bunch of partners you see maybe every day? You maybe eat dinner with them. Or they come over from time to time?"

***

In November 1983, Kerrey acted quickly to shield himself and his associates from investigation during the uproar over the collapse of Commonwealth. On November 5, 1983, news media reported what was an apparent leak from administration sources, that Republican Attorney General Paul Douglas, who normally would have handled the Commonwealth investigation, was involved in improper Commonwealth loans. Douglas was a long-standing friend of the Copples. With impeachment proceedings under way, Douglas resigned.

Kerrey replaced Douglas as attorney general with his own man, Robert Spire. (Today, Spire serves as U.S. Senator Kerrey's chief of staff.) To oversee the Commonwealth investigation, he named a new special assistant attorney general, David Domina, formerly a law clerk in Bill Wright's law firm!

On November 15, 1983, Kerrey fired Banking Director Paul Amen and replaced him with John Miller, whom he had appointed to the State Liquor Control Commission in June. Miller admitted he had no knowledge of the banking business, telling the press, according to the Metro Update, "I can't even balance my checkbook."

The Legislature's Banking, Commerce, and Insurance committee, then chaired by this writer, Senator John DeCamp, was prepared to investigate the Commonwealth collapse, which came under its purview. But Kerrey handpicked a special new committee for the job. In a November 21, 1983 letter to the governor, I protested Kerrey's actions: "Governor, it would be most unfair and unreasonable to expect your own people, Mr. Domina, Mr. Miller and yourself, for example, to investigate yourselves since you are the administration officials in charge of the Banking Department and since the Attorney General's office is the attorney with the responsibility of providing the legal guidance to the Banking Department and to you."

The ostensible investigation by this made-to-order committee turned out as expected. A 1990 report to the Legislature by Reuben Worster of Lincoln and other Commonwealth depositors characterized its findings: "The conclusion of the Domina Report was filled with speculation and 'Who Dunits' and the final analysis determined that Kerrey was an innocent bystander, Amen and [his assistant in the Banking Department] Lake exercised poor judgment, and Douglas was guilty of a multitude of crimes surrounding the failure of the financial institution."

Although Commonwealth had been looted before its collapse, Worster's group charged that post-seizure actions planned by Kerrey were even more egregious. In their three-volume report, these Commonwealth depositors argued that Kerrey had tried to establish, through changes in law and personnel, the ability to devalue Commonwealth's assets by 50% and then sell them to individuals of his choice, with loans financed by a new, Kerrey-appointed agency, the Small Business Development Authority. Although this alleged scheme attributed to Kerrey bogged down in legislative resistance, Commonwealth assets did get inexplicably devalued by 54%, and did wind up in the hands of Stuart and other Kerrey-connected creditors, Worster's group has charged.

Commonwealth depositors got paid only $8.5 million by the state, against their $50 million in losses. There was no reason for them to have lost a nickel. The bank had assets, mainly in real estate, then valued at $50-60 million. The Commonwealth property at 40th & Old Cheney in Lincoln, for instance, would have been worth $35 million if properly developed, according to an estimate given in 1985 by state-appointed receiver John Queen, in front of depositors' representative Dr. Breiner and attorney John Robinson. At the fire sale after Kerrey's liquidators devalued Commonwealth's assets, choice properties, such as 40th & Old Cheney and the Commonwealth Building, went to Jim Stuart's National Bank of Commerce.

***

On another project to make millions from the creation of a new state body, the Kerrey clique evidently had more success. The Omaha Metro Update of July 16-22, 1990 summarized the case:

In 1982, the fortunes of Prairie Life Center, [businessman] Kerrey's planned sports center in Lincoln, were at a low ebb. His managers were saying in published accounts in the Lincoln press that the project was dead. It would not fly, they said, because interest rates made it financially impossible. It was announced that subscribers to membership had their downpayments refunded.

But then it was 1983 and a miracle. Kerrey was in as governor, Wright was his trusted, closest financial adviser. Kerrey's announced highest governmental priority became the creation of NIFA (Nebraska Investment Finance Authority], the very body that could breathe new life into Prairie Life.

Three public agencies that had been lending money in the areas of agriculture, home building, and industry were to be consolidated into one, into NIFA, which was to be created as a new public authority.

And there was one additional area of lending; loans could now be made to commercial enterprises. Suddenly, Kerrey's enterprise, Prairie Life, which couldn't fly in 1982, could soar in 1983. Suddenly, it became economically feasible. The senator and his partners got a loan of $2.55 million, some 4 percentage points under the going rate. ...

After the bill to set up NIFA passed, Kerrey appointed all nine members of its board, including Bill Wright. One of NIFA's very first loans was to Prairie Life. Four days after approval of this loan to Kerry's project, Lancaster County Republican Chairman Randy Moody wrote to Senator Yard Johnson, chairman of the Legislative Council Executive Board, about the obvious conflicts of interest. "This insider deal seems a slap in the face of the taxpayers and business community of the state of Nebraska," Moody wrote. "It's obvious the governor has taken advantage of his elected position to line his pockets and he, his sister and brother-in-law [partners in Prairie Life] are laughing all the while."

Metro Update reporter Bob Hoig also came to me with some questions about NIFA:

This writer went to former Sen. John DeCamp, who spearheaded NIFA into existence in 1983 as head of the Banking Committee. What, the Omaha Metro Update asked DeCamp, has NIFA accomplished that it could not have accomplished as three separate agencies, even if the agencies had to be amended in some way, except to make the type of loan that went to Kerrey and his partners and that, of course, allowed Kerrey to appoint the original board?

DeCamp said he could think of nothing. DeCamp is a Republican. He was once close to Kerrey but he said they are not close now. He knows NIFA as well as any legislator, past or present. And he can think of no reason for its existence other than to make a new class of loan and to allow Kerrey to appoint its board.

In 1986, NIFA marketed a $200 million bond issue, for the avowed purpose of funding low-interest loans to Nebraska's distressed farmers. Kerrey negotiated a deal with New York-based junk bond peddlers Drexel Burnham Lambert, for Executive Life Insurance Company of California to market the issue. (Executive Life failed in 1991 due to its Drexel-linked losses.) Drexel and associated firms earned their fat fees, the value of the bonds collapsed, and not one dollar out of the $200 million ever reached a Nebraska farmer! According to a federal law suit filed in April 1990 by holders of the devalued bonds, the main purpose of the financing was never to provide funds to farmers, but to provide "inexpensive funds to Executive Life for reinvestment ... in junk bonds ..."

While the actions of Kerrey and his associates outraged legislators and tens of thousands of depositors who suffered, there was deafening silence from Nebraska's major press, the Omaha World-Herald, the Lincoln Journal, and the Lincoln Star. The Metro Update of July 16-22, 1990 gave some insight into why:

John Gottschalk, an important World-Herald figure in the business sense since 1975 and publisher of the newspaper since last January, has invested through his daughters in Kerrey's ventures since Kerrey's earliest days in business in the early 1970s. The daughters, now ages 15 and 23, own a $50,000 share in the Prairie Life Center in Omaha.

As for the Lincoln Journal-Star, one of its three board members since 1981 has been Bill Wright.

***

From covering up financial swindles, it was a short step to covering for prominent businessmen who were involved in organized drug peddling or for politicians and publishers with a weakness for young children. Reviewing the Commonwealth case and the Franklin Credit Union scandal side by side, it is striking how the casts of characters overlap. Key personnel in the Kerrey-appointed apparatus, who snowed the Commonwealth depositors, will intervene again as Franklin unfolds.

The state regulators in charge of the Commonwealth receivership were John Queen and Robert Kirchner. Deputy receiver under Queen was one Kent Johnson, Commonwealth's former comptroller and the state's star witness against S.E. Copple; Johnson was to be indicted in 1990, for stealing over one million dollars of Commonwealth depositors' funds, during the receivership. Queen and Kirchner will get a federal contract to analyze the Franklin Credit Union in 1989. On this new assignment, they will hire Johnson once again.

Kirk Naylor was special prosecutor for a grand jury probe of Attorney General Paul Douglas and his ties to Commonwealth; Douglas' resignation cleared the decks for Kerrey's men. Jerry Lowe was a Lincoln police officer, without prior training in financial investigations, assigned to go through the records of Commonwealth. As the first counsel and investigator, respectively, for the Legislature's Franklin committee, Naylor and Lowe will quit suddenly in 1989 in what some senators see as an attempt to torpedo the committee. Naylor will argue that Carol Stitt of the Foster Care Review Board lied, in her reports of child abuse.

Richard G. Kopf was legal counsel for the special legislative committee set up on Commonwealth, bypassing the Legislature's banking committee. Prior to this starring role, Kopf was a country attorney of no significance in a country town called Lexington, Nebraska. As a United States magistrate -- Lincoln sources insist the appointment was a reward for the Commonwealth job -- Kopf will issue, and seal, the order that closes Franklin's doors in 1988. An order from Kopf will get Larry King out of town at a critical moment in 1990. Kopf will preside over the federal grand jury that indicts victim-witness Alisha Owen later that year. And finally, surprise of surprises, on August 27, 1991, Kopf will vault ahead of a host of qualified attorneys to be in the lead position for appointment as a new federal judge.

[admin]

CHAPTER 7: THE FRANKLIN COMMITTEE

On Friday, November 4, 1988, four days before George Bush was elected President of the United States, agents of the Federal Bureau of Investigation, the Internal Revenue Service, and the National Credit Union Administration (NCUA) swooped down on the north Omaha headquarters and branches of the Franklin Community Federal Credit Union and its affiliate, the Consumer Services Organization, and shut their doors.

It was a case of swindles on a vast scale.

At the time of the raid, the Franklin Credit Union listed $2 million in deposits, of which $1.2 million was in certificates of deposit. Yet within a week of the doors being padlocked, claims were filed for $15 million in CD's. Ultimately, close to $40 million was determined to be missing from this credit union that claimed to have a scant $2.6 million in total assets. The obligations were listed on a second, secret set of books.

***

In Nebraska's unicameral Legislature, a handful of senators moved to begin a probe into what happened to the Franklin money. The two main initiators of this legislative investigation, the one that would persist when law enforcement balked, were Senator Ernie Chambers, Democrat of north Omaha, and Senator Loran Schmit, Republican of Bellwood.

Senator Chambers represented the district where the Franklin Credit Union was founded in 1968, by community activists, with the proclaimed goal of making credit available for businesses and individuals in the African-American community of north Omaha. (It was by qualifying as a "low income credit union," that Franklin could sell certificates of deposit to non-members, the means by which it swindled millions.) Larry King became its manager in 1970.

Chambers was in receipt of numerous complaints against King. People talked about his high spending ways, and about the teenaged boys who got in and out of limousines with King. During 1988, Chambers received some of the Foster Care Review Board reports, that abused children had named Larry King.

Senator Schmit, as a Republican, knew of suspicious behavior by King out of town. In early years, Larry King was a Democratic Party activist, and headed Black Democrats for McGovern in 1972, but after he shifted registration in 1981, King made his name in the GOP.

As Schmit's friend and personal attorney, I shared with him my own recollections about how I had noticed the two faces of Larry King, which I later summarized in writing: "I had personally been a delegate to the Republican National Convention in 1984 and 1988 and been a witness at the massive spending and luxury at the Larry King parties in both Dallas and New Orleans, and as chairman of the legislative Banking Committee had observed with a jaundiced eye the Franklin operation, which no information could be obtained on because it was a Federal Institution."

At these two conventions, I attended the two biggest parties ever sponsored by Larry King. It was the first of these that brought King to my attention.

The year was 1984. I was attending the Republican National Convention in Dallas, Texas, having been elected as a delegate pledged to support Ronald Reagan. Nebraska was seated in the front row in the convention hall. I had the first seat in the row. The feeling of excitement and power was awesome.

The man sitting next to me, Senator Rex Haberman of Imperial, Nebraska, informed me that the portly black man standing at the podium as the convention was set to begin, was from Nebraska and was the fastest rising black star in the Republican Party.

"Who the blazes is he?" I asked, "And how come I haven't heard anything about him?"

"Larry King," Senator Haberman told me, "and you and I are attending his party tonight."

"I had planned on going to a good movie," I told Haberman.

"Can't," Haberman explained. "Not if you are going to be a good Republican. You are from Nebraska and this is a party being put on by a Nebraskan to honor another black Nebraskan, DuBois Gilliam, who is going to be getting one of the highest appointments any black person has ever gotten in government. You've got to be there."

So, we went. I drove Rex out to the party, which was being held at Southfork Ranch, famous as the setting for the TV show "Dallas."

It was the most impressive party I have ever witnessed. The attendance by top politicians was remarkable; names and faces you only hear or see on television were there in number. At the center of the excitement was Larry King. Draped over him like a blanket throughout the evening was a heavyset woman, who I learned was Maureen Reagan, the president's daughter.

From what I saw, this party had to have cost far more than the one or two hundred thousand dollars I have heard as an estimate. At a public meeting in 1990, I recalled my thinking at the time: "I got to wondering: Here's this little credit union, and here's Larry King, obviously in the highest reaches of the Republican Party. ... And I just wondered, how does he do this supposedly on a salary of $16 thousand a year?"

Such conspicuous consumption as I had witnessed, earned Larry King the tag "flamboyant" in just about any mention of his name. The NCUA's civil suit against King, filed November 14, 1988 in the wake of the raid, put some price tags on his lifestyle. It itemized $4 million of King's personal expenditures, paid out of credit union funds during the previous thirteen months, including: $1 million in American Express bills, $148,000 to Old Market Limousine, $70,000 to Floral Concepts, $61,000 to Mastercard, $39,000 to Citibank, $37,000 to himself, $27,000 to Omaha Jewelry, and so on.

***

As the disclosures began to flow, on how King's $2 million dollar credit union had tens of millions of dollars in deposits unaccounted for, and on the secret second set of books, I suggested to Senator Schmit that he talk to some other legislators about investigating whether some state laws were violated.

Why was I concerned? Because, from my experience as chairman of the Banking, Commerce, and Insurance Committee of the Legislature, I knew that with all the regulatory controls existing for a federally insured institution, it was impossible for such a theft to occur without cooperation by higher up officials. Larry King could only have accomplished this massive theft with the help or cooperation of regulatory officials or politicians at the highest levels. That meant that institutions of government must have been compromised.

Senator Schmit had his own reasons for thinking that a legislative probe of the Franklin collapse was in order. He had heard from friends of his in the black community, that Larry King spent money like a drunken sailor, but was not making any loans in the community.

When I discussed a possible investigation with Schmit, I had no idea that anything other than theft, and the possible protection of illegal financial transactions, would be involved. As the investigation was launched, no one, except possibly Senator Ernie Chambers, knew where it might lead.

***

On November 18, 1988 the Legislature passed Schmit's resolution in favor of an investigation. In front of special hearings of the Legislature's Executive Board, the strands of evidence against Larry King were finally pulled together, for the first time, before officials who would pay attention.

After the first session, on December 12, 1988, Senator Chambers made a dramatic announcement about the probe. The investigation would go into not only financial wrongdoing, he said, but also the physical and sexual abuse of children by persons connected with Franklin. People holding official jobs might be affected, added Senator Schmit.

At the three and a half hour Executive Board hearing on December 19, 1988, Carol Stitt, Dennis Carlson, and Burrell Williams of the Foster Care Review Board summarized the abuse complaints centered around Franklin's top officer. They presented their files on the Webb foster home and on Loretta Smith.

CARLSON: The nature of these allegations are something that is going to shock the Committee. They deal with cult activities, they deal with sacrifices of small children, they deal with sexual abuse, and there's a correlation between these two different reports. We have, the Boys Town report ... prepared by a worker from Boys Town named Julie Walters, ... (which) contains the allegations of the children that were in the Webb foster home, Nelly primarily. Years later, well, two years later, we have Loretta Smith in Richard Young Hospital who's making allegations against Larry King and as far as we know there is no relationship between Nelly and Loretta Smith. ... Both reports talk about the Omaha Girls Club, both reports mention a specific individual who is the superintendent of schools. ...

SENATOR REMMERS: [T]he question that came into mind, it's been in my mind since you've been testifying and I think you've answered part of it just now, is you're talking about about these abuses from children from Boys' Town and Girls' Club and so forth, now is there a common thread that goes over here to the Credit Union deal that we are investigating? In other words to the Franklin Credit Union? Is there a common thread there that kind of leads to that?

CAROL STITT: Well, the common thread is Larry King.

SENATOR REMMERS: Yes, that's what I mean. It all goes back to him? OK.

"CAROL STITT: Yes, he seems to be more the organizer, or the high-class pimp, I mean if that helps fit this together. ...

Stitt also clarified what she had written in her June 1988 letter to Attorney General Spire, about a Kansas City connection of Larry King. She testified that she had cross-checked with the Kansas City detective, who reportedly inquired of Kirstin Hallberg about when Nebraska was going to crack down on King. The officer, said Stitt, "confirmed that Larry King had been there, had contributed money to a group home and when he left, three boys came forward and said that they had been abused by him while he was there."

The Executive Board also received from the FCRB the handwritten report by Julie Walters, on her interview with the teenaged victims during 1986. In the December 21, 1988 Omaha World-Herald, reporter James Allen Flanery recounted a telephone interview with Walters at her home in another state, in which she told him how their testimony had seemed at first "too bizarre to be true." But the more experience she gained with troubled children, Walters added, "working in probation, I'm more sure than ever that there is more truth than not in their accounts. The conclusion I reached was the kids I spoke with were not lying."

What the senators heard at the closed December 19, 1988 meeting shook them to the bone. "The information brought tears to my eyes," Schmit said, according to the Lincoln Journal. "I do not cry easily and I was not the only person that was moved." Chambers echoed the witnesses' outrage about delays: "With this type of information it is inexcusable that action had not been taken of an investigative nature. People were not contacted that should have been. Leads were not followed up that should have been followed up. My feeling is that the whole thing is being sat upon and nothing was done."

The question of a cover-up of Franklin-linked crimes came up at the outset, in this way. Omaha Police Chief Wadman and state Attorney General Spire offered a lame protest. "Every step that should have been taken was taken," Wadman told the Journal. Spire said, "We did receive some sensitive information in July. My office acted promptly and professionally and nothing was sat on. I am confident that law enforcement -- both federal and state -- is doing its job in the situation. ..."

***

The Legislature's Franklin committee hired its first investigator, former Lincoln policeman Jerry Lowe, in February 1989. Attorney Kirk Naylor came on as Special Counsel. On February 15, Lowe sent a memo to the committee on the results of his first comprehensive evaluation of the case, including its handling by law enforcement. Lowe wrote:

This matter is indeed a complex and complicated one, commencing with the closing of the Franklin Credit Union . .. and mushrooming into a situation where additional allegations (other than the financial improprieties) have arisen, including influence peddling, child abuse and neglect, child sexual abuse, pornography, substance abuse, homicide, and inaction and possibly malfeasance on the part of law enforcement agencies, public agencies, and public officials for events dating several years back. More importantly, there seems to be a growing public perception that many of the affected agencies and/or officials are participating in a cover-up. ... The task which the Committee has undertaken will not be an easy one. ...

The allegations regarding the exploitation of children are indeed disturbing. What appears to be documented cases of child abuse and sexual abuse dating back several years with no enforcement action being taken by the appropriate agencies is on its face, mind boggling.

In this and other early reports, Lowe made clear that every aspect of the Franklin case was politically hot. Larry King had become wealthy and influential thanks to quite a number of "big people," he commented. Moreover, Lowe reported, there were indications that King was involved in guns and money transfers into Nicaragua, of involvement by the CIA, and possibly "a White House connection." There appeared to be "some type of connection between the money missing [from Franklin], the crisis in the Savings and Loans, and the funneling of money to Haiti and Nicaragua."

Lowe wrote that there was evidence Omaha Police Chief Robert Wadman had stayed at Larry King's residence in Washington, D.C.

Lowe retraced the leads contained in the documents assembled by the FCRB. In March, he interviewed Loretta Smith three times. In April, he talked with Cornelia (Nelly) Patterson, who had taken back her original name after she escaped from custody of the Webbs.

***

With Lowe' s investigative reports in hand, the Franklin committee convened hearings. When some state officials were called before them, the senators met with a stone wall.

Testifying on June 22, 1989, Attorney General Spire appeared still unchastened. Just as his office had dallied in the face of Carol Stitt's plea for action on complaints against Larry King the year before, Spire now said about Franklin-linked child abuse, that "based on conclusions and reports of the FBI, the Omaha Police, and the Nebraska State Patrol, all three of those have concluded that the reports do not have substance ..."

Someone was working at cross-purposes outside the hearing room, as well.

While the Legislature's Franklin committee was getting started at the end of 1988, the NCUA selected a firm called Financial Advisory Group, of Council Bluffs, Iowa, to make its own determination about what had happened to Franklin's missing millions. FAG was a partnership formed by John Queen and Robert Kirchner, whose earlier appointments included the one they got from Governor Kerrey -- state regulators to oversee the liquidation of the Commonwealth Savings and Loan. In their 1989-1990 audit of Franklin Credit Union, Queen and Kirchner would conclude that Larry King spent nearly all of it on flowers, limousines, gold watches, and his generally extravagant lifestyle.

Even as he proceeded with the audit of Franklin, Queen was serving during 1990 as deputy receiver for Commonwealth, overseeing the liquidation of the bank's remaining assets and the disbursement of the proceeds. On August 14, his chief assistant in the receivership, Kent Johnson, was arrested by the FBI for stealing over a million dollars in Commonwealth funds. Although Queen's co-signature was on every check Johnson wrote to steal the money, Queen claimed that his name had been forged. His career, in any case, was tightly intertwined with Johnson's. Johnson worked for him in the Commonwealth receivership, on the Franklin audit, and at an Omaha corporation he owned, Phoenix Sign Corp. This was a venture Queen launched by buying up the assets of Globe Neon, a bankrupt firm. One of Queen's fellow holders of a $50,000 share of Globe Neon before it folded, was none other than Larry King!

Queen and Kirchner enjoyed the sympathy of investigator Jerry Lowe, who wrote in his February 15, 1989 case summary for the Franklin committee:

A private consulting firm headed by Omaha residents John Queen and Bob Kirchner, both formerly associated with the receiver for Commonwealth Savings in Lincoln, Nebraska, was retained by the National Credit Union Association (NCUA), in early 1989 and given the responsibility to trace all the funds flowing into and out of the Franklin Credit Union. ... I am familiar with both Mr. Queen and Mr. Kirchner due to my involvement as a Lincoln Police Department investigator in the Commonwealth matter. ... I can personally attest to the thoroughness and capabilities of Mr. Queen and Mr. Kirchner and the people assisting them and believe an association with them would save us an enormous amount of time in following the money.

***

I have been Senator Loran Schmit's personal attorney for a number of years. When we were both senators, we frequently worked together on major issues. At other times, such as when we disagreed on the issue of telephone deregulation, we led opposite sides, and fought each other tooth and nail.

During the early months of the legislative investigation of Franklin, I personally had serious doubts as to the validity of what was being alleged. I provided a minimum of legal advice to Senator Schmit during this period, but he did insist that I be available to provide him such advice.

Schmit had the experience of a previous investigation, involving drug-related matters and the State Patrol, which ended up with him and other senators, including myself, being sued by some of the individuals investigated. He wanted to make sure that he made no error that would cause any legal liability for him. Even though we had won that earlier suit against us, Senator Schmit wanted to exercise all caution, to protect himself from lawsuits. Therefore, like many other state and national politicians, he quite properly had private legal counsel -- me.

In the spring of 1989, after the Franklin committee had been conducting investigations for some time, Senator Schmit sought my legal advice. He wanted to know the legal liability involved, if he supported a planned report of the committee, which was to suggest that there was child abuse committed by prominent individuals -- not to be named -- which had not been properly investigated by agencies of government.

I asked for no names and he provided no names of the individuals he was talking about. In point of fact, there were enough rumors floating in the legislative corridors and on the streets of Omaha, that at least a dozen prominent persons could have been the subject of these accusations.

I gave him the same advice then, that I would give now: "Accusations of child abuse are the worst accusations you can make against an individual. That is because, no matter what the truth of the matter, once the accusation is made, it will never be able to be rubbed completely off, even if the individual accused is as innocent and pure as can be. Therefore, before you sign your name to anything that suggests that there is serious child abuse or before you suggest that an agency of government has failed in its duty to find or investigate child abuse, make sure you have the smoking gun that establishes that is what actually occurred. Not just for your legal protection, but because that is the right thing to do. To falsely accuse of child abuse is a terrible thing. To cover up child abuse, is worse than falsely accusing."

I had my own personal experience of a false accusation of child abuse, which still burns in my soul. It was also a hideous example of the use of political office to intimidate, silence or destroy political enemies.

The year was 1984, early January. I had announced my intention to run for the United States Senate. As chairman of the Legislature's Banking Committee, I was actively seeking to investigate the collapse of Commonwealth Savings, which had just occurred. In an Associated Press listing of the ten most powerful people in Nebraska, as ranked by media editors and publishers, I was number 5, behind the governor, U.S. Senator J.J. Exon, Omaha World-Herald publisher Harold Andersen, and University of Nebraska President Ronald Roskens. Polls showed me as the leading candidate for the Republican senatorial nomination.

Then, I received a message from Republican Party leaders. It was simple: "GOP strategists at the highest levels believe this is the year the Republicans can beat J.J. Exon. Opinion poll analysis shows that such a victory can only come, if the candidate is a woman and has no political 'baggage.' (Remember, 1984 was the year of Democrat Geraldine Ferraro's candidacy for U.S. Vice President, the 'Year of the Woman' in politics.) Republican leaders are fearful that you, John DeCamp, will be able to win the primary, but because of 'baggage' and controversiality, you will not beat Exon in November. Therefore, Republican leaders ask you to withdraw from the primary. If you do not drop out voluntarily, you will have to be stopped some other way. And stopped you will be, because this race means so much to Republican leadership, at the highest levels in Washington."

I did not listen. I continued to campaign for the Senate seat.

Shortly thereafter, a tenant in one of my apartments, who was delinquent on her rent, lodged an anonymous complaint to the Nebraska Department of Social Services. She charged that I and my wife had "abused" my young daughter when she was five years old. A picture in a family photo album, showing my daughter in a pose like the Coppertone baby ads, was the basis for the complaint.

Two investigations conducted immediately, one by the DSS and one by the Lincoln Police, found there was no child abuse and so reported.

But a County Attorney, Mike Heavican, took matters into his own hands. Heavican was on the Republican search committee for a senatorial candidate, which ultimately picked a woman with no "baggage," and she lost to Exon. He also was someone whose name had come up as my Senate Banking Committee attempted to start probing the Commonwealth and State Security matters, as someone who may have granted illegal tax favors to involved parties.

Heavican filed a petition, alleging that I and my wife had abused our daughter in the way we were educating and raising her. It was a civil, not a criminal, filing, but I am sure it was designed to gain statewide publicity.

Heavican's action also exemplified how a public position can be abused. It comes as a shock to most Americans, that the lowliest county attorney has absolute immunity when he files complaints or charges against somebody, even if he does so knowing them to be false. His automatic immunity is supposed to protect the prosecutor, as an institution of government, from being deterred from effective action by the specter of future lawsuits. The abuse of this institutional privilege can be terribly destructive.

Months of investigation resulted in a legal opinion from Judge W.W. Nuernberger, that there was no child abuse. Nuernberger concluded that if Mr. and Mrs. John DeCamp were guilty of child abuse, then so were a lot of families and so was the late President Kennedy, and perhaps every family in Nebraska would have to destroy its photo albums, if I were considered guilty of anything.

While the investigation was under way, media coverage continued to smear my name with the charges. I maintained that the phantom child abuse was concocted by Heavican, using the County Attorney's office, for the political purposes of knocking me out of the Senate race and stopping my Commonwealth/State Security investigation. Six years after these horrible events, my suspicions were confirmed.

On March 17, 1990, the Kansas City Star reported on the DeCamp child abuse allegation:

... Roland Luedtke, a former lieutenant governor and the mayor of Lincoln from 1983 to 1987, launched his own review of the charges. "The report that came back to me was that [DeCamp] was pure as the driven snow," Luedtke said, but, he added, whoever may have had it in their mind to get rid of DeCamp "accomplished their purpose."

My 1984 ordeal came to mind in the spring of 1989, as I insisted to Senator Schmit that he exercise caution in the Franklin case.

***

Senator Schmit offered an amendment to the committee report, written by himself, which stated, in essence, that at this point in the investigation, the legislative committee did not have the smoking gun that would establish the truth of any of the child abuse allegations or the failure of institutions of government.

In July 1989, a controversy broke out on the Franklin committee, over Schmit's amendment and the course of the investigation. Some members maintained that Senator Schmit was not doing enough to fo1low up the child abuse. Schmit rejoined that the information gathered thus far by Lowe, while useful, was mostly second-hand, and that the committee should follow the advice he had been given by a friend in law enforcement: "Follow the money trail." There is almost no important crime that can be committed, said Schmit, echoing his friend's advice, without spending money, and spending money leaves a paper trail. It should be possible to move from hearsay to court-admissable evidence such as checks, credit card receipts, and flight manifests.

Senator Chambers and Senator McFarland departed from the committee. Investigator Lowe and Counsel Naylor resigned.

Schmit and the remaining four other members of the Franklin committee -- three farmers, a plumber and a grandmother, as Schmit described them -- hired private investigator Gary Caradori, a former state patrolman, to replace Lowe in August.

In a review of his work for the committee, Caradori recalled his first impressions:

From the onset it was apparent that I was up against a barrier regarding mistrust of the Franklin Legislative Committee. I was told repeatedly that people were afraid to divulge any information, not only because of retribution of the alleged perpetrators, but also because they feared they would be publicly discredited by the Omaha World-Herald. People were also becoming discouraged by the lack of progress made thus far on the investigation and they translated this to mean "cover up."

Initially, the reports which Mr. Lowe had generated were reviewed in detail. It was evident that while there were a large amount of reports generated, that very little of substance had been gained by him regarding firsthand information. It was then decided that, while secondhand information had been valuable in that it presented an idea of the possible scope of abuse going on, that it was more important to locate individuals who had actually been abused and participated in the various activities that comprise this case.

[admin]

CHAPTER 8: "SOMEBODY HAS TO TELL THE STORY"

Caradori did find victims who would talk. Four of them allowed him to videotape their stories, in nearly 30 hours of sessions during late 1989 and early 1990. These interviews contained detailed allegations of sexual abuse, drug usage, pornography and other crimes by prominent Omaha citizens. Implicated, among others, were individuals already named by Nelly and Kimberly Webb, Brenda Parker, and Loretta Smith, as abusers or pornographers: Rusty Nelson, Deward Finch, Larry King.

What these victim-witnesses related became the central matter of the Franklin case, but nobody except for a few law enforcement personnel, state senators, and grand jury members has viewed the Caradori tapes. Snippets were aired on television in Omaha. With their contents largely unpublicized, the tapes became a target of speculation and denunciation, rumor and doubt.

The interviews are reported here for the first time in considerable detail. The excerpts that follow are from Caradori's written precis of the interviews, which include his notes on discrepancies in the testimony, corroborative details, and ideas for follow-up investigation.

***

On October 30, 1989, Gary Caradori and his assistant Karen Ormiston went to the Women's Reformatory in York, Nebraska, to interview 21-year-old Alisha Owen, who was incarcerated there on a bad-check conviction. Caradori had had Owen's name on file for some months, as a potential lead. He noted in his daily report for October 30:

Ms. Owens [sic] was informed of the purpose of our visit and was asked for her cooperation in the matter. Ms. Owens indicated, after a three-hour interview, that she had been heavily involved with various individuals in Omaha, including former members of the Franklin Credit Union. She indicated that she was also involved with other minors involved in pornography and homosexual acts involving various people in Omaha. Several of the individuals she mentioned were Alan Baer, Harold Andersen, and also former Police Chief Robert Wadman, who had participated in many parties. It should be noted that Alisha also indicated that Mr. Wadman is a pedophile.

Contrary to impressions that the Omaha World-Herald tried to convey, Alisha Owen not only did not seek out Caradori, but she told him only a fraction of the story at that first meeting. As she later described to the legislative Franklin committee, she was extremely reluctant to get involved at all. After Caradori left, she contacted the prison psychiatrist, who directed her to Superintendent Lawrence Wayne. He advised her to tell the truth and to cooperate with the Franklin committee.

Caradori's daily notes for November 4, 1989 record what happened next:

Upon arriving from out-of-state on the above date, this writer received word that Alisha Owens had called this writer in an attempt to reach me regarding a meeting that I had conducted with her previously. Upon receiving this information, arrangements were made to speak with Alisha by telephone. ...

Alisha went on to state that she did not relate to me all of her experiences during the first time that we had met because she was "unsure" of this writer. She stated that she now wanted to come forward with the information that she had previously withheld. Specifically, she indicated that she was one of the minors involved in flights to other states, and she knew of other minors who were on these flights also.

On November 7, Caradori and Ormiston proceeded to York prison and took a sworn video statement from Alisha. The taping lasted from 11:38 a.m. until 10:00 p.m. In addition to the video record, Caradori made an annotated transcript, which is excerpted here.

Alisha Owens [sic]

After pursuing many leads, on October 30, 1989, this writer contacted Alisha Owens at the Women's Reformatory in York Nebraska. I spoke with Alisha for approximately three hours, during which time she indicated that she had been heavily involved in pornographic and sexual activity with various individuals in Omaha, including former personnel of the Franklin Credit Union. During this discussion with Ms. Owens she initially indicated that homosexual activities also occurred involving Alan Baer, Harold Anderson (sic] and Robert Wadman.

It should be noted that Ms. Owens remitted this information without being directly questioned about these specific individuals. ... Following is the information gained from Alisha during the videotaped statement (of Nov. 7].

During the course of the statement, Alisha stated that she first became involved with Larry King in August of 1983. Alisha was 14 years old at this time. She indicated that she met Larry King through some boys from Boys' Town, among them Mark Powers*. Mark had invited her to a party that next Friday night.

This first party was held in August of 1983 at a Twin Towers penthouse. Alisha arrived with Troy Boner and Mark Powers at approximately 10:00 p.m. in a car that Troy was driving. Present when they arrived at the party were Larry King, Bob Wadman, Alan Baer, Harold Anderson, and other adults that Alisha did not identify at this time. ... Alisha estimated that there were approximately six adults and 20 minors. Mark Powers had told Alisha prior to going to the party that there would be marijuana, alcohol, and so much cocaine available at this party that "she would think it's snowing." ... Alisha stated that the party was held at Alfie Allen's apartment in this building. ...

There was a "professionally made" pornographic tape showing portraying two males, approximately age 17, engaging in homosexual acts.

Alisha observed Larry King and Larry (Last name unknown [Lnuk], black youth) going into one of the bedrooms. She observed later when the black youth emerged from the bedroom that he was tucking in his shirt and fastening his pants. Alisha also observed Alfie Allen going in and out of the bedroom numerous times. She observed a young boy approximately 14 years old sitting on Harold Anderson's lap. She then observed this boy and Harold Anderson going into one of the bedrooms.

Alisha observed Alan Baer using "two lines" of cocaine and smoking marijuana. ...

A young boy was sitting on Harold Anderson's lap with his pants undone. He was stroking the child's penis. The name of the child is unknown. ...

A third party occurred on the 21st or 22nd of September, 1983, at the same Twin Towers apartment. Alisha had turned 15 on September 18th. Present at this party were Troy Boner, Alan Baer, Robert Wadman, Mark Powers, Larry King, Larry (Lnuk), Danny King, and Harold Anderson.

Harold Anderson was "with" Danny King.

On the above evening, Robert Wadman told Alisha that she was pretty and asked her if she was wearing anything underneath her clothing. He asked her if she was wearing a bra. Sometime around 10:00 to 12:00 p.m., she was sitting on his lap. He indicated to Alisha that he knew she wasn't a virgin and he then felt her breasts. He told her that she had nice breasts. He felt her genitals and unzipped the zipper to the jumpsuit she was wearing. She asked him to stop and he grabbed her wrist very tightly and twisted her wrist.

He then removed her clothing and asked her if she knew what fellatio was. He said that he would show her what it was. He then instructed her to perform oral sex. Robert Wadman's pants and underwear were down. He pinched her on the breasts. She was kneeling on a cushion on the floor and he was stroking her hair and her breasts, while she was performing oral sex, and he was also grabbing her head and forcing her to perform oral sex on him. ... After this sexual activity, she began to cry and went to the bathroom where she vomited.

Wadman then told her that he would buy her a new dress.

... While at the French Cafe, Wadman gave her this dress and said that he wanted to show her the wine cellar. ... She removed her clothing and put on the dress. He said that she would look better without the dress so she took off the dress and he removed her panties and sat her on top of a table and spread her legs. He then began touching her and she was crying because she was afraid that he would rape her. He masturbated and ejaculated on her. When he ejaculated, she physically drew back which made Wadman very angry ...

She stated that during parties sexual encounters would occur between adult males and minor males. Usually present at these "parties" were Larry King, Robert Wadman, Gene Mahoney, Alan Baer, Peter Citron, Harold Anderson, and the superintendent of a school. ...

She told me that a photograph was taken of her at a later party while she was tied up. It is probable that the photograph was taken by Rusty Nelson. She describes Rusty Nelson as having blond hair, average build, approximately 27 years old, and that he has acne scars on his face. ... Reference group sex, photos were taken of the group sex encounters by Larry King and the photographer, Rusty Nelson. She mentions that her hands were handcuffed and her feet were tied up. ...

She said that Alan Baer "cruises" the Old Market area for young boys, then takes them back to his office where he has them run naked on a treadmill while he watches them. This has been corroborated by Troy Boner who did perform this activity for Alan Baer. ...

She states that she witnessed a young boy sitting on Bob Wadman's lap at a party and that he had his hands between the boy's legs. ...

She also discussed the activities of Harold Anderson. She said that he likes young boys and that his "regular" boy is named Jeremy (Last name unknown) and that he was approximately 14 years old when she witnessed them together. She said that Harold Anderson gives money to boys and that she has seen young boys performing oral sex on him. She stated that she has witnessed Danny King performing oral sex on him. ...

I asked her to elaborate on the superintendent she mentioned as attending the "parties." She said that he lives approximately 40 miles from Omaha, is gay, older, balding, has bad teeth, and stands approximately 6'. She stated that this individual had sex with Troy Boner at the Twin Towers apartment and that he gave money to Troy for this. ...

Corroboration: You will later see that another witness, Danny King, identifies Deward Finch, former superintendent of the Fort Calhoun High School as an individual who he had sex with on many occasions. He also fits the description as related by Alisha.

Other information from Alisha was that Troy Boner and Danny King were taken to Council Bluffs by adult males for sexual purposes.

Corroboration: Troy Boner and Danny King related these events in detail in their respective videotaped statements ...

Alisha also describes a forced sexual encounter which occurred at the French Cafe in August of 1985. Present were five boys from Boys Town, Tom McKinney (sic], and Judge Theodore Carlson, among others. Larry (Lnuk) told her that "someone is waiting downstairs and you'd better be good." She performed oral sex on Judge Carlson, and the encounter lasted approximately 20 minutes. ...

It should be mentioned at this time that the individual identified as Larry (Lnuk) is known as Larry King's "henchman". I have been unable to determine his last name. It wasn't usual for the individuals in this group to divulge their last names, and it was also common to use aliases. ...

Please note that Alisha became very upset when discussing her sexual activities with Bob Wadman, and with other individuals. The video was stopped several times so that she could compose herself.

She said that Wadman had told her that Larry King "owes him a lot" and that "he had done a lot for Larry King." ...

She said that she was told that [Omaha Mayor] P.J. Morgan supplies a lot of drugs. ...

Alisha took numerous plane trips at the direction of Larry King for sexual purposes. These trips include trips to Los Angeles, Kansas City, Pasadena, CA. On these flights were other minors. Information regarding these flights is as follows: ...

Private Flights:

The first private flight that Alisha was on occurred in March of 1984. ... The plane landed at a small airport in California. ... Upon their arrival, Danny and Alisha were taken to an Embassy Suites type motel, and two businessmen came into their room. One man had sex with Danny, and one man had sex with Alisha. They received no money. Please note that she said that Larry King had ordered her to take this trip.

The man that Alisha had sex with she describes as "extremely weird." He hurt her, forced her to have anal sex, slapped her and threw her around. He took out a knife and threatened her if she didn't perform oral sex on him, and threatened to cut off her nipples. She was afraid and crying.

She stated that when the men finally left, that they were both very upset. She described Danny as being very upset and angry. Their ordeal with these two men lasted approximately six hours. Also, they were both afraid to take a shower for fear that the men would come back. ...

Corroboration: Troy indicates in his video statement that Alisha, after this ordeal, was extremely upset and "smelled" and was a "mess". ...

When Alisha was asked who participated and who was aware of the transportation of kids across state lines for sexual purposes, she said that Larry King and Alan Baer were aware of this. It is probable that other adults were also aware of this. She stated that Bob Kerry [sic] knew about these activities and that Larry (Lnuk) had told her this. Larry (Lnuk) also indicated that Bob Kerry knew about the closing of the Franklin Credit Union before it fell.

Other issues discussed regarding Bob Kerry consisted of Alisha's statements that she had a friend who works for Dixon and Dixon law firm who is responsible for maintaining the keys to the file room. Her name is Jackie Compton, and she has told Alisha that there are various documents with Bob Kerry's signature on them that relate to the Commonwealth ordeal. This is explained in detail in the first video taped statement. ...

Alisha discusses the friendship between Judge Carlson and Tom McKinney, Assistant Douglas County Attorney. ... She stated that McKinney and Carlson are also involved in drug activity. ...

She also knows Peggy* West, the daughter of Gary West who is a good friend of Larry King's. She said that Peggy may have also been exploited and/or is aware of these activities. She is also acquainted with Gary West and indicated that he is a bartender at the Max Bar in Omaha.

When questioned about satanic cult activity, she said that Troy Boner and Danny King were involved in this activity, and that at one time Danny King was extremely "anti-God." ...

She also mentioned a house on Leavenworth where there is, or was, a pentagram drawn on the kitchen floor. She also saw satanic pictures on the walls of this house. ... In addition she stated that she saw Bob Wadman coming out of this house on one occasion.

Corroboration: Loretta Smith mentioned that a person actively involved in cult activity was a male identified as Kings Horses. She [Alisha] said that Larry (Lnuk) who was/is Larry King's "henchman" is known as Kings Horses.

She also indicated that she knows an individual identified as James Teddy Broom. She describes him as black, with greasy hair, a flat nose, slitted eyes, and that he "walks funny." Said that he does the "dirty work" for Larry (Lnuk).

Corroboration: Loretta indicates that Teddy Broom was instrumental in satanic cult activity, and threatened her if she said anything about what happened at the meetings. Loretta Smith also indicated that Teddy Broom raped her mother, Jackie Smith*, as a warning to her. ...

She knows an individual named Frank Kessler who she thought was "very strange" and who always talked about the occult, but wanted to get out of it.

You will also see a transcript of a taped interview from Lisa Sutherland*, who discussed satanic activity and teenage prostitution in Omaha. She too mentions Frank Kessler as being involved in cult activity.

She also knew of a social worker identified as Florence Davis who may be associated with this group of people. She stated that Larry King could "get anybody out of anything" by offering them bogus jobs. It is also possible that Florence Davis may be involved in "funneling kids" into certain foster homes. See a transcribed interview with Millie Boggs* the Director for the Omaha Children's Home for further information regarding Florence Davis. ...

Caradori filed a back-up report for this part of the precis, entitled "Taped conversation with Gary A. Caradori and Millie Boggs."

GC: But I'm also interested in when I asked you about what's her name, she was living "high on the hog."

MB: Florence Davis?

GC: Florence Davis.

MB: See, I'm not. ... Let me tell you a little bit about what I know about Florence. I mean, Florence just used to be a line worker. I mean she was a worker like I am.

GC: I want you to talk about that because her name has come up. Just because a person's name has come up doesn't make you guilty either.

MB: No.

GC: And maybe it came up because she had the position at the time. And doggone it, I'm going to get her pulled on the carpet and have her explain herself from back then.

MB: You 'II never get her back here.

GC: A subpoena might bring her back.

MB: Well maybe. I hear she's in San Francisco. I don't know. All of a sudden one day she was just there and the next day she's gone. And nobody can understand how Florence gave up this good job being a supervisor which would, I think had always been her goal ...

In late June of 1983 I attended a meeting at the state with Florence Davis, the McArthur children's worker, and Lloyd Linquist, the permanency planner. Basically, the purpose of this meeting was to tell me that the state would not change their minds and that they felt they were in a better position to judge what the McArthur children needed, and that they were going to proceed with adoptive plans of placing the children with the Webb family in Fort Calhoun.

A few days later I went with Florence Davis to the Webb home, as Florence thought I would feel better about the placement if l had the opportunity to meet the Webbs. Quite to the contrary, after meeting with Mr. and Mrs. Webb, I was more concerned than ever as I did not feel that this was a proper home for these three children ...

Something that I think is extremely suspicious is that about the time that the King mess was surfacing, Florence Davis suddenly left the state, almost overnight, and supposedly is living in California. A short time later, Lloyd Linquist went on sick leave and was gone for many months. And then about the time he was to return, he also resigned. While he was on leave I understand that he took a trip to Tahiti. I think personally that Lloyd Linquist and Florence Davis know a lot about the situation regarding the abuse of these children and they should be found and questioned. ...

One time when Florence was working for the state, I believe before she became a supervisor, I noticed that she declared bankruptcy while she was living in her new condo and had her new car. However, after that whenever I would see Florence it seemed like she was dressed extremely well and did not appear to have any monetary worries, although I am not a friend of Florence's and I did nothing with her socially.

Lloyd Linquist also was impeccably dressed, although someone told me that he had only rented a room at the Grace Bible Institute and actually didn't even have an apartment. ... I thought it was interesting that Lloyd could take trips to Europe which I know that he did in the years that he was a permanency planner, and other exotic vacations on the salary that he was paid by NDSS.

Caradori' s summary of the testimony from Alisha resumed:

During the second video taped statement, [Alisha] again discussed the pornography aspect of this case. She said that Rusty Nelson develops his own photographs and that he would more than likely have the negatives of the group and individual pornographic photos, possibly to blackmail Larry King at a later date. She reiterated that Rusty Nelson and Larry King would "direct" these photographic sessions. She said that she would cry and try to get out of participating in these sessions, but she would be "slapped around" if she didn't participate. ...

She also states that Alfie Allen had been given a Mercedes Benz by Larry King, and that Alfie was very upset when the money stopped coming in because of the closing of the Franklin Credit Union. ...

She again discussed the parentage of her child. She said that she is 99.9 percent sure that her child is Bob Wadman's, and that conception occurred in August of 1984. She had sexual intercourse with him on August 8th, August 10th, August 17th, and August 22nd. All of these sexual encounters occurred at the Starlight Motel, with the exception of August 10th which occurred at the Twin Towers apartment. ...

Caradori recommended 62 individuals and documents to be subpoenaed on the basis of Alisha Owen's testimony. He finished the precis with a list of alleged perpetrators, named by her:

1. Larry King
2. Bob Wadman
3. Harold Anderson
4. Alan Baer
5. Deward Finch
6. Peter Citron
7. Judge Theodore Carlson

***

Owen provided Caradori the name of Troy Boner as a victim-witness who could testify on the same events. After beginning a search for Boner, Caradori received a telephone call from him at 4:40 a.m. on November 25, 1989. From 4:30 p.m. later that same day, until 10:22 p.m., Troy Boner told his story.

Troy Boner

... Troy then stated that he met Larry King in July of 1984. He stated that Alan Baer had talked to Larry King about him, so Larry King approached him in July of 1984 in The Max Bar and grabbed Troy's crotch. ...

Since it was apparent that Troy had met Alan Baer before meeting Larry King, I asked him when he first met Alan Baer. He said that he first met him in August of 1983 through a friend of his named Tim Prescott*. He said that Tim picked him up in Alan Baer's car and told him how he could make some money. Tim took Troy to Alan Baer's residence in the Twin Towers which Troy stated was apartment #201. ...

He said that he knew he was there so Alan Baer could get acquainted with him, and so he could make some money. He thought that he would let Alan Baer perform oral sex on him for him because Tim Prescott had told him what the "arrangements" would be. ...

He said that he walked back to Alan Baer's apartment later that afternoon at Alan Baer's request. Alan met him at the door in a yellow Ralph Lauren bathrobe. Alan Baer asked him to get undressed. (Troy stated that he thought he was going to get $50.00.) He started undressing in the hallway and Alan Baer asked him to go into the bedroom. Alan Baer then got undressed and a sexual encounter ensued, including mutual masturbation and oral sex. After this sexual encounter, they took a shower together and he received $400.00 in fifty-dollar bills. Alan Baer told him to call him that next Tuesday.

Troy met with Alan Baer again five days later, after Troy had called him from his residence in Council Bluffs to make the arrangements.

Corroboration: Get the telephone records for his residence in Council Bluffs at this time. ...

On February 5, 1984, Alan Baer took Troy and another young kid to Des Moines, Iowa. The other boy's name was Shawn (Lnuk) and he was approximately 12 to 13 years old. They drove to Des Moines in a tan Mercedes, which Troy thought might possibly be rented. They stayed at the Savoy Hotel in downtown Des Moines. Troy and Shawn stayed in the room at the hotel while Alan Baer attended some business meetings. The three of them had several sexual encounters while in the hotel. At one point, Troy left the hotel and upon returning found Alan Baer asleep holding Shawn.

Troy's mother had filed a missing persons report while he was in Des Moines. He then called the mother of his girlfriend and had her pick him up in Des Moines. He left without Alan Baer's knowledge.

Corroboration: Check for a tan Mercedes possibly leased/rented to Alan at this time. Check to see if Loni Boner did file a missing persons report at that time. Who was Troy's girlfriend at that time? Check her and her mother to see if they did pick up Troy in Des Moines. Check the hotel records at the Savoy Hotel for that time period. ...

In July of 1984 Troy was approached by Larry King at the Max Bar. Larry knew what Troy looked like from the pictures he had received from Alan Baer. Larry King grabbed his crotch while at the bar. Please note that he was a minor at this time. ...

Larry King then had Troy move into the Travel Lodge Inn. ... During this three weeks, Larry would stop by at various times, usually in the afternoon, for sex with him. They would perform oral sex on each other, and Larry King performed anal sex on Troy. Larry King also wanted Troy to urinate on him in the bathtub, which he did. ...

In May of 1985 he (Troy] talked with Danny King about how Danny could make some money. Danny initially objected and said he did not want to get involved, but he later changed his mind. Troy had also told Alan Baer about Danny King. Troy then took Danny to Alan's apartment at the Twin Towers during which time Alan Baer asked Danny some questions about himself. Alan Baer then told him [Troy] to leave. He waited for approximately three hours before Danny came out of the apartment, and Danny showed him $300 that he said Alan Baer had given him. Danny said no sexual activity went on, but Troy stated that he later found out that Alan had anal sex with Danny.

In June or July of 1985, he went to a party where a 15-year old boy was in the center of the room with his pants down. An adult male was inserting beads into the young boy's rectum. Other adult men were seated around the young boy masturbating. Troy was ordered at this party to play with the young boy's genitals.

He stated that he thought the adult male who was inserting the beads into the young boy's rectum was a police officer. An individual named Mark* (Last name unknown) had told him that this adult male was a police officer. The alleged police officer masturbated on the young boy in the center of the room. ...

Troy also stated that an individual he identified as P.J. Morgan was there, also masturbating while the young boy was being exploited in the middle of the floor. ...

He stated that he met Alisha Owens in February or March of 1984. He stated that Alisha did lose her virginity with him, and that he did introduce her to Bob Wadman at a party held in an office in the Woodmen Tower. ...

When asked for further information about Bob Wadman, he stated that he likes to have sex with young kids and that in addition to Alisha Owens, there was another young girl he was involved with identified as having the last name of Hovel*, who was a runaway from Chicago. He stated that the last time he saw this girl was in May of 1986.

He stated that although he did not take any trips with Wadman, that Wadman did take trips with Larry King. ...

He said that [the] reason he went on this flight was to have sex with an individual named Ron Gilbert. He stated that Ron Gilbert is a movie producer for a television series. He stated that he received no money for having sex with Ron Gilbert, and that he and Larry King also had sex while on this trip. ...

The next trip occurred in a private plane to California. Present were Troy, Danny King, Alisha Owens, two smaller kids. and Larry King. ... he said that he knew Danny and Alisha were going to be used for sexual purposes, even though neither one of these individuals wanted to go. The two smaller unidentified kids got dropped off by Larry King and Troy at two different locations. He stated that he believes that these two kids were "sold." ...

He stated that Ron Gilbert, the television producer from California, is also involved in making pornographic movies. He described Ron Gilbert as an older, Jewish man.

Troy also discusses Robert Andreson [sic] having a collection of pornographic photographs. He feels that this individual works for Union Pacific Railroad and that he lives in La Vista, NE. ...

He also stated that the following individuals supplied illegal drugs:

Larry King
Alan Baer
David (Lnuk}
John Points
Bob Wadman
Mark* (Lnuk)

Troy also stated that Bob Wadman brought two grams of cocaine to the party in North Omaha. ...

Troy stated that Claire (Lnuk), Alan Baer's secretary, would set up "appointments" with kids for Alan Baer. He described Claire as an older woman, petite, with gray hair that she wore in a bun. Troy stated that Claire knew who he was.

He stated that Larry King and Bob Wadman and a couple of other men took a trip somewhere and with them were two young boys. He stated that the two young boys did not return from the trip. ...

When asked what other kids were involved in these activities, he stated the following:

Rusty (Lnuk)
Danny King
Alisha Owens
(Fnuk) Hovel*
[three others]

On December 4, 1989 and December 5, 1989, I took Troy to the Omaha, Nebraska, and Council Bluffs, Iowa, areas in order to identify the various locations he made statements about in his videotaped statement. See Exhibit PH-1 for the photographs and his identification of these locations. See T-18 for the daily reports covering these two days.

On December 22, 1989, I videotaped Troy again for corrections that he wanted to make reference certain details in his first video taped statement. ...

It is recommended that the following individuals and/ or documents be subpoenaed reference the statements and allegations made by Troy BONER. [60 names and references are listed.]

Perpetrators :
Alan Baer
Larry King
P.J. Morgan
Bob Wadman
Ron Gilbert
Henry (Lnuk)
Bob Andresen
[two others]

***

On December 3, Caradori taped a third victim-witness.

Danny King

This writer telephoned Danny King at the Residence Inn and, along with staff member Karen J. Ormiston, proceeded to this facility ...

At approximately 9:32 a.m. the interview began with James Daniel King in room 422 at the Residence Inn. Please note that approximately five hours of video was completed. It was quite apparent to this writer that it was very difficult for Danny to divulge the events of his past. ...

It is apparent that there are some discrepancies between the statement of Alisha Owens and that of Danny King, however this writer feels that Danny was heavily involved with drugs during this time period and wasn't quite sure as to certain details. As a matter of fact, Danny did not know what month follows December. ...

At this time, Danny indicated that he was relieved and wanted to "go forward." It is this writer's opinion that Danny is finally coming to grips with reality. He also indicated that this is the first time he was ever told anyone about the events that have happened to him.

From Danny King's videotape:

Danny said that he first met Alan Baer toward the end of 1983. This would have made Danny approximately 13 to 14 years old. He met Alan Baer through Troy Boner. ...

Danny met with A approximately two weeks later. A and Danny drank schnapps and both participated in oral sex. Danny received 50.00 from A. The time was after school at approximately 5 p.m. He would have been 13 or 14. This occurred at A's residence. ...

Danny then saw A for approximately seven months, every week. The same events would occur as stated above. ...

In April of 1984 Danny met Larry King at A's residence. Cocaine was used by A and Danny. LK and Danny then went into the bedroom. Danny was lying on the bed and LK had anal sex with Danny. It hurt Danny and Danny made him stop. Danny then gave LK oral sex but spit LK's ejaculation. LK then hit Danny with a shoe on the side of the head because he did not swallow it. Danny received no money for this occurrence. ...

At this time Danny started seeing A again and A introduced Danny to "shooting up" cocaine. A gave him a shot in the arm and Danny got sick. A shot up also. Both participated in oral sex and Danny received $50.00. ...

Danny mentioned an individual named Larry, Jr. who is LK's righthand man. ...

When shown photographs, Danny identified Deward Finch as being "Chuck" who Danny had engaged in sex with quite a few times.

Perpetrators:
Larry King
Alan Baer
Deward Finch
Bob Andreson [sic]
Gary (Lnuk)

***

At a press conference on December 18, 1989, Senator Schmit announced that he had obtained videotaped testimony from three victim-witnesses in the Franklin case. It had been viewed by himself and the other members of the Franklin committee, Senators Bernice Labedz, Dan Lynch, Jerome Warner and Dennis Baack. "Members of our committee are dismayed," Schmit wrote in a letter to Attorney General Spire, released at the press conference, "by the fact that no state or federal investigative bodies interviewed any of these new witnesses we have, even though they were discovered by our investigative efforts after a fairly short time and with a very small budget. ... It is the opinion of all committee members that the activities described and the personalities involved scream out for action, whether statute of limitations problems are involved or not. ... As a result of the new evidence and new investigations, we have all become very, very concerned."

Schmit expressed his personal inclination to release the tapes in toto, for the sake of "the safety of our witnesses" and a speedy investigation. He abided by the committee consensus, however, to hold them back.

By December 1989, local, state and federal law enforcement had received copies of the videotapes of Alisha Owen, Troy Boner, and Danny King. Some officials, notably Douglas County Sheriff Dick Roth, said they believed the victim-witnesses. After watching five hours of the tapes, the Associated Press reported in February 1990, Roth "said he found the witnesses' statements to be credible." But there was no apparent move toward prosecutions.

[admin]

CHAPTER 9: THE DECAMP MEMO

On January 18, 1990, I released a document that soon became infamous as "the DeCamp memo." For the first time, the names of prominent alleged perpetrators were public.

A lot has been written about that memo, much of it full of untruths and distortions. What follows is the true story of the DeCamp memo and the events leading up to it.

In the spring of 1989, after the first child abuse stories surfaced, I recommended to Senator Loran Schmit that he go directly to the FBI in Omaha to discuss the very serious allegations being made against Police Chief Robert Wadman by various individuals. This was before anybody even knew that Alisha Owen or other victim-witnesses existed and, of course, before Alisha Owen's allegations against Robert Wadman were made.

This legal advice of mine to Senator Schmit was in response to his question as to how to handle things, when law enforcement officials themselves were being accused of impropriety.

"Go to the highest authority you can, above the authority who is being accused," I told him.

Senator Schmit insisted I go with him to this meeting, as his personal attorney. I agreed to go, but on condition that he first meet one-on-one with the regional head of the FBI, Nick O'Hara, without me present.

He did meet with O'Hara for about one hour. Then I was called into the room. It was only at that time, through discussion, that I learned that the individual in question was former Omaha Police Chief Robert Wadman.

In brutal language and with the most somber demeanor possible, Mr. O'Hara made it clear that probably his closest friend in the world was Police Chief Robert Wadman, and that anyone who would dare to accuse Robert Wadman of impropriety had better realize that in accusing Wadman, they were effectively taking on Nick O'Hara and the FBI.

I realized instantly, that my advice to Senator Schmit may have been faulty. How could I have known in advance, that the head of the FBI and the former chief were so intimate in their business and personal relationships?

There was tension in the air. I made a point of saying that I also was sure that all these accusations -- whatever they were -- had to be nonsense. I pointed out that my experience as a public official, a senator for sixteen years, made me appreciate the fact that it is easy to accuse a public official and darned difficult for one to defend himself, since the accusations are immediately put on the front page of the paper and broadcast as the lead story on the evening TV news.

But, as if to make a point that both I and Senator Schmit had better understand how serious it was for anyone to come to the FBI and raise questions about Robert Wadman, O'Hara had us sit down and provide him information about ourselves, as if we were the ones being accused and investigated, proceeding exactly as one might expect the FBI to do with someone the FBI was investigating.

"What's your date of birth? Where were you born? What is your exact name? Do you have any aliases?" O'Hara quizzed us.

When we left the FBI offices, I said to Senator Schmit, "Wow, did I make a mistake. Anybody who dares to investigate this is going to get themselves buried by the FBI, if they start making any accusations against Wadman or anybody associated with him."

I had no idea how prophetic those words were.

***

It was only after Caradori's first tapes had been turned over to law enforcement agencies, that leaks of what was on them began to reach the public and became the subject of widespread discussion. Articles began to appear in the Omaha World-Herald, aimed to discredit the witnesses and intimidate any other potential child victim witnesses from testifying or coming forward with information.

As the stories proliferated, Gary Caradori expressed to Senator Schmit his concern for the safety of the victim-witnesses who had allowed themselves to be taped. Schmit sought my legal advice again.

"These kids need protection or they are going to end up dead, or become afraid to continue to tell the truth," the senator said. "The committee has to do something to guarantee their protection."

Gary Caradori was even more vehement on the need for protection. "Unless they get into a protected environment, where Alan Baer and Larry King and Robert Wadman are not able to get to them and scare them, I can tell you the kids will fold. They will do whatever those guys order them to do. They will fold, or they will end up dead," Caradori hammered at Senator Schmit. "You have to do something to protect them."

My legal advice to Senator Schmit and my direct warning to Gary Caradori at that time, in December 1989 and January 1990, was the most painful information I have ever had to provide someone.

"You cannot and should not do anything to use committee funds or committee personnel to provide protection for these kids," I told Schmit. "Otherwise, you and the committee may be accused of impropriety and tampering with witnesses, and who knows what else. Painful as it is for me to tell you this, you have to find some other legal channel to provide protection for the kids. Whether that channel is the courts or a judge or whoever, it is something that either the lawyer for the kids should be doing, or some institution of government vested with the power and responsibility to do those things should be doing. But you, Senator Schmit, should not personally get involved in any way, shape or form in providing money or assistance or protection for these kids, nor should the committee, in my opinion."

Senator Schmit shared his concerns with other members of the legislature, who were hearing the rumors and who had their own resources for finding out information. Key among them was Senator Jerry Chizek of Omaha, chairman of the Legislature's Judiciary Committee. He was very tight with Douglas County Sheriff Dick Roth.

In early January 1990, as stories of what was involved in the Franklin case spread through the streets of Omaha, Senator Chizek took it upon himself to set up a very secret, private meeting among Senator Schmit, Sheriff Roth, a representative of the Douglas County District Court, Judge Corrigan, and himself. I was asked by Senator Chizek and Senator Schmit to attend the meeting. I was glad to come, for the purpose of providing legal guidance to Senator Schmit, so that he did not engage in trying to solve the problem of protection for the witnesses in an illegal, if well-intentioned, manner.

The meeting took place in an auto body repair shop somewhere in west Omaha, on what I am sure was the coldest day of the year.

For most of the afternoon, discussion centered around the essence of the rumors that were circulating about the contents of the Caradori tapes. Attention was focused on the necessity of protecting the victim witnesses who had provided testimony.

Sheriff Roth had viewed the tapes. I presume others in the room also had, including Senator Schrnit. I personally had not viewed the tapes and, believe it or not, have not viewed them to this day.

From the conversation on that cold January day, there was no doubt at all, that Sheriff Roth and others in the room believed in the validity and accuracy of the allegations made on the tapes.

As the talks progressed, Sheriff Roth used a phrase that had special meaning to me. "I will tell you one thing," he said, "Nick O'Hara of the FBI and Robert Wadman are closer than nineteen is to twenty. Everybody in law enforcement knows that. I know it especially well. Closer than nineteen is to twenty. That makes it almost impossible to get anything done or to arrange any witness protection through the feds. I will try to help in any way possible, but I am not sure anything can or will be done. These people involved are just too powerful. They carry enough weight in this community to do what they want and get away with it."

Sheriff Roth did stand up for the victims of Franklin-related child abuse, on several occasions. I know that he subsequently came under intense pressure, including from the World-Herald, to repudiate his belief that the allegations of the child victim-witnesses were true.

The net result of the secret meeting with Sheriff Roth and Judge Corrigan of the Douglas County District Court was nothing. The plan was for Judge Corrigan to explain the situation, including the fact that fellow district court judges were the subject of some of the accusations, to the other dozen district court judges. Then a plan might be worked out, for witness protection under the auspices of the court.

Unfortunately, that did not transpire. What Judge Corrigan did or did not do, only he knows.

***

About the time of the secret meeting with Judge Corrigan and Sheriff Roth, my office received a long-distance phone call from a girl who identified herself as Loretta Smith. I returned her call.

"I'm one of the Franklin victim-witnesses," she explained. "I'm the one they wrote a lot about in the Omaha World-Herald. A friend of mine told me that maybe you would help me."

Having read the stories about Loretta, who was not identified by name in the World-Herald, I knew basically the story she was telling, as to her abuse and the individuals who had supposedly abused her.

"I know who you are, Loretta, and if I can help you, I will," I said. " And yes, I have read about you and your story and, surprising as it might sound to you, I do believe you."

We discussed ways I might help her.

A couple of weeks after that phone call, reporter Kathy Rutledge of the Lincoln Journal telephoned me at night at home. She said she understood I had been in touch with Loretta Smith, and she wanted to know all about the matter. It was clear from the beginning of the conversation, by the tone of her voice and her accusatory questions, that Kathy was intent on doing a hatchet job on me.

I begged Kathy Rutledge not to distort facts. She repeatedly tried to suggest that I had improperly contacted Loretta Smith. Furthermore, she kept implying that I had told Loretta that I had secret information on Franklin, which I would be trying to use improperly.

I corrected Rutledge again and again. I pointed out to her that if I had done the things she was saying or implying that I did, such conduct would be a violation of legal codes of ethics and would subject me to penalties, including even revocation of my license to practice law. I urged that she not even write a story about this, for the protection of the young lady involved. If she insisted on writing a story, I said, she should at least tell the truth and not distort facts.

A few days later, a lawyer working in my office, John Goc, walked into the office carrying the Lincoln Journal and talking loudly: "What are you trying to do, DeCamp, get yourself disbarred? What are you going around talking to this reporter for? When the Bar Association sees this, you can bet you'll be in trouble. I hope you have a good explanation. You're going to kill your lobbying business with this kind of story." That is approximately what John Goc said to me on January 18, 1990.

I ran down to get a copy of the newspaper, knowing already what Kathy Rutledge must have done. Determined to get herself a headline story and lots of attention, she had to distort the truth. Just as I feared, every negative and distorted impression was conveyed by her story. Six days later, I would be notified by the Bar Association that I was under investigation, as a result of the Rutledge story.

Even before that happened, I was confronted by Omaha World-Herald reporter Bob Dorr on the telephone, demanding that I answer questions about Franklin, such as what I knew, where I got my information, how I got the name of this Franklin witness, what secret information I had, and why I was concealing things. His drift was the same as Kathy Rutledge's questions.

I determined that I could no longer keep silent. I would answer the questions of Dorr in detail in writing, so that there would be no misunderstanding or distortion possible. Or, if there was distortion nonetheless, I would have a record of what I had actually told him.

My answer to Bob Dorr' s questions was the DeCamp memo.

I also prepared a documented reply to the Nebraska Bar Association inquiry, to prove that the conduct related by Kathy Rutledge in her article had not occurred. I was able to submit affidavits from two employees in my office, who swore that it was Loretta Smith who contacted me, and not vice versa. I also obtained an affidavit from a friend of Loretta, who knew me and my wife from when we had helped her, on request from her minister, several years earlier, and who was the person who advised Loretta to call me. Within hours after presentation to the Bar Association of this documentation, the bar investigation was terminated. I was cleared of any impropriety or wrongdoing.

The Lincoln Journal ran a second story on the matter, after the DeCamp memo was issued, in which Rutledge attempted to correct the falsehoods and deceptions in the first story. In any case, I filed a slander and defamation lawsuit against the Journal for that first story, which lawsuit is still in the courts.

***

I charged in the memo, that in the Franklin case, "institutions of government have failed and thus credibility of government itself is at stake in this matter and in a very real sense, first the [legislative] committee and then the Legislature, are the court of last resort." (Emphasis in original.)

I had not seen the videotapes of the victim-witnesses and I said so, but I wrote:

First, as a citizen who strongly pushed for the Franklin investigation and in fact offered suggested language for the Senate Resolution which triggered the investigation, I find what is occurring by both the Press and Institutions of Government nothing short of criminal. The Press quietly and carefully covers up, either thru ignorance or artifice, while the various institutions of Government repeat the old Commonwealth/State Security game of "let the statute of limitations run" on those that should and could be immediately prosecuted and investigate and study and "ask for more information."

Why?

Because of the personalities involved.

The World Herald and Lincoln Journal want to know where I get information on Franklin. Get serious. A reporter has to be deaf, dumb, blind and corrupt not to know the names of the personalities involved and the scope of the allegations. Stop on any street comer in Omaha; go into any coffee shop; have a drink in any bar in Omaha, or if you are lazy, walk around the Capitol Rotunda in Lincoln and simply listen to the discussions. Here is what you will learn:

1. The allegations are that the most powerful and rich public personalities of the state are central figures in the investigation.

2. That these include former Omaha World Herald Editor Harold Andersen; Larry King of the dead Franklin Credit Union; Former Omaha Police Chief Robert Wadman; Media Personality Peter Citron; Ak-Sar-Ben Financier and bluest of the bluebloods, Alan Baer, for starters.

3. That the allegations are that these individuals were some of the centerpieces in a coordinated program of Child Abuse, Drug Abuse, and abuse of their various public positions of trust and honor.

4. That prosecutors who should be prosecuting are afraid to prosecute for one reason or another and that the public itself is rapidly losing faith in its fundamental institutions of government as a result of this perceived cover-up, whether real or imagined. ...

What do I personally believe. I damned well believe the allegations.

Now, having said these things and reported these allegations, am I afraid of being sued by these powerful personalities. Absolutely not. Remember that rule you newspaper folk live and die by and crucify others by. If you have forgotten, let me repeat it for you: truth is a defense. And, since these are all public figures, we also know that absent any malice, and I have none, truth is definitely a defense. ...

No, I do not fear a lawsuit. I fear, just like any alleged child victims in this bizarre tragedy, that the rich and the powerful will use their positions of power and control of institutions of government to shut up those who would speak out and bring things to a head.

***

The DeCamp memo lit a firestorm of controversy in Omaha and statewide. On radio, TV, and in the press, it was dealt with daily for several weeks.

The furor touched off by the circulation of the memo is conveyed in a March 17, 1990 Kansas City Star article, headlined "Former legislator's angry memo turns sober Nebraska on its ear":

Two months ago, DeCamp sat behind his (word processing] machine and pounded out the infamous "DeCamp Memo." The piece of invective became the subject of discussion from Omaha's silk-stocking salons to the cowboy bars in the Sand Hills.

He named five prominent Omaha men as "central figures" in a legislative committee's yearlong review of allegations of sexual abuse linked to the 1988 collapse of the Franklin Community Federal Credit Union. ...

DeCamp's memo found its way to dozens of copy machines and quickly littered the state, spawning a swirl of gossip. In an attempt to put the rumors to rest and find the truth, the U.S. attorney called a federal grand jury last month.

And next week a Douglas County grand jury in Omaha will begin hearing the allegations, including one that King flew teenagers to Kansas City in 1985 to perform sex with men in a rented room at the Westin Crown Center Hotel.

Hardly modest, DeCamp takes credit for the convening of the grand juries. "If it had not been for that memo, there would not even be a grand jury investigation today," DeCamp contends. ...

DeCamp had the audacity to name, among others, Harold Andersen, former publisher of the Omaha World-Herald. DeCamp left the implication that Andersen, an icon of journalism who lunches with President Bush, had a fetish for children. Said one politician, "It was like insulting God."

Rumors started reaching me, that I was going to be sued by various people.

Finally, a close friend of mine, who is a prominent reporter in Nebraska and whom I agreed not to name in this book, came to me privately to say that an agreement had been reached among the various individuals I had named in the memo, and others, for Peter Citron to be the one to sue me. The purpose would be to destroy me in full view of the public, and to repudiate the DeCamp memo.

Truth put a crimp in that plan. Not long after the message was delivered to me, Peter Citron was charged with sex crimes involving male minors in the Omaha area. It seems that some parents, who knew their children were hanging around Peter Citron, were shocked to see him named in the DeCamp memo. They responded by asking their children, whether or not there was any truth to the allegations, with respect to Citron. One after another, the boys began to pour out the truth to their parents.

The demands by parents for immediate action left the police and prosecutors no choice. They had to file charges against Peter Citron, although I rather suspect they did not want to.

Citron ultimately pleaded guilty. Today he is in prison, sentenced as a mentally disordered sex offender.

***

Needless to say, the World-Herald devoted many column inches to condemning the DeCamp memo as irresponsible.

I cannot neglect to comment on the World-Herald's overall role in the Franklin scandal.

Nebraska has only one state-wide news source. It is the Omaha World-Herald. Our small population, vast expanses, and the cost of maintaining a daily newspaper in this day and age, all guarantee that the World-Herald is the news source for this state. With that awesome power, one would think would come a corresponding measure of responsibility, to make sure Nebraskans get all sides of an issue. That they really get the news.

But the World-Herald's long-standing pattern of behavior is just the opposite. If it has an editorial attitude on a story, its news coverage and every other aspect of the newspaper are mustered to accentuate the preferred side of the issue and suppress opposing views.

In the case of Franklin, the paper went to new lengths. The integrity and credibility of the newspaper went on the chopping block, for the sake of suppressing the truth about Franklin and, to a high degree, the Commonwealth and State Security banking stories -- Nebraska' s three biggest scandals of the last fifty years.

Why all this effort? Because, tragically, the people who control the World-Herald appear to have a strong vested interest in suppressing the truth. Whether it is Peter Citron, past publisher Harold Andersen, or underlings who have their positions only because of Andersen, their linkage to Franklin dictates that they use the best tool available, the World-Herald, to tell the public what they want them to believe.

Because of its virtual monopoly as a news source, something repeated often enough by the World-Herald may attain the status of truth in the minds of those who read it. In the case of Franklin, the paper has repeated a simple theme, shaped by its top personnel -- that the Franklin sex scandal, pedophilia and drug abuse stories were trumped up.

I can present certain facts, never publicly revealed before now, that exemplify the program of deception carried on by the World-Herald throughout the Franklin scandal, continuing to the present.

In coverage of the DeCamp memo, and in other Franklin coverage, the impression given by the World-Herald was that the legislative committee to investigate Franklin, headed by Senator Schmit, was functioning in an irresponsible manner, allowing leaks to the press and to others. In editorials and on the news pages, the World-Herald repeatedly condemned Senator Schmit for supposedly leaking information. Then they attacked me, for supposedly obtaining information from Senator Schrnit and leaking it.

The truth was the opposite. I was providing information to the committee, as committee records will bear out.

Probably the best example of this would be the detailed breakdowns of Franklin Credit Union financial transactions, which committee received from me, months in advance of their own investigation.

How did I get such data? Believe it or not, I got them from the chief counsel of the National Credit Union Administration (NCUA), Robert Fenner.

In an unsolicited phone call from him, Fenner gave me details about Franklin's secret accounts. In retrospect, I believe he wanted -- through me -- to throw cold water on the questions that were heating up in Omaha, about the role of Franklin monies in the Iran-Contra money-laundering schemes. At the time, I asked Fenner if he wanted me to share his information with Senator Schmit, which he did.

I immediately drafted a detailed memo of my conversation with Fenner. I provided the information to Senator Schmit, for the legislative committee. I gave Fenner's phone number to Schmit.

Thus, from the outset, I was sending information to the Senate Franklin committee, and not the other way around.



Lincoln Journal article of January 18, 1990, which appeared despite John DeCamp's urging journalist Kathleen Rutledge to "tell the truth and not distort facts."



Six days later, this letter from the Nebraska State Bar Association notified DeCamp he was under investigation for improperly contacting a victim-witness.



Affidavits from DeCamp's secretaries and a friend of the victim-witness proved that the Journal was distorting facts.



The Bar Association cleared DeCamp



After Rutledge's article appeared, Omaha World-Herald reporter Bob Dorr telephoned DeCamp, demanding to know where DeCamp got his information, how he got the name of the Franklin witness, and what secret information he had. So that there would be no grounds for misunderstanding or distortion, DeCamp decided to answer in writing. This was the origin of the DeCamp Memo, shown here.

[admin]

CHAPTER 10: PAUL BONACCI

In May 1990, Caradori discovered a fourth victim-witness, Paul Bonacci, whose testimony corroborated and amplified the stories told on the earlier videotapes. Caradori's daily notes of May 10 record his first contact with Bonacci, at the Douglas County jail.

After discovering Dan Newton* wasn't at this facility, this writer then contacted Inmate Paul A. Bonacci. ... Paul Bonacci's name had been given to me by a Mary Barrett, and I had his name for quite some time.

Upon having Mr. Bonacci meet me in an interviewing room, Bonacci related to this writer that he knew Troy Boner, Danny King, and Alicia [sic] Owen. He further advised that he had been a victim of Alan Baer, Peter Citron, and Larry King, and had some knowledge of Bob Wadman, Harold Anderson, and a judge who he later on referred to as Carlson. During the next few hours, he related some of his knowledge reference Peter Citron, Alan Baer, Larry King, and also Bob Wadman.

The subject stated that he had been on at least 1-200 trips and had been involved in extensive homosexual activity as a child and as a young adult, with his homosexual activity starting when he was approximately 8-10 years old. The subject then stated that between the years of 1982 and 1986 he had probably been on at least 200-300 trips. The subject stated that he made at least 15-20 trips to various parts of California, a couple of trips to Washington, D.C., and also trips to Des Moines, Minneapolis, Kansas City, Austin, Houston, Dallas, St. Louis, Miami, Pasadena, Tampa, Lincoln, and Grand Island. Some of those trips he thought involved politicians from Washington, D.C., however, he didn't know anyone by name because of his young age.

The subject stated that he was taken to the Omaha Police Department sometime in March and was talked to by Omaha Police Detective Mike Hoch, during which time Detective Hoch was very hard on Bonacci, and after finishing up with the police interview, he told Bonacci, that, reference Larry King, he was afraid he might prosecute him (Bonacci) as there would be no attempt to give him formal immunity. ...

When questioned about Alan Baer, he stated that he first met him in the "Milk Run," an area near and surrounding the Correctional Center. He stated that he was approximately 12 years old and that this occurred possibly in 1979. He stated that Alan Baer would pay him $20 for oral sex. He stated that the last time he had sex with Alan Baer was, he believed, around November 15, 1989, in Alan Baer's apartment in the Twin Towers. ...

Other information received from Paul indicated that he had tried to get away from these people on many occasion, and in his attempt to escape them he did attempt suicide. He stated that he was very afraid of Larry King's "people." In fact, there was a black individual whom he called "Larry Little King," who would go around and make threats and attempt to scare him and other individuals. Paul Bonacci indicated that he was really very scared of being threatened. ...

In reference to Bob Wadman, subject stated that he believed he met Wadman sometime in late 1985 or early 1986. He stated that he had seen Bob Wadman at [at] least two parties that were located near the town of Elkhorn, Nebraska. ...

During the course of the conversation, subject stated that Alisha Owen was present at [at] least one of these parties that Wadman had attended also. The subject believed the girl (Alisha) and Wadman might have been together. ...

Other information gained during the interview: Bonacci stated he knew when Alisha Owen got pregnant because a young individual by the name of Chris told him that it was probably Bob Wadman who got Alisha pregnant. Further, he stated that there was another individual who he had spent time with in the Twin Towers by the name of Bob Morino, Apt. #4H, Twin Towers, Omaha, Nebraska. Also, there was another young boy sexually abused by Alan Baer by the name Peter Fells*. He stated that this individual might have moved to Tennessee, however, he was not sure.

Paul Bonacci went on to state that he had gone on many "scavenger hunts" for Alan Baer. He defined "scavenger hunts" as an activity in which he would go out and recruit young boys for Alan Baer. ...

He stated that Larry King would fly him all over the country. On at least one trip to California, Alisha Owen was present on the flight. ...

He stated that on at least one trip he had seen Troy, Danny and Alisha in California. That was sometime in 1985 or '86. ...

He also stated he made two trips to Washington, D.C. with Larry King -- just the two of them alone. He stated that while in Washington, D.C., he had sex with other people. He thought they were part of the Republican Party because Larry King was trying to hard to "get in with the higher ups" in the Republican party. He stated that he heard the name of one of the individuals with whom he had sex as Frank. He thought he might be a senator or governor or some state official. ...

***

On May 14, 1990 Caradori took a video statement from Bonacci. He wrote in that day's notes:

Further, when questioned, Mr. Bonacci stated that his last contact with Alisha Owen, he thought, was in 1986, and with Troy Boner and Danny King in 1987. He stated that he had no physical, verbal, or written communication with any of those three since that time.

One of the experiences with Larry King, which Bonacci described to Caradori on tape, he later detailed again in his written account of abuse, prepared for his lawyer, this writer. Bonacci has often said, that he wants the full story of his abuse to be public. "Somebody has to tell the story," he wrote in the introduction to this document, "And it might as well be me."

Gruesome as it is, Bonacci's report to me harks back to the early cries for help, from Loretta Smith:

I went in January of '84 on every trip. I was paid by men King knew for sex. In the summer of '84 sometime I went to Dallas, Texas and had sex with several men King knew in a hotel.

I flew on YNR Airlines and Kam Airlines normally for King. I never had much personally to do with King, only went where he told me to go.

In or on July 26th I went to Sacramento, Ca. King flew me out on a private plane from Eppley Airfield [in Omaha] to Denver where we picked up Nicholas, a boy who was about 12 or 13. Then we flew to Las Vegas to a desert strip and drove in to Las Vegas and to some ranch and got something. Then flew on to Sacramento.

We were picked up by a white limo and taken to a hotel. I don't remember the name of it. We meaning Nicholas and I were driven to a area that had big trees, it took about an hour to get there. There was a cage with a boy in it who was not wearing anything. Nicholas and I were given these tarzan things to put around us and stuff.

They told me to f---the boy and stuff. At first I said no and they held a gun to my balls and said do it or else lose them or something like that. I began doing it to the boy and stuff. And Nicholas had anal sex and stuff with him. We were told to f-- him and stuff and beat on him. I didn't try to hurt him. We were told to put our d---s in his mouth and stuff and sit on the boys penis and stuff and they filmed it. We did this stuff to the boy for about 30 minutes or an hour when a man came in and kicked us and stuff in the balls and picked us up and threw us. He grabbed the boy and started f---ing him and stuff. The man was about 10 inches long and the boy screamed and stuff and the man was forcing his d-- into the boy all the way. The boy was bleeding from his rectum and the men tossed him and me and stuff and put the boy right next to me and grabbed a gun and blew the boys head off.

The boys blood was all over me and I started yelling and crying. The men grabbed Nicholas and I and forced us to lie down. They put the boy on top of Nicholas who was crying and they were putting Nicholas hands on the boys ass. They put the boy on top of me and did the same thing. They then forced me to f-- the dead boy up his ass and also Nicholas they put a gun to our heads to make us do it. His blood was all over us. They made us kiss the boys lips and to eat him out. Then they made me do something I don't want to even write so I won't.

After that the men grabbed Nicholas and drug him off screaming they put me up against a tree and put a gun to my head but fired into the air. I heard another shot from somewhere. I then saw the man who killed the boy drag him like a toy. Everything including when the men put the boy in a trunk was filmed. They took me with them and we went up in a plane. I saw the bag the boy was in. We went over a very thick brush area with a clearing in it. Over the clearing they dropped the boy. One said the men with the hoods would take care of the body for them.

I didn't see Nicholas until that night at the hotel. He and I hugged and held each other for a long while. About two hours later the men or Larry King came in and told us to go take a shower since we had only been hosed off at some guys house. We took a shower together and then were told to put on the tarzan things. After we were cleaned up and dressed in these things we were told to put on shorts, socks and a shirt and shoes and driven to a house where the men were at with some others. They had the film and they played it. As the men watched they passed Nicholas and I around as if we were toys and sexually abused us.

They made Nicholas and I screw each other and one of the men put the dead boy's penis in mine and Nicholas' mouth. I didn't want to write this because the man forced me to bite the boys' penis and balls off. It was gross and I saw the film where it happened and started freaking out remembering what they made us do afterwards to the boy. They showed us doing everything to the boy. I was there for about 5 days attending parties but only recall cutting my wrist which is why I stayed two days in a hospital under a name I can't recall. Some guy paid for me.

In other testimony, Bonacci said that Larry King was smiling and laughing the whole time the film was being shown, and that "the men with the hoods" were a Satanic group which planned to use the dead boy in some sort of ceremony. He also named the director of the snuff film, whom they had picked up in Las Vegas, as "Hunter Thompson."

[admin]

CHAPTER 11: COVER UP PHASE II: THE DOUGLAS COUNTY GRAND JURY

On July 23, 1990, twelve days after the sudden death of Gary Caradori, the Douglas County grand jury, formed in the wake of the DeCamp memo, issued its long-awaited report. A banner headline in the World-Herald trumpeted: "Grand Jury Says Abuse Stories Were a 'Carefully Crafted Hoax'."

The conclusions presented in the 42-page "Grand Jury Report," not to mention the pretentious language in which it discounted whole areas of the Franklin case, betray the deliberations of the jury, rather, as a carefully crafted cover-up. The grand jury gave opinions on a variety of matters.

The Douglas County grand jury cleared Larry King of child abuse:

We found no credible evidence of child sexual abuse, interstate transportation of minors, drug trafficking or participation in a pornography ring by King or other Franklin officials or employees. To the extent that homosexual relations occurred involving such employees or officials, the evidence we were able to uncover showed these exchanges to be voluntary acts between persons above the age of consent.

Yes, Larry King had diverted credit union funds for his personal gain, but "it is our opinion that federal authorities are better able to pursue matters regarding this misappropriation of credit union funds, and we strongly recommend that they continue to do so." And although "we also found probable cause to believe that King, on numerous occasions, used money or items of value to 'entice, inveigle, persuade, encourage or procure' men in their late teens or early twenties to engage in acts of prostitution with him, and, therefore, he committed the crime of pandering," the statute of limitations had run out on many of these acts, and "our ultimate decision was that to charge and try King with a class IV felony under state law when he is facing 40 felony counts in federal court [on financial charges only] would not be the best use of the resources of the Douglas County District Court, and again we have deferred to the federal prosecution."

So careful was this grand jury not to fritter public resources, that it did not even subpoena Larry King!

The grand jury explained away its failure to call King as a witness:

Because King is presently in an institution out of the state pursuant to an order from the federal court, and because we believed he would rely on his right against self-incrimination ..., we decided it would not be fruitful to attempt to require King to appear before us.

Whenever it did admit that abuse had taken place, the grand jury stipulated that none of it had anything to do with the Franklin Credit Union.

The grand jury indicted three people. First came Alan Baer, the department store heir, one of the five persons named in the DeCamp memo.

We did have testimony from certain witnesses about sexual involvement with Baer. Evidence also showed that these witnesses received substantial amounts of money or other valuables in exchange for sex. ... Therefore, we believe Baer committed the offense of pandering, and we have handed down an indictment against him for that offense.

However that may be, the grand jury added, "We have found no direct connection between Alan Baer and King or the Franklin Credit Union, other than limited social and business dealings."

Peter Citron, another of the five I named, appeared before the grand jury and was found to have had "inappropriate sexual contact with male minors," but again, "no connection has been found to link Citron with the Franklin Credit Union. ..." Citron had already been indicted and convicted for these contacts in a separate court process.

The other two people indicted were the victim-witnesses, Alisha Owen and Paul Bonacci. These young people had suffered, admitted the grand jury, but that had nothing to do with Franklin: "We think that Owen might have been sexually abused during her early years, but not by the people and in the way she has alleged." As for Bonacci, "according to his testimony, he was a child victim of repeated sexual abuse by persons not associated with the Franklin investigation." Accusing them of lying to the grand jury during May and June of 1990, the jury handed down indictments against Owen on eight counts of perjury and against Bonacci on three counts.

Troy Boner and Danny King, the other two main witnesses taped by Caradori, recanted in the spring of 1990. The Douglas County grand jury made no mention of the fact that by retracting their testimony to Caradori, the two were saying that they lied to the Legislature, whose representative Caradori was.

The grand jury noted that in a May 1990 interim report, it had recommended "that the Washington County Attorney charge Jarrett Webb with third degree sexual assault of a minor," namely Nelly Patterson Webb. Where Nelly had reported organized abuse and prostitution, however, she was not to be believed:

In early 1986, Nelly began to expand her allegations by charging that she had been taken by King on flights to other cities such as Chicago and Washington, D.C. where she was "put on display" at parties where sex and illegal drug activities took place. We interviewed a number of witnesses who traveled extensively with King, and a few made what must have been embarrassing admissions about engaging in sexual contact with King on some of these trips. However, no witness before the Grand Jury could confirm in any way that Nelly Webb or any other children were ever transported for any illegal purposes and we found no evidence to support these claims.

Addressing other dimensions of the Webbs' house of horrors, the grand jury offered its opinion that it was "unfortunate that so much time elapsed between the first allegations of abuse and the time that the last children were removed from the home." It then faulted Carol Stitt of the Foster Care Review Board for writing to the state attorney general so promptly about Loretta Smith's reports, instead of first making more inquiries on her own! But Attorney General Spire had "appropriately passed the information on to [Law Enforcement chief] William Howland," and any delays past that point must have been due to Howland's heavy workload, in the jury's opinion.

Loretta Smith, who testified before the grand jury, had "suffered more abuse and neglect than anyone should ever have to endure," but "the perpetrators of such abuse may never be known." In any event, "the Grand Jury found no evidence to substantiate any connection between King, or any Franklin personnel, and the alleged illegal activities described by the girl."

The grand jury report contained gratuitous pronouncements such as that "children do have the right to expect that if they exhibit reasonable behavior, they will not be abused." (Emphasis added. )

It casually mentioned that, according to the OPD, there were "over 500 known pedophiles in the Omaha area." (Since the U.S. Department of Justice estimates that a typical pedophile molests 77 children before he is caught, and most are never caught, a contingent of 500 pedophiles would be abusing thousands of children every year!)

One pedophile even

caused us [grand jury members] to be greatly concerned. This individual, Robert W. Andresen, a white male, 6'5", 325 lbs., has been known to coerce males (including male minors) to his residence. Once he has taken a male there, he may sexually assault and/or pornographically photograph the young man. Furthermore, we have reviewed documents that state Andresen has threatened to physically harm his victim(s) and has threatened to search out and kill those who report him to the authorities.

Having painted that bloodcurdling portrait, the grand jury dismissed the matter with a wave: "Unfortunately, because the victims refused to testify against him, we could not indict." In reality, Andresen figured in the taped testimony of Troy Boner and Danny King to Gary Caradori, which the grand jury neglected to say.

The grand jury charged that the "hoax" was spread by certain "rumormongers"; among these, it named two child care workers, to whom the victims had begun to speak. In the opinion of the grand jury, "Perhaps never in the history of Douglas County has the discordant multitude played so feverishly upon the rumor pipe as in the allegations of sexual misconduct surrounding Franklin."

All those who had pursued the allegations, such as Senator Schmit and the Franklin committee, Senator Chambers, this writer, members of the Concerned Parents, and a free-lance journalist named Michael Casey, came under attack from the grand jury. But, in a striking variation from normal grand jury procedure -- to either indict an individual or not to name him at all -- this jury cleared, by name, all the prominent alleged abusers, including Judge Theodore Carlson, Harold Andersen, former Game and Parks Commissioner Eugene Mahoney, Omaha Mayor P.J. Morgan, and Omaha lawyer Thomas McKenney. As for alleged abuser Chief Robert Wadman, the jury observed, "We now look upon Owen as the perpetrator and Wadman as the victim."

According to the grand jury , one of the perpetrators did not even exist: "Owen repeatedly referred to a bodyguard and enforcer of King's nicknamed 'Larry the Kid.' We believe this muscular, black male, in his late teens or early twenties, to be a fictitious character." The report did not explain, how a fabricated personality could have appeared in reports from at least four different children over a period of three years. Loretta Smith told about a person named King Horse, who was at parties and rituals she attended in 1985. Alisha Owen testified that Larry King's "henchman" was a black youth named "Larry (Lnuk)", also known as Kings Horses. Danny King said "Larry, Jr." was King's righthand man. And Paul Bonacci reported that a black man he called "Larry Little King" would carry out threats on Larry King's behalf.

Finally, the report insisted that there was no cover-up. There are citizens who believe that prominent individuals, allegedly associated with this case, are automatically guilty because of their public stature. They also believe that the public stature of these individuals allows automatic protection and the power to cover up situations. While we agreed that this was a possibility, our investigation found nothing to substantiate any of these allegations. There is no evidence of a cover up.

The Douglas County grand jury said it "spent the most time" and "the majority of our fact finding and deliberative effort," on refuting the videotaped testimony assembled by Gary Caradori. It concluded, "There is no doubt after reviewing all relevant evidence, that the story of sexual abuse, drugs, prostitution, and judicial bribery presented in the legislative videotapes is a carefully crafted hoax, scripted by a person or persons with considerable knowledge of the people and institutions of Omaha, including personal relationships and shortcomings."

With Caradori, as Senator Schmit put it, "conveniently no longer alive to defend himself," the grand jury insinuated that he had staged the tapes for personal profit:

We have scrutinized Caradori's investigative techniques. In too many instances individuals Caradori interviewed were "fed" items of information. He led his witnesses and the videotapes were stopped and started at suspicious intervals with the substance of the witnesses' stories changing. Caradori stated that he thought it was his job to find the leads and it was someone else's responsibility to follow them up. We believe to the contrary. We think that Caradori stood to gain professionally and personally from the outcome. Caradori spent more time supporting the allegations rather than verifying the same. Caradori worked from a sensational base. If there appeared to be something that would be scandalous, he was interested in following it through. If it was just a routine matter, he was not willing to invest the necessary time or effort.

In October 1990, Karen Ormiston, the employee of Caradori's investigative firm who was with him at the videotapings, passed a polygraph test administered by Chris Gugas, a professional polygraph specialist from San Diego who was President of the National Polygraph Association. The questions to which she answered "no," were:

"1. During Gary Caradori's interviews with the Franklin case victims, did he ever threaten anyone in obtaining information from them?

2. To the best of your knowledge, did Gary coach any of the alleged Franklin case victims on what they should say in their interviews?

3. Did Gary and you advise any of the four victims at anytime to fabricate their stories?"

To the question, "Were all the statements given to you and Gary by the four Franklin case victims completely voluntary?" she answered "yes." Gugas concluded, "t is the opinion of this examiner that Ms. Ormiston answered all of the above relevant questions truthfully."

One of Caradori's close associates said after his death, "We never thought these tapes represented more than a tiny part of the overall story. They are important, but the Franklin case has been turned into a debate on the tapes." The collaborator was talking about the investigation's reach into high political circles and into Washington D.C., but the point applies also to the use of the tapes themselves. The bad faith of the grand jury's dismissal of Caradori's work comes even more into relief, if contrasted with the reams of evidence in the investigator's files, which the grand jury apparently failed to consider. By no means satisfied with the taped statements as they stood, the meticulous Caradori listed, at the end of each interview precis, dozens of leads for follow-up and cross-checking. A small excerpt demonstrates his exhaustive investigative agenda:

6. Records from what was formerly Brandeis to determine the payment of the dress and teddy that Wadman bought Alisha.

7. The bartender who was present at the French Cafe when Alisha had lunch with Wadman.

8. The kitchen help who was employed at the French Cafe at the time that Alisha and Wadman had lunch there. ...

23. Fuel records for the private planes that Alisha took. This would indicate where the plane fueled up, especially on flights to the west coast.

24. David Hughes; a pilot named by Alisha as one of Larry King's favorite pilots.

Caradori did not trace through many of these leads, because he died. But the grand jury waved them aside.

The jury's report says that it "heard live testimony from 76 witnesses" in all. Caradori's notes on the Alisha Owen and Troy Boner tapes alone, list over 75 people to be interviewed during follow-up, not counting Alisha and Troy. Caradori' s evidence, the originals of which occupy a whole locked room at the statehouse, comprise cross-indexed binders, boxes of files, hundreds of hours of audiotapes as well as the videotapes, and a list of 291 potential witnesses in all. The grand jury had a full set in its possession.

I do know, who from Caradori' s potential witness lists was called before the panel, because I was one of the few people who ultimately had access to this information. I am forbidden from identifying these people.

As I have said, I believe that if the entire grand jury testimony could be made public, that would be in the public interest. I also believe that, if that were done, there would be a follow-up grand jury to investigate the original grand jury.

***

The Grand Jury Report met with outrage.

Trish Lanphier, head of the Concerned Parents group, two of whose founders were denounced as "rumormongers" by the grand jury, blasted the indictment of Alisha Owen and Paul Bonacci: "This is a sick grand jury. Turning the victim into the perpetrator. This is so classic."

Phone calls against the jury's findings poured into a local TV station, as reported in the Omaha Metro Update of July 30: "The day after the grand jury report hit on Tuesday, July 24, an 'unscientific' viewer phone-in poll by Omaha television station KETV Channel 7 indicated 10-1 viewer dissatisfaction with the grand jury report. More than 3,000 responses were tallied."

The jury claimed -- without having called me to testify -- that I had "issued [my] memorandum for personal political gain and possible revenge for past actions against [me]." I filed a civil suit, charging that the jury's statements "were malicious, intentional, negligent and done in ... violation of [my] clearly established constitutional and statutory rights."

Senator Chambers submitted a "Motion to Expunge" to the Douglas County District Court, accompanied by an 83-page supporting brief, which documented the jury's gross irregularities.

The legislative Franklin committee's official response to the jury's report raised a question which the jury had carefully left unanswered. "We assume from their choice of words -- carefully crafted hoax," the Franklin committee said, "that the Grand Jury was persuaded that the testimony of the witnesses corroborated each other, and included facts and circumstances which were readily verifiable and attested to by other witnesses. Otherwise, it could not be logically deemed 'carefully crafted.' If it was carefully crafted, who crafted it and when?"

In addition, the committee observed, "Alisha Owen and Paul Bonacci are charged with perjury and Troy Boner and Danny King are not. As we see it, the victims who stand by their story are charged with perjury, while those that have admitted to false statements before the Committee [in the videotaped testimony] are not. That makes little sense to us. Either all of them should have been indicted or none of them. The message is mixed and appears to favor encouraging the recanting as a way to avoid the hazards of criminal prosecution. It also tells persons they can lie under oath to Legislative Committees, so long as they change their story before they get to court."

***

The Omaha World-Herald, whose society columnist Citron stood convicted of child molestation while its former publisher, Andersen, was whitewashed in the grand jury report, leaped to the jury's defense. "Grand Jury Did Its Job; The Insults Are Intolerable," blared its lead editorial on July 29, 1990.

Rumors of wrongdoing and cover-up in the Franklin case were rampant last winter. Based on the conclusions of the Douglas County grand jury, it now appears that the rumors resulted from the fantasies of liars, hoaxers and opportunists who wanted to pay back their perceived political enemies.

Because of the rumors last winter, however, the faith of much of the public in its institutions was shaken. At one time, there seemed no way to determine the truth.

How fortunate Nebraska was to have the grand jury system to help it get to the truth.

Now, however, the grand jury system itself is under attack. The grand jurors who constituted the Douglas County body are being insulted. Doubts are being cast upon their integrity.

The barrage continued, with an August 2, 1990 World-Herald editorial, "Schmit Panel Can't Duck Responsibility in Hoax":

Loran Schmit is frantically rewriting history as he urges the public to believe that his Franklin committee doesn't deserve the criticism it was given by the Douglas County grand jury. ... Senator Schmit, you and other people connected with the committee haven't been putting evidence together properly since the day committee investigator Gary Caradori made the videotapes that became part of the Franklin story. ... Schmit clearly had his mind made up on the credibility of many of the stories on the videotapes. By June, still sticking by his view that the stories were believable, he was insinuating that "money is being spent" to block the indictments of prominent people. The more such statements were repeated, the more some Nebraskans believed the wild tale of a sex-and-drug ring and cover-up involving Omaha individuals and institutions.

***

The World-Herald evidently hoped that the "wild tale" about prostitution and a cover-up had been laid to rest by the grand jury. The more that became known about that panel, however, the more obvious it was that the grand jury itself, guided by prosecutor Samuel Van Pelt, was adding to the cover-up, and had systematically leaked sensitive information, buried crucial evidence, and threatened witnesses.

In my opinion, never was a case of control and abuse of institutions of government and cover-up of crime executed more perfectly, than in the calling and handling of this grand jury.

A grand jury can be the best or the worst device to uncover crime. First, everything in a grand jury is supposed to be secret. Second, the prosecutor in charge of the grand jury can do about as he pleases, in presenting or screening information. If a corrupt or incompetent prosecutor is in charge, the result will correspond to his behavior.

Third, if the grand jury is controlled by corrupt forces, as I believe this one was, then they may use the grand jury as a means to find out what people know about the matter under scrutiny, by calling them as witnesses, without any of that information becoming public. Then such information can be used to assist in a cover-up. The so-called recantations of Troy Boner and Danny King appear to be a case in point.

Nebraska may have the worst laws in the United States, on the use of the grand jury system. They contribute to corruption and cover-up, rather than proper investigation and indictment. At an October 14-15, 1991 hearing in the 8th Circuit Court of Appeals in St. Paul, Minnesota, this fact was exploited by the Nebraska Attorney General's Office, which was defending Douglas County Prosecutor Van Pelt and the grand jury foreman in the Franklin case, Michael Flanagan, before a three-judge panel that was questioning them. The state's argument was that the poor quality and ambiguity of Nebraska state laws on the use of grand juries at the county level should exempt the prosecutor and the foreman from responsibility for any errors or wrongdoing committed by the grand jury.

All grand jury testimony remains sealed. The evidence given here of the jury's role in the cover-up comes from the public domain; it is a fraction of the story.

***

Concern that the grand jury was rigged arose even before it was chosen, just as soon as retired judge Van Pelt was named as special prosecutor for the Franklin case at the county level. On March 12, 1990, the Lincoln Journal ran a letter from 43 neighbors of the late Cairo, Nebraska farmer and political activist Arthur Kirk, in which they termed Van Pelt "a hired gun for the state." The group charged that Van Pelt had covered up the 1984 death of Kirk at the hands of a State Police SWAT squad, which they called murder. In that case, they wrote, "Van Pelt simply took the statements of the perpetrators, put them in his report and exonerated them of any wrongdoing. He did exactly what he was paid and hired to do."

Gross irregularities in Van Pelt's investigation of Kirk's death were noted by Senator Ernie Chambers and others at the time. The police, for instance, claimed that Kirk fired first. If he had, their claim to have fired in self-defense might have held water; yet no ballistics tests were done to see if Kirk had fired his weapon at all! Kirk's wife charged that she had been used by the state police to lure Kirk out of his house, so he could be gunned down. "I came to realize that they had used me against my own husband. I had been used as a decoy," she was quoted in Lindsey Williams' 1987 book, Where's the Food? Despite glaring contradictions in the SWAT team's story, Van Pelt found that the police had acted in self-defense.

The World-Herald retaliated against the Cairo citizens' letter, with an all-out defense of Van Pelt. The March 17, 1990 lead editorial, "Van Pelt's Report on Kirk Followed the Evidence," lamented, "The sad fact of the matter is that some people cling to wild, sensational rumors and conspiracy theories even in the absence of any rational basis."

***

Van Pelt's behavior during the Franklin grand jury was no rumor, but a matter of record. Three people who testified before the grand jury -- Paul Bonacci, Alisha Owen, and a young woman called "Jane Doe" -- subsequently charged that Van Pelt intimidated them and attempted to force them to change their testimony.

Paul Bonacci testified before the Legislature's Franklin committee on October 16, 1990, about his grand jury experience.

BONACCI: And the other thing is they kept saying when I was in front of the -- that -- some -- that jury or whatever, they kept telling me to -- that if I stuck to my story they were going to make me be in trouble for it.

SENATOR SCHMIT: Who said that?

BONACCI: It was some guy with a -- it wasn't in front of everybody, it was when I was getting ready to be taken back upstairs before lunch. They stuck me in this room. He was sitting in this back room behind this desk. He was one of the guys that kept asking me questions.

BEVERLY MEAD (Bonacci's doctor): Well, could you identify this particular man who in -- describe him or

BONACCI: Yeah. He was -- had a mustache and I don't know if he had glasses or not. ... He was the guy mainly in charge. ...

MR. DECAMP (Bonacci's attorney): What did he say to you?

BONACCI: He kind of told me if I just -- he said -- he kind of said, if you stick to the same story that you have been telling, you will be in a lot of trouble.

The guy with the mustache was Sam Van Pelt.

On June 11, 1990, Alisha Owen testified to the Franklin committee about what happened when she went before Van Pelt's grand jury.

LEGISLATIVE COUNSEL: First of all, do you have any comment at all about the grand jury and you can -- that you would like to tell us without violating your oath to the grand jury?

ALISHA OWEN: It was the hardest three days of my life almost.

COUNSEL: Well, now wait a minute. You've been sexually abused, you've been put into a narcotics situation, you have been in a mental hospital, you have attempted suicide, and you are saying that your appearance before the grand jury was -- was more difficult than that, is that correct?

OWEN: It was more exhausting, yes. I would go home and be exhausted. Exhausted.

COUNSEL: I am going to ask a leading question. Were you humiliated, denigrated, degraded, put down?

OWEN: Yes. ... I met with them on a Monday and that was just a very short meeting. And then I met with them on a Tuesday, Wednesday and Thursday. That Wednesday I was humiliated, I was put totally on the defense. Totally put on the defense.

COUNSEL: By whom?

OWEN: By I call him the jerk at the end of the table. I believe his name is Dougherty. ... I have not seen prosecutors do that in a courtroom the way I was -- I was done. I was angry, I was upset. I did not deserve that.

COUNSEL: Your voice is cracking and you are tearing up a little. I am going to stop and ask [Owen's attorney] Mr. Rosenthal a question. ... Henry, did you feel that you were given an adequate opportunity to protect your client during the grand jury proceedings?

ROSENTHAL: Well, I was to the extent that I was allowed to. You see, in my opinion they just never asked her any questions at all. ... And I think at one time, without getting into it, they asked her do you want to say anything? She says, I'm sorry you never got to the point in three days. It was always go around the circle and it was always accusatory more than trying to get the facts out and let the chips fall where they may. They never gave her an opportunity to go into them, you see.

Although the grand jury was to indict Owen for saying she was sexually abused by Omaha Police Chief Robert Wadman in 1983 and 1984, she said they asked her virtually nothing about those years, about the abuse, or about her detailed description of Wadman's physiognomy.

OWEN: I -- you know, as I said before, they never talked to me about 1983 and 1984. They don't even know what happened. They -- they send me into this grand jury, they are calling me a perjurer and they have never even asked me what happened. And when -- it's kind of hard for me because I want people to know I'm telling the truth, and sometimes some of the things that you have to tell them about what happened or about the perpetrators is difficult. And it would be, I think, a gross injustice if that evidence was suppressed.

The fact that I know about the bunion or the knot on his little toe and he has hair on his toes, you know, I can tell you exactly how the hair patches on his feet are, it would be a gross injustice if that was suppressed in the grand jury. I think that would -- that would be absolutely a crime. Because in the United States today when it comes to those kinds of cases, a lot of times the only way that a victim can actually prove that they were abused is by identifying key marks on that person's body that no one else would know.

A way to call me a liar and a way to say she's not telling the truth would be to suppress that, would be not to watch -- I made you a tape describing Rob's body. For the grand jury, I consider that a key piece of evidence. For that to be suppressed I think is a crime. I think that that is willful, knowledgeable suppression of evidence. And to have that done by a prosecutor, I think that's a crime and that's a deliberate cover-up.

Jane Doe recorded her anger with the grand jury in a taped interview with Senator Ernie Chambers, reported on in the Nebraska Observer of August 31, 1990:

She was left with the overwhelming impression that the Grand Jury had wanted only that part of her testimony that might be useful to discredit Alisha Owen. Later, she was to receive phone calls from a male saying she talked too much. Since she had moved several times since her partying days, and except for phone calls right after being investigated by the FBI, had not had any such phone calls, she believed that someone connected with the Grand Jury was giving out information.

Jane Doe charged that the grand jury was simply a set-up:

"Then the fact is also, about half way through my testimony. in front of the Grand Jury, it was, it got to a point where I didn't even trust them. Because of the fact that they did not want to know about Alisha or any of that type of stuff." ...

According to Jane Doe, Van Pelt told her how to testify and why, revealing information about the Grand Jury proceedings that others had been charged to keep secret. ... Van Pelt was said to make some references to Jane Doe's past, including some illegal activities that were blocked out of the transcript, that could have been interpreted by her as a threat to her. She said in the interview, "there were some things that I had done in my past that I was afraid he was going to charge me with. ... Basically he was using me as, like a dummy witness because he had figured out that I didn't have or know about any of the information that the Grand Jury was dealing with. ... So it just seemed to me like he was going to use me to discredit Alisha." [Emphasis in original.]

***

Bonnie Cosentino, a grand jury witness pilloried as one of the "rumormongers," also contacted Senator Chambers to register a complaint. A co-founder of the Concerned Parents group, Cosentino told Chambers she was repeatedly harassed by Van Pelt's assistant Terry Dougherty outside the jury room. The jury's sole interest, it seemed to her, was to tie her to Michael Casey, a journalist whom the grand jury was to build up as an orchestrator of the "carefully crafted hoax."

Cosentino wrote in her open letter to Chambers, printed in the Omaha Metro Update:

Numerous questions asked by Mr. Van Pelt and Mr. Dougherty, seemed to be accusatory and began with phrases like, "Did you tell Carol Stitt ..." (Foster Care Review Board) and "Did you tell Jerry Lowe ..." (former Franklin investigator). I found myself on trial for reporting leads to the proper authorities.

I was questioned relentlessly about Michael Casey, who seemed to be the focus of Mr. Van Pelt's prosecution. I had only met Mr. Casey on two occasions, neither of which were interviews. Mr. Van Pelt and Mr. Dougherty seemed to try over and over again to form some relationship between myself and Mr. Casey which simply did not exist.

Senator Schmit recalled his own appearance before the grand jury, during a Franklin committee hearing on June 21, 1990:

And it's also sort of interesting, of course, I appeared before the grand jury. I had about 25 minutes for a statement the first time, and they had about that many questions. Mr. Van Pelt said they didn't have any further need for my appearance up there. And I thought that was sort of strange in view of the fact that we spent a year and a half at this, we have spent hundreds and hundreds and hundreds of hours, and [the Franklin committee] could answer all their questions. And I might, without revealing anything that was asked, might add that most of the questions that were asked of me, I think [Franklin committee counsel] Mr. Berry is here, had little or nothing to do with the scope of the investigation.

And the second time around, when I appeared at my request, it was more of the same. And it's a rather disappointing situation when you realize that if you are hunting for something and you do not look where you know the evidence is, you're not going to find it.

In my civil suit, I charged that Van Pelt and Dougherty had even participated in writing the grand jury's final report, a practice forbidden by Nebraska law. Jury foreman Michael Flanagan admitted their involvement, as the World-Herald reported on August 21, 1990:

Flanagan emphasized that the grand jurors participated equally and actively in the writing of the report, dividing the writing into small groups and then meeting again and again as a whole to "polish and polish" the text.

He said the special prosecutor, Samuel Van Pelt, and his assistant, Terry Dougherty, did not have a disproportionate amount of influence on the writing.

"He (Van Pelt) was with us and he was part of it," Flanagan said. "I'd say he was one-eighteenth of the writing. Everybody had equal chance and equal opportunity. It was a completely joint effort."

The grand jury explained that its failure to subpoena Larry King was due to the probability that King would have invoked his Fifth Amendment right not to incriminate himself. In other cases, it was fine with Van Pelt to call witnesses who would take the fifth, as he indicated to Jane Doe in the exchange reported by the Nebraska Observer:

On the return trip home, Mr. Van Pelt told Jane Doe about the "easy day" coming up the next day. When she asked why, he disclosed to her that the witness would "plead the Fifth." She said, "He told me that he was a homosexual and that he had sex with little boys. And that they would indict him on that, so the fact is that he had to plead the Fifth so he would not get indicted." Van Pelt said it would be an easy day "because he wouldn't have to do anything," except 'just sit there and listen to those guys plead the Fifth throughout the questions." ...

That exchange, in addition to consisting of inappropriate disclosure by Mr. Van Pelt, is in sharp contrast to the Jury's refusal to subpoena Larry King, "because ... he would rely on his right against self-incrimination," and therefore, "it would not be fruitful to attempt to require King to appear before (the Grand Jury)." [Emphasis in original.]

***

Van Pelt's treatment of Jane Doe caused such a public outcry, that Douglas County prosecutor Ronald Staskiewicz felt compelled to conduct an investigation. He appointed Douglas County Assistant Attorney Robert Sigler. Sigler was very familiar with the Franklin case; he was the prosecuting attorney when Alisha Owen was sentenced to five years in prison for passing $700 in bad checks. He had handled the child molestation trial of World-Herald society columnist Peter Citron. After Citron's conviction, Sigler maintained that the Citron case had never been linked with the Franklin investigation "in the beginning, middle, or end. That's not what this case is about." He told the World-Herald, "It had nothing to do with Franklin, the evidence uncovered didn't show any link. That's a big misconception."

Neither was Sigler disqualified from responsibility to probe Van Pelt's performance, by the fact that two witnesses to the Legislature's Franklin committee witnesses had placed him in the Franklin case!

On June 10, 1990, Karen Ormiston interviewed one Alice Good*, who had information on pornography and prostitution. Ormiston recorded, "The subject feels that a Douglas County prosecuting attorney identified as Robert Seigler [sic], nicknamed 'Smiley,' is involved with the Franklin case."

Paul Bonacci was more specific, in testimony given to the Franklin committee on June 12, 1990.

BONACCI: With Larry King I've traveled a lot of times to Kansas City, and that was usually by car. But we used to go up to Sioux City, Iowa and we used to take a -- there was a chartered plane. It was called KAM Air or something. And they used to fly us up to Sioux City and we'd stay at a hotel that was right on the river. And he had a boat and stuff we used to go on all the time. And he -- we used to go up there for having sex and stuff. ...

SENATOR LYNCH: Were some of the people you met there from the Omaha area, do you remember that?

BONACCI: Yes.

LYNCH: Do you remember some of their names at all?

BONACCI: Joe Caniglia. Guy named Robert Siegler [sic]. Alan Baer was there.

Before he joined the Douglas County prosecutor's office, Sigler had worked for an Omaha law firm, where he handled the legal affairs of Charlie Rogers, a former lover of Larry King who died an apparent suicide in 1989. In the days before his death, Rogers told friends that he was very afraid of what King would do to him, and that if anything happened to him, to contact Robert Sigler. The Douglas County grand jury said it "spent a considerable amount of time investigating all aspects of Rogers' death," but concluded it had nothing to do with Larry King. Sigler's friend and associate in the law firm, Gerald Moran, later also joined the Douglas County attorney's office. In 1991, he ran the prosecution of Alisha Owen for perjury.

Sigler promptly reported back to Staskiewicz, that Van Pelt had done nothing wrong.

***

From the outset, Paul Bonacci presented a huge obstacle for the Douglas County grand jury. Since Bonacci refused to recant what he had testified to Caradori, Van Pelt's jury was compelled to indict him for perjury, in order to maintain that the story of Franklin-connected abuse was a carefully crafted hoax.

It was difficult to see how Bonacci could have participated with Owen in the fabrication of such a hoax. Caradori did not even meet him until May 10, 1990, and took his videotaped statement for the Franklin committee on May 14 -- five days after Owen finished testifying before the grand jury. Bonacci' s recollections corroborated Alisha's on many points, although he told Caradori that he thought the last time he had spoken with her was in 1986.

Since his testimony supported Owen's, the grand jury had to call Bonacci a liar:

Bonacci was perhaps the most pathetic witness to appear during the entire proceedings. ... He has been diagnosed as having multiple personalities, and his psychiatrist doubts that he can tell the truth. His many inconsistencies and contradictions render his testimony unbelievable and necessitate his indictment for perjury.

This tortured formula contained not one, but two contradictions. Obviously, a person who was medically incapable of telling the truth could not also be guilty of perjury, or deliberate lying under oath. The second error, however, was to cite the alleged opinion of "Bonacci's psychiatrist," who did not appear as a witness before the grand jury. It was a stretch even to apply this label to the doctor in question, Dr. Beverly Mead, since he examined Bonacci on behalf of the Omaha Police Department. But where Dr. Mead did testify, before the Franklin committee, he said he believed Bonacci to be telling the truth!

Dr. Judianne Densen-Gerber, New York-area psychiatrist, lawyer, child abuse expert and member of the International Society of Multiple Personality and Dissociative States, has described the ailment Bonacci suffers from, Multiple Personality Disorder (MPD). It is not a psychosis, she said, but a neurosis, that results from a defense mechanism in the mind of a child seeking to protect himself from "unimaginable atrocity." Virtually all MPD victims were severely abused starting before they were six years old, with tortures such as being hung upside down and having hot objects stuck inside them, or being forced to participate in the murder, mutilation and cannibalism of other children. A child subjected to such terrible emotional and physical pain has no possibility of escape from this "emotional Auschwitz," so his mind, in self-defense, invents another identity at the moment of abuse and suffering. Through this mechanism, the child victim can imagine he is someone else, looking at the pain and betrayal from the outside, as if it were not actually happening to him. As the victim grows older, these different personalities survive in the victim's mind, each having its own age, name, memories and characteristics.

Multiple Personality Disorder is familiar to many people from Flora Rheta Schreiber's book Sybil, about the first MPD victim who ever reintegrated her personality through psychoanalysis. "Sybil," tortured since infancy by her mother, first sought a psychiatrist's help as a young woman in Omaha, Nebraska.

Invited to Omaha by the Legislature's Franklin committee, Dr. Densen-Gerber testified on December 29, 1990 about her examination of Paul Bonacci. She was questioned by committee counsel Robert Creager.

CREAGER: Doctor, I believe the grand jury actually went so far as to pin their conclusion on a "fact" that according to testimony Mr. Bonacci was not capable of telling the truth. Do you have a comment on that?

DENSEN-GERBER: I think it would be very difficult for Mr. Bonacci to lie. ... Being a multiple personality there is no need to lie, you switch [personalities]. ... First of all, Mr. Bonacci's story is an average story for someone in Mr. Bonacci's circumstances. There is nothing that Bonacci told me that I haven't heard from other patients or individuals. He has no elaborations and he often says I don't know. He does not fabricate or he does not try to provide answers which most people do because they want to please. He doesn't even give you the impression that he wants to please.

Police-hired psychiatrist Dr. Beverly Mead concurred, when he answered questions from senators and Bonacci's attorney, this writer, at an October 1990 hearing before the Franklin committee.

DECAMP: What do you believe now, Doctor, relative to his discussions here that we've heard and the ones you and I have listened to?

MEAD: I personally feel that these details that he's related to us were experiences that he really experienced. ...

SENATOR SCHMIT: I have several questions of Dr. Mead. Doctor, we heard the witness in various personalities mention some specific names of persons who were with him at various times, Larry King, Robert Wadman. ... In your professional experience, is there -- how do you -- I guess my question is do you feel those descriptions are accurate?

MEAD: I would like to see them confirmed from other sources, of course. But it's -- it's my present impression that Paul is -- or [personality] Alexandrew is reporting things honestly as he remembers them.

SCHMIT: Is there any way that he could have imagined this and dreamed it up and then told it to us here today? Could that have been done?

MEAD: It would be a most phenomenal trick to do that. I don't think it would be possible. I think he's talking about things that he actually remembers. ... In our effort to remember something, sometimes we may say, well, I think so-and-so, and as we think about it we come to believe it. So there might be a few details that are not precisely as happened. But I think basically the story as he tells it is what he is honestly reporting.

SCHMIT: For example, the story about his trip to the Southfork ranch [with Larry King, during the Republican national convention, to be sexually abused], do you believe that story?

MEAD: Yes.

Finally, the credibility of Paul Bonacci is bolstered by his own action in April of 1986, two years before there was a Franklin case, when he reported to the Omaha Police Department and to officials of his high school, that he was abused by Harold Andersen, Larry King, Alan Baer, and others. Henry Rosenthal, then Bonacci's attorney, spoke to the Franklin committee about this on June 21, 1990.

ROSENTHAL: I talked to his people at school, you know, because I -- I had some severe doubts about this fellow telling me about that. But his problem -- one day he went kind of outer space in school and they thought it was drugs and it really wasn't. This stuff was really starting to work on him. He just did not want to recruit anymore for Mr. Baer.

SENATOR LABEDZ: He told us that.

ROSENTHAL: But I talked to the school officials. You are talking about assistant principal at school, how many people, 4,000 students. I talked to his head counselor and they said it's absolutely true. They phone the police department and said he's in the hospital, are you going out to interview him? "No, we have closed the case." When he mentioned those prominent people, those people [school officials] told me you could just see like they closed their eyes and their books and was gone.

[admin]

Part 1 of 2

CHAPTER 12: THE OMAHA BUSINESS COMMUNITY

Senator Schmit warned the Franklin committee at the outset, not to expect to breeze through an investigation like this. "No one person," he told the Executive Board session of December 12, 1988, "could have masterminded this without the compliance and the acquiescence and cooperation of a number of people, some of whom had to be in official positions. ... I do not want anyone to say I want to be on this committee, then all of a sudden say, wait a minute, I don't want to walk through that mine field with you, because that is what it will very likely prove to be."

Senator Chambers, who represented the black district of north Omaha where Franklin was headquartered, agreed: "What Larry King is doing is the tip of an iceberg and he's not in it by himself. One thing I told the Attorney General ... is that I don't want Larry King to commit suicide and I don't want any accidents that will take him out. What he's doing he has not done by himself and couldn't do by himself."

With over forty years in the Legislature between them, Schmit and Chambers knew whereof they spoke. Behind Larry King's rise to fame and riches stood some of the most powerful figures in Nebraska politics and finance.

Larry King himself bragged about his connections. "I felt that I could call anyone in this city," he told the TV interviewer who questioned him about favors from Chief Wadman. In a September 7, 1988 interview with the Omaha weekly Metropolitan, before the Franklin Credit Union scandal broke, King was more expansive about his friends:

They were the key to my success. I had really great, great people who were counselors and teachers, who were over some of the major companies in the city. And I would go to them and ask them what they thought I should do and sometimes they would come and sit down or send someone out to talk with us. Harold Andersen of the World-Herald was one of the great people who came out. Bill Fitzgerald at Commercial Federal Savings and Loan. I called him once years ago when we were in a crisis and he said, "I'll be there at 7:30 tomorrow morning." And so he was. So I have to say the Omaha power structure has some of the best people to work with. They'll help you if they're convinced you want to help Omaha. They don't turn their backs; they have never done it to me. And I appreciate it because I like being a part of what makes this city grow, and this country.

Had the "Omaha power structure" merely extended a liberal hand to a young black man trying to get ahead? For some of the city's elite, perhaps that's all there was to it.

Days and even weeks after the raid, some of Franklin's backers were still defending King. The World-Herald of November 9, 1988 quoted its own publisher, Harold Andersen, Ken Power of US West Communications, and Lyn Wallin Ziegenbein of the Kiewit Foundation, in praise of King. "Until the day it closed, Franklin was performing a useful purpose," Harold Andersen said on November 30, 1988.

Yet someone making even a casual inquiry -- such as a businessman might be expected to do before he contributed or deposited hundreds of thousands of dollars in a credit union -- would quickly hear the kind of warning Boys Town social worker Julie Walters did, when she asked around about King. They would have heard he was a dangerous man, and they would have heard about pornography, drugs, and pedophilia. Some, at least, of these "great people" from the major companies, had to know precisely what they were doing when they sponsored Larry King.

***

In Gary Caradori's files is the transcript of a February 12, 1989 phone conversation with Sheila McGuire, aka Sheila Calder, former manager of the French Cafe, who had moved to the West Coast. This night spot, partly owned by Larry King, was named by victim-witnesses as a center of sexual abuse. Alisha Owen told Caradori that "Sheila Calder would arrange parties at the French Cafe during the afternoon when the cafe was closed."

Here is what the hostess had to say:

We had parties in my apartment above the French Cafe. Larry King would wine and dine potential investors downstairs at the Cafe. When the French Cafe closed about 1 AM, King and his man called Parking Lot Bob -- who worked for him (and was our coke connection) -- would bring people upstairs to my place. If Larry King investors wanted drugs, booze, children or hookers (male or female) we'd get them. While these guests of Kings took their pleasures -- with the kids or whoever -- King would sit and watch -- while he drank, did coke and played with his young boys. ...

One time, when this guy Irv from NYC wanted Sandra -- who was about 12 or 13 years old and getting her 1st period, Larry intervened when Sandra refused. King pulled out a roll of $100.00 bills and gave Sandra 5 of them. King then pulled out a small gram of coke and gave that to Sandra. Sandra finally agreed and went off to bed with Irv.

King took good care of the local and out of town high rollers. If you had the money to invest at Franklin, King would cater to your most deranged perversion. And, let me tell you another thing. The boys in the board rooms around Omaha are s---ing in their Brogans. If this case gets cracked open the list of involved will read like Who's Who. King and his crew have ruined a lot of childrens' lives.

***

Two years after the raid on King's credit union, as the legislative Franklin committee's original term drew to a close, an old hand in Nebraska politics reflected on the events of the past 24 months. "The Omaha business community," he said, "the Ak-Sar-Ben crowd, has really closed ranks behind Alan Baer, Andersen and the rest of them. The word has gone out: layoff the Franklin investigation. Most of the Senators are terrified. These guys make and break political careers. They give a lot of campaign money, and many of the Senators get what are generously called 'consulting fees,' or sometimes positions -- no-show jobs, really -- with the big firms up there. That's the way it's done. It's not uncommon for a big company to have more than one Senator on a $50,000 retainer."

Who were "these guys," the Ak-Sar-Ben crowd?

Visit the Omaha Public Library to look up the boards of directors of big Omaha companies, and you will find names that are listed on board after board. Take a few of those -- say, Walter Scott, Jr., chairman and CEO of the construction giant, Peter Kiewit and Sons Corporation; Charles "Mike" Harper, chairman and CEO of the $20 billion per year food conglomerate ConAgra; Michael H. Walsh, CEO of Union Pacific Railroad, a major force in Nebraska for over a hundred years -- and ask the librarian to help find information on these men. The reply will likely be something like what one library staffer told a friend of mine in 1991: "These are businessmen all right, but they are intensely secretive. We have very little on them."

For over a century, the Omaha business community has been organized around the Knights of Ak-Sar-Ben, a quasi-freemasonic social organization, centered on a racetrack and fairgrounds in Omaha. Spell "Nebraska" backwards and you get its name. Founded in 1895, Ak-Sar-Ben functions as a sort of central committee of the corporate elite, and a self-perceived oligarchy for the city.

Every year Ak-Sar-Ben celebrates a ritual coronation of the "King of Ak-Sar-Ben," generally an older corporate executive, and his Queen, generally the younger wife or daughter of another man in the club. The king for 1990 was Mike Harper of ConAgra. Here, and at debutante balls and other affairs organized for the younger generation, the lords and ladies of Ak-Sar-Ben establish their social pecking order. The rituals and "den shows" mimic ceremonies from different lands, real and invented, and always pagan. Past Ak-Sar-Ben festivity themes included: "The Roman Hippodrome," "King Arthur's Wild Goats," "Trouble in the Tropics," and "Hi-Jinx in Hades." Sometimes the men and boys of Ak-Sar-Ben paraded in women's clothing, or dressed as Egyptian goddesses.

Ak-Sar-Ben's clout is so legendary, that Omaha Mayor P.J. Morgan, himself a member of the Ak-Sar-Ben social set, could make political hay by a demagogic attack on it. In 1990, during a squabble with Ak-Sar-Ben over where a new stadium would be constructed, Morgan blustered, "Frankly, I'm just sick and tired of a small handful of people who think that they can control this city and county without regard to feelings, sentiments and desires of the honest, hard-working people who are the real foundation of this city."

Sensitive to this widespread perception, ConAgra's Harper, speaking as chairman of Ak-Sar-Ben's Board of Governors, replied in a special World-Herald column on December 9, 1990, "Ak Knights Don't Control City." Just because the individuals and corporations on Ak-Sar-Ben's board had given over $50 million to various causes over the past 20 years, wrote Harper, ticking off a list of most of the public facilities in Omaha, that did not mean they had clout. I am at a loss to see how contributions to reputable charities can be associated with political power."

Harper's own company flaunted its political power over the city and the state, just a few years ago. According to "Omaha Held Hostage," a May 1989 article in Progressive magazine, ConAgra threatened in 1987, to pull out of Omaha, unless the city granted it a choice piece of free land, sewage, paving and a host of other benefits, which will ultimately total as much as $60 million, for a new corporate headquarters. The city acquiesced. Later the same year, when the Nebraska Legislature was on the verge of removing personal property tax exemptions on purchases of jet airplanes and mainframe computers, Harper put out the word to the legislature: Change the tax bill, or ConAgra leaves Nebraska. The bill was changed.

***

Ak-Sar-Ben has been ruled for decades by its Board of Governors, a roster of sixteen influentials (increased to twenty, in 1990, "to better represent the entire community," according to Mike Harper), most of whom are chief executives of major corporations. In the late 1980s, the board included:

Charles "Mike" Harper, President and CEO, ConAgra
William A. Fitzgerald, President and CEO, Commercial Federal Savings and Loan
Bruce Lauritzen, President, First National Bank of Omaha
David A. Rismiller, Chairman and CEO, FirsTier Financial, Inc.
Walter Scott, Jr., President and CEO, Peter Kiewit &Sons, Inc.
Thomas J. Skutt, Chairman and CEO, Mutual of Omaha
Michael H. Walsh, Chairman, Union Pacific Railroad
Michael Yanney, Chairman and CEO, America First Cos.

These corporations poured millions into the Franklin Credit Union, in the form of deposits and outright contributions. Their executives supported King, in arrangements both informal and formal.

Bill Fitzgerald, Knight of Ak-Sar-Ben and president of Commercial Federal Savings and Loan, helped his friend Larry King with advice. When the jig was up for Franklin and the Consumer Services Organization, King's close associate CSO director Barbara Moore could find employment with Walter Scott's wife, Sue.

Mutual of Omaha placed funds in the credit union, while Thomas Skutt, chief executive of this insurance giant, co-chaired a $1.3 million fundraising drive for Franklin, with Harold Andersen.

The Franklin Credit Union had two boards. The small, governing board included Larry King, Jarrett Webb and James C. Hart, Jr., the secretary, who were named as child abusers by victim-witnesses before the Legislature's Franklin committee. The firms run by the Knights of Ak-Sar-Ben, along with other prestigious Omaha corporations and law firms, showed up on the larger, "Advisory Board."

On the Franklin Community Federal Credit Union Advisory Board were:

Chairman Harold Andersen, publisher, World-Herald
Rep. Hal Daub (R-2nd Congressional District)
N.P. Dodge II, President, N.P. Dodge Real Estate
Lamont Wallin, Kutak, Rock, & Huie law firm
L.B. Thomas, Vice President, ConAgra
Jerome Jamrog, Senior Vice President, Commercial Federal Savings and Loan
Arnold Nesbitt, Senior Assistant Manager, Union Pacific Railroad
David Hinton, Assistant Dean, College of Public Affairs, University of Nebraska, Omaha
Louis Lamberty, County Surveyor
Samuel Marvin, President, R-Lynn, Inc., Council Bluffs, Iowa
Leslie McAuley, Supervisor, Director of Quality Control, Northwest Bell
Donald Miller, Vice President, Omaha National Bank
Carolyn Rothery, Byrne & Randall, P.C., Omaha
Dale Wolforth, Vice President (ret.), Murray State Bank
John S. Zeilinger, attorney, Baird-Holz, Omaha
Michael Albert, President, Albert Food Brokerage
Angelo Amato, General Superintendent Customer Records
Department, M.U.D.
David Ambrose, Professor, Department of Marketing, University of Nebraska, Omaha
Joseph Barker III, Massachusetts Mutual Insurance
Company
Dana "Woody" Bradford, Bradford, Coenen, & Ashford
Leo Eisenstatt, Erickson, Sederstrom, Leigh, Eisenstatt, Johnson, Kinnamon
James Healy, Administrator of Urban Affairs, Northern
Natural Gas

L.B. "Red" Thomas headed up finances for ConAgra, which put funds into Franklin certificates of deposit. Union Pacific, and its executives acting as individuals, poured in money, while Union Pacific officer Arnold Nesbitt sat on the board.

Ak-Sar-Ben interfaced with the Franklin credit union proper, but also with individuals in the orbit of Larry King. One of its biggest financial contributors in recent years was the department store heir and child abuser, Alan Baer. Catering for Ak-Sar-Ben was Gary West, bartender from the Max gay bar.

***

As the Legislature geared up to investigate the credit union, its lofty advisors began to jump ship. At the Legislature's Executive Board meeting of December 12, 1988, Senator Chambers captured the picture:

This situation will be like the Nazi regime after it failed, nobody saw Hitler, nobody knew who Hitler was, but one kid once saw an old man who one time knew a guy who talked to a guy who saw a car drive by with curtains on it and somebody said Hitler was in that car. That's the way this is going to be, nobody knows anything, nobody has seen anything, nobody knows why investigations in the past, by the federal government, were terminated.

Sure enough, over the next months one board member after another would appear on the pages of the World-Herald, to deny he had really had anything to do with Franklin. Virtually nobody from the powerful firms that channeled funds to Franklin and advisers to its board, was ever questioned by the Franklin committee about his relations with the credit union. Once again, according to one veteran politician, the whiff of a ConAgra payoff was in the air: Those who helped cut short the Franklin investigation would receive campaign funding from ConAgra, and those who pursued it would not.

For some of the Franklin board members, the ties to Larry King were too close to hide. Gary Caradori questioned one of them, Joseph Barker III of Massachusetts Mutual Insurance Co., on March I, 1990. He wrote up their exchange:

At 1400 this writer arrived at the Massachusetts Mutual Insurance Company located at 90th and Dodge, Omaha, Nebraska, and contacted Mr. Joe Barker. Mr. Barker then did admit to writing policies for Larry King and his family. He stated that as far as he knew, he handled all of Larry King's life insurance. Mr. Barker stated that he had known Larry King for many years. He was not certain how they met, however, they did share some duties on church committees and possibly several other boards. ... When my questioning started to center around social gatherings, Mr. Barker indicated with a nervous gesture that yes, he had been to some social events with Larry King, but that everything was always "on the up and up." He stated that throughout his friendship with Larry, everything was always "straight" and that he had never seen anything out of the ordinary.

To the trained investigator, something didn't sit quite right. Caradori observed:

This investigator noted that Mr. Barker seemed extremely uneasy while this writer was present. Further investigation will be conducted reference this matter.

In other cases, Franklin Advisory Board members were one step removed from personal contact with King. One person from a company would sit on the board, while somebody else was more directly in touch. The law firm Byrne & Randall (credit union board member Carolyn Rothery) fit this pattern. Joseph Byrne handled much of King's legal business early in his career, and King used Byrne as a personal reference on credit applications, according to a February 17, 1989 report by Jerry Lowe. Byrne's partner, Gary Randall, was the lawyer who negotiated Jarrett and Barbara Webb's way out of trouble in 1986.

Erickson, Sederstrom, Leigh, Eisenstatt, Johnson, Kinnamon (credit union board member Leo Eisenstatt) was retained by King and the credit union for various matters. Quoted by James Traub in a December 1991 article in Gentlemen's Quarterly, Leo Eisenstatt recalled, "The Kings came to our house for dinner, and we went to their house. We were one big, happy family."

An employee of Erickson, Sederstrom, Leigh, Eisenstatt, et al., Jay Derr, came to the attention of Caradori and the Franklin committee, in connection with King's sexual escapades. Caradori received reports from at least two sources, that Derr had taken a private flight with King to the 1988 Republican National Convention, where King organized one of his sex parties. In his notes of March 29, 1990, Caradori reported a local law enforcement officer receiving "a call from the DEA in D.C. requesting help on Jay Derr." Then Paul Bonacci testified about him before the Franklin committee on June 12, 1990.

SENATOR LYNCH: Does the name Jay Derr mean anything to you?

BONACCI: Yeah, Derr I know. Jason Derr.

SENATOR SCHMIT: Why is that name familiar to you?

BONACCI: Well, there was a guy that was at some parties and stuff, he told me his name was Jason Derr. And that's all I remember. I mean, because he was having -- you know, he asked me questions a lot and then he took me out sometimes, a couple times, and gave me money and --

SENATOR SCHMIT: Did you have sex with Jason Derr?

BONACCI: Yes.

SCHMIT: More than once?

BONACCI: Yes. ... probably four or five.

SCHMIT: Do you know of any other young lads that he had sexual contact with or among your acquaintanceship.

BONACCI: Can't be positive, but I think a kid named Mark Powers. And I'm not sure if it was Danny or Troy, Danny King or Troy Boner.

***

Among the backers and contacts of Larry King and the Franklin Credit Union, certain stand-outs deserve special attention. These are Harold Andersen and his World-Herald, former state Game and Parks Commissioner Eugene Mahoney, Omaha multibillionaire Warren Buffett, FirstTier Bank, Union Pacific Railroad, the famous Boys Town orphanage, and the Omaha Girls Club.

***

Harold Andersen was King's biggest backer in the Omaha business community. He chaired Franklin's Advisory Board and co-chaired its fundraising drive, starting in 1983. These money-raising efforts lost some of their luster in 1989, when it was revealed that the money was used to build an addition to the credit union, the most prominent feature of which was a bedroom. The retreat was equipped with "a brass bed, a fluffy white comforter, a stereo and a television," according to former Franklin employee Noel Seltzer, quoted in the March 5, 1989 Lincoln Journal. Others said King used it for afternoon trysts with his homosexual lovers.

Andersen claimed that he did not know there was a bedroom in the addition he raised the money for, but Seltzer had a specific recollection, reported in the Village Voice: "When the addition opened, credit union employees say, Andersen gave guided tours of the new building. 'He always walked by the door and it was open,' says Noel Seltzer, a former employee. 'He knew there was a bedroom in there, he had to see it. We did.'" Seltzer told the Lincoln Journal, that during Andersen's opening-day tour, "the door to the bedroom was open, ... although it was kept locked after that and the room was off limits to employees."

For years before the fall, Andersen's World-Herald chronicled the great works of Larry King and his associates. Its magazine, The Midlands, ran a feature article in 1983, full of praise for Franklin board member Jarrett Webb and his wife Barbara as model foster parents.

The paper's incessant PR work for King, before and after the collapse of Franklin, was bitterly resented by many in Omaha's black community, as Senator Chambers said at the Executive Board session of December l2, 1988:

This man that the World-Herald has pussy-footed around and tried to hold up as a role model for our children, a leader in our community, is a gross insult to us ... and I get tired of seeing World-Herald headlines about the leader of the credit union, things that try to indicate that he typifies what our community is. ... In the community there is outrage that the appearance seems to be to try to keep this man looking like a decent, upstanding citizen. One of the pictures you'll see is where he was catering something for one of the Christ Child centers in Omaha to make it look like he's a great guy. You'll see an article that talks about how generously he gave for AIDs research. If I'm stealing your money, it is easy for me to be generous with that money. In the black community $100 for the Boys Club, $100 for the Girls Club. For a gay outfit in Washington, D.C., $18,000 at a pop. ... So the reason I'm saying this is to indicate that I believe that the World-Herald tried to cover up.

When Franklin collapsed, the newspaper viciously attacked victim-witnesses, parents, senators, and anyone else who persisted in seeking an investigation of the child abuse charges.

It was company policy to protect the pedophiles, admitted World-Herald reporter Gabriella Stern in 1990. Asked why the World-Herald did not print information Stern herself had discovered about a young homosexual tied to Alan Baer, Stern shouted, in the presence of other reporters in the statehouse corridor, that "we have to protect the little fag because he would lead to the big fag," namely Baer. (When I mentioned Stern's exclamation, on a radio station KKAR program, World-Herald publisher Woody Howe called me to deny Stern said any such thing. But Stern herself confirmed to me that she had. Soon afterwards, she left the World-Herald to work for the Wall Street Journal.)

***

Harold Andersen volunteered his fund-raising talents also for the Nebraska Wildlife Federation, a private entity established in honor of his close friend, former State Game and Parks Commission head Eugene Mahoney. The latter was to figure many times during the Franklin investigation, including when Alisha Owen testified he was present at Larry King's sex parties.

Mahoney worked on the OPD vice squad before he entered politics and became known as the "godfather" of many a political career.

In fact, Gene Mahoney was the godfather of my own political career. I conducted my first successful election campaign, from Vietnam where I was an infantry captain, without ever setting foot in the United States. The publicity about that was important to my election, but there was another, secret powerful factor. Senator Gene Mahoney had become arch enemies with the senator I was running against, Bill Wylie. I chanced to fit perfectly into Mahoney's plans against Wylie.

Back in Nebraska, while I was shooting at and being shot at by Viet Cong, Gene Mahoney was working for my election. He was to remind me later, that I never would have been a senator if not for him.

Mahoney made politicians, and he destroyed them. Ask former Omaha Mayor Mike Boyle, the only mayor of Omaha ever recalled from office. Mahoney engineered that recall.

He worked behind the scenes, so that no one was ever able to pin the tail on the donkey.

Gene Mahoney would demand that you be his "boy," once he put you in office. He might not call on you very often, but when he wanted your vote or your support on something, you had better deliver. I did not deliver, early on, because we disagreed on a major matter. As a result, I am supposed to spend the rest of my life doing "penance for Uncle Gene." It is a common joke among political folk in Nebraska, that if you cross "Uncle Gene," you will have to "do penance."

Almost any politician in the state will confirm, that Eugene Mahoney is probably the most powerful politician in Nebraska in recent history.

Gary Caradori's dossier on Mahoney filled up with incident reports of another nature. One of his confidential informants, in an interview on February 22, 1990, recalled how he once returned Mahoney's car to him at a camp where, lacking wife or family, Mahoney spent time.

Immediately west of the Louisville State Park is a little camp near there with a half a dozen cabins in it. And Mr. Mahoney's is the far west cabin in that group right up against the river. ... We took that car down there and went up with the keys to leave the, to identify the car, so here's the keys. And the door swung open and as I recall there was no screen or anything on it. And there stood a large, heavyset, fleshy, young black man absolutely in the buff with nothing but a big smile on his face.

In retrospect, the informant thought, it was likely that the heavyset young man had been Larry King. That would agree with a report by Jerry Lowe from June 18, 1989, of an interview with a former Franklin employee:

[Source] indicated that [Godfather's Pizza founder] Willie Thiesen's name had been linked with Larry King's as being homosexually involved ... and that King had also had similar relationships with Harold Andersen, Eugene Mahoney, and Bob Wadman.

Investigator Robert Hansel of Caracorp, Caradori's firm, filled out the picture on October 1, 1990:

Information was obtained that Mr. Mahoney has a cabin at the west end of Louisville Park. [The source] also stated that some sexual activities may have occurred there. He stated Harold Andersen was real close with Gene Mahoney and his name had come up on several occasions. The name, Nate Foley*, was mentioned. He stated he knew for a fact that Gene Mahoney had propositioned him in the past and showed him some photos. ... [He] informed this writer that Mr. Foley did get very upset at the time when he was propositioned by Mr. Mahoney. He also stated that possibly Mr. Foley did get a promotion to keep his mouth shut about the incident.

Mahoney was notorious, as Game and Parks Commissioner, for surrounding himself with good-looking young men. On March 16, 1990, Caradori recorded a description of Mahoney's travels, by a former pilot for the Game and Parks Commission, who used to fly him around:

During his time with the Commission, he stated that Eugene Mahoney always traveled with young individuals, i.e. late teens or early 20s. ... Whenever Mahoney would travel, especially with his aides, they always had to stay in the same room or cabin with Mahoney. He stated that on numerous occasions Harold Andersen had also traveled with Mahoney, which may have been to promote the State Games [sic] and Parks Commission, and also for fundraisers.

Said the February 22, 1990 confidential informant, about Mahoney's ongoing activities:

This park isn't quite done but it's got a major residence in there with an apartment above and below. Mr. Mahoney to this day, you know he's not affiliated with the Game Commission, lives in the upper half when he's around. The lower half, lo and behold, has a beautiful blond, blue-eyed young male there that Mr. Mahoney found at about 18 or 19 years of age. And he is kept there at state expense. He's the highest priced park superintendent in the state even though when he came in there he had absolutely no credentials. He'd never worked in a state park and didn't know anything about managing people or the wildlife or anything.

On March 16, 1990, Caradori reported the observations of another source:

He went on to state that Mr. Mahoney did like to cater to teenage boys and had participated in many outings with various groups of teenage kids, such as the Boy Scouts.

With the help of Harold Andersen and Lincoln Journal-Star publisher Joseph Seacrest, over a two-year period, Mahoney raised more than $10 million for the new Mahoney State Park. According to Caradori' s confidential informant, "There's an assumption that there's some Franklin Credit Union money that went into that place." To identify where the park money came from, he said,

the place to start quite simply in any state area is to drive through them and record the names off the cabins. Mr. Mahoney has this fetish about naming cabins and outhouses and pavillions and things after his friends. Everything is the Harold Andersen this, V.1. Skutt that. And obviously those are the people who probably helped funnel money for that particular project, or something in that park anyway.

Mahoney's political power and his role as a darling of the Ak-Sar-Ben crowd were captured in a December 7, 1989 article in the World-Herald:

Gov. Orr and Sen. J.J. Exon, who have been at odds politically for 20 years, were on the same side Wednesday in pushing the election of Eugene Mahoney to the Omaha Public Power District Board.

Mahoney, who was appointed Nebraska Game and Parks Commission director when Democrat Exon was governor and who was appointed by Republican Gov. Orr to the OPPD post, said he reluctantly would seek election to the post next year. "I really hate campaigning," said Mahoney, a former state senator from South Omaha.

He said he had planned to serve out his term and not seek election, but was talked into running by a group of prominent businessmen who were the hosts of a Wednesday reception.

Among those paying tribute to Mahoney at the $100-a-person fund-raiser at the Cloud Room at Kiewit Plaza were Walter Scott, Jr., chairman of Peter Kiewit Sons' Inc., Mike Yanney, president of America First Cos., Attorney General Robert Spire, and Mayor Morgan.

The crowd of more than 210 at the event, which raised more than $40,000, included corporate leaders, South Omaha businessmen, former Mayor Eugene Leahy and former Sen. Dave Kames, R-Neb.

"I've never seen anything like it in my life," said Yanney, a frequent sponsor of political fundraisers. "The great thing about Gene is he crosses all party lines and he does it with dignity. Gene Mahoney is one of the great men in this community and this state."

Scott said, "Gene is a good hunter, a good fisherman, and a good sportsman. I'm grateful to have a man like that take on a specific post like OPPD."

In September 1991, Eugene Mahoney was crowned King of Ak-Sar-Ben.

[admin]

Part 2 of 2

***

As essential to Franklin as Andersen's fundraising and publicity were, the credit union could not have functioned for a single day without the complicity of Nebraska's largest bank, FirsTier. Before coming to Franklin, Larry King had been a management trainee at Omaha National Corporation, one of the institutions that merged into FirsTier in 1984.

Every dollar that went into Franklin Credit Union -- the missing $40 million was no exception -- went into its account #153 7-353 at FirsTier.

"There would sometimes be a million dollars coming in in the morning and a million leaving in the afternoon," said one person familiar with the investigation. "The amounts were astounding, and remember this is a $2.6 million credit union. There is no conceivable way in the world that FirsTier was not fully aware of what was happening, as far as gross irregularities."

FirsTier would cover for Franklin when the credit union overdrew, as one disgruntled FirsTier official told former Franklin employee Noel Seltzer. Senator Chambers charged in early June of 1989, that the large volumes of Franklin transactions, occurring in such short periods of time, should have raised suspicions about the nature of its business.

This was just business as usual, protested the officers of FirsTier. Bank Vice President Donald Petersen told the Lincoln Journal on June 5, 1989, "Franklin Credit Union had a commercial account with FirsTier Bank Omaha that was no different from our standpoint than other commercial accounts. We clear incoming and outgoing items for our customers, but the customer is ultimately responsible for each transfer in their account."

During Franklin's heyday, the board of FirsTier Bank and FirsTier Financial Services was a who's who of the Omaha business community. On it were pedophile Alan Baer and Knight of Ak-Sar-Ben Walter Scott, Jr., the Kiewit Construction chairman who was known in the business community as "one of the real powers" in FirsTier.

***

Donations to Franklin through the Union Pacific Foundation made the Union Pacific Railroad one of Larry King's biggest corporate backers. Its individual leaders, like former Union Pacific Chairman John Kenefick, deposited funds at Franklin.

According to reports out of Omaha's homosexual community, the old Harriman family railroad overlaps other areas with King. "The company is well-known for two things at the top: homosexuality and freemasonry," said one knowledgeable person.

Is there a tradition or obligation of homosexuality among top Union Pacific executives?

The Legislature's Franklin committee heard testimony from a former Franklin employee, implicating two Union Pacific executives in the recruitment of "young kids for Larry King's friends." Robert Andresen, the pedophile whose brutality was so heavy-handed that even the Douglas County jury mentioned (but did not indict) him, worked for Union Pacific.

So did the foreman of the grand jury! The Douglas County panel was headed by citizen Michael Flanagan, an employee of Union Pacific Railroad for 27 years. Given that Union Pacific personnel were implicated in the matters under consideration, there would have been a conflict of interest for any UP employee sitting on the grand jury. In the case of Flanagan, there was more to it than that.

In the summer of 1990, while the Douglas County grand jury was sitting, I received a call from a person who identified himself as an executive at Union Pacific headquarters in Omaha. He declined to give his name, saying, "I am too old to start over. I have too much vested in a good salary, position and pension. But I do not feel I can sit idly by."

He defended Union Pacific as a company that was good to its employees and, he thought, good for the country. But it had been taken over by a homosexual element, which tolerated, condoned and encouraged a code of sexual conduct he felt was abhorrent. Even this would be no one's business, he said, unless it was being imposed on people, using the power of UP in Omaha and Nebraska.

At first, I thought the man might be trying to make an issue of some minor homosexual relationship, and I told him I was not interested in "bashing" homosexuals. I said that I didn't care what adult men did with their sex lives, so long as they do not abuse and hurt children. I could have told him, but I didn't, that my own brother had died of AIDS in California just the year before. My brother was a homosexual; he was also one of the best human beings on the planet.

My caller's carefully chosen words quickly dispelled the notion that he meant insignificant incidents, and led me to ask, "Are you talking about the head of Union Pacific, Mr. Walsh?" While the information he provided satisfied me that my concern about Walsh might well be valid, the caller made it clear that this was not the immediate point of his contacting me.

What he had to say, was that the foreman of the grand jury had committed impropriety of such a nature and degree, that Union Pacific had to reach a private financial settlement to protect him.

"I believe if you will check out a former very young male Union Pacific employee named Pike*," said my caller, "you will discover that Mr. Flanagan made improper sexual advances upon him, and he complained to Union Pacific officials. A financial settlement was reached by Union Pacific and the young male individual was paid a substantial sum of money by Union Pacific to keep quiet, go about his business, and find other employment."

I began to investigate, and found the facts accurate. Here is how they were summarized in a lawsuit, filed by me on behalf of Paul Bonacci:

The Grand Jury Foreman, Michael Flanagan, should not have been allowed to be Grand Jury Foreman because he himself, Michael Flanagan, had been recently involved in an incident in which he, Flanagan, was accused of pandering and in which he, Flanagan, and his Company, Union Pacific, had reached a civil settlement to suppress such incident and satisfy the demands of the individual making the complaint against him. Thus, the Grand Jury Foreman was being literally asked to indict other individuals whom Bonacci was identifying for the very things that he, Flanagan, had been accused of and reached civil settlement to avoid like indictment and prosecution.

Through Flanagan, the suit also charged, Union Pacific was directing the grand jury:

Further, Flanagan himself violated his Grand Jury duties by sharing Grand Jury information with other individuals, including lawyers and others he met with on a regular basis almost every day following Grand Jury proceedings at Union Pacific Headquarters in Omaha, and receiving advice and guidance from them on how to proceed in the Grand Jury proceedings and providing them information on the supposedly secret Grand Jury proceedings themselves.

***

One of King's earliest boosters was the wife of a man with an unrivaled reputation for shrewd investments -- Warren E. Buffett, chairman of Berkshire Hathaway. Based in Omaha, Buffett is the second biggest stockholder in the Washington Post and a controlling power in ABC TV. In 1991, he acquired large blocks of stock in American Express and Wells Fargo Bank. When Salomon Brothers faltered in August 1991, the owner of 13% of its stock -- Buffett -- stepped in as interim chairman. With $4.4 billion to his name, Buffett is ranked by Fortune magazine as the 24th richest man in the world, and in the United States is among the top five. In Omaha, the Buffett mystique gains from the fact that there are two hundredsome "Buffett millionaires," who made their fortunes by investing through Buffett's Berkshire Hathaway.

Buffett favors the multiplication of money, but not people. He contributes to groups advocating radical population reduction. His Warren Buffett Foundation lists hundreds of thousands of dollars in grants to Negative Population Growth, the Association for Voluntary Sterilization, Planned Parenthood, the Population Council and Population Institute, the Sex Information and Education Council, and Federal American Immigration Reform. Negative Population Growth members, according to the group's literature, "believe that a drastic reduction in total population size represents the only viable option consistent with human survival." NPG wants the United States, and then every country, to enact programs to drop the U.S. and world population to one-half its present levels within 90 to 100 years. Buffett contributes approximately 7% of NPG's total budget.

Language about Buffett, and his own, abounds with references to his "cult." A 1991 Washington Post write-up of his annual shareholders' meeting quoted guests along those lines: "It's like worshipping at the altar of the high priest of finance. ..."; "He has a very large, cultish following." Buffett himself has called his management staff "magicians." Said Steve Forbes of Forbes magazine, talking to National Public Radio about Buffett, "He's not Moses, but they read what he says as if it were written on tablets. ... Buffett's economic forecasts are more listened to, than Papal Encyclicals or the State of the Union message." In 1974, when stocks were at a low, Buffett told Forbes he felt "like a sex maniac in a harem," wanting to buy.

On November 8, 1991, the Wall Street Journal trumpeted in a two-page spread on Buffett as "the Oracle of Omaha," that his "folksy image belies a killer instinct."

Backing from Buffett's socialite wife, Susie, came early in the rise of Larry King. Susie Buffett was a volunteer at the credit union in its early days. According to the Lincoln Journal-Star of March 19, 1989, King "liked to tell the story of a woman coming to the credit union to see him and being told to return at 7:00 the next morning because he was so busy. The woman was Susie Buffett, wife of billionaire Warren Buffett, and she did come back to offer her help at the credit union."

For years, it has been part of Larry King lore in Omaha, that the Buffetts hosted a tenth wedding anniversary party for him and Alice. James Traub's December 1991 Gentlemen's Quarterly article served as a platform for Warren Buffett to deny he had a role in that affair, and to insinuate that perhaps the party never happened: "In 1978, King asked Susan Buffett if she would be willing to host his and Alice's tenth-anniversary party at her house. ... Susan said yes, but her husband said no."

Paula Albert, a close researcher of the Franklin scandal who has interviewed several people who attended the anniversary party, commented that the Buffett/Traub account was carefully worded. Buffett avoided an outright assertion that the party didn't take place, but "you'd be left with the thought that it never happened, if you didn't know anything."

Buffett told Traub, "I knew that King was a phony. ... It was like he had a big sign on his head that said, 'PHONY, PHONY, PHONY.'" These protestations prompt the question, why, if Buffett saw so clearly that Larry King was a fraud, he did not alert his friends at FirsTier, or the World-Herald. Buffett is a director emeritus of one of the institutions that merged to become FirsTier, and he served on the World-Herald board.

Larry King returned favors, by hosting a fundraiser for Buffett's son Howard, when Howard ran for Douglas County commissioner. Warren Buffett may have done some more private socializing with Larry King, if a former Omaha city employee is correct in his report, that when Larry King was crowned "Queen" at The Max gay bar, Warren Buffett was his escort. "This is what his cousin Barbara Webb told me," said the source. "She said the people, they were mad, because Larry brought his son and his wife there."

The Wall Street Journal feature reported that Warren and Susan Buffett have lived apart for thirteen years, although they attend official functions together. Buffett shares his home with a companion named Astrid Menks, "alternating his time between the two women." According to the Journal, Buffett met Menks in 1977, when Susie brought her home from the nightclub where Menks was a waitress -- the French Cafe.

***

Buffett and King shared an interest in Boys Town, which to many Americans evokes the 1938 movie starring Spencer Tracy as Father Flanagan, the priest with the heart of gold whose orphanage, Father Flanagan's Home for Boys, straightened out many an errant youngster. Known today as Boys Town, it is an incorporated village on the west side of Omaha, with extensive land and plush facilities, and an endowment of $460 million. The orphanage is therefore a major power in the Omaha financial world. It has begun a $25 million nationwide expansion program, and will have youth care facilities in seventeen cities by 1992. The chairman of its finance committee is Union Pacific's Michael Walsh.

In 1972, Warren Buffett executed a maneuver around Boys Town, which is not fully understood to this day. His own Sun newspaper ran a series of articles, that targeted Boys Town for having too large an endowment. The Sun wrote, "members of the board of directors of Father Flanagan's Boys' Home generally seem little concerned that the institution has amassed a net worth of more than $200 million while going to the public twice a year with a plea of poverty." Of the cited $200 million, $175 million was the "liquid endowment."

Editor and Publisher magazine reported on March 30, 1985, "The Sun papers in 1973 became the first weeklies to win the Pulitzer Prize for an expose of Boys Town. The story idea originated with Buffett, who also participated in its development and wrote a section of it."

The articles prompted a major shake-up and purge of personnel at Boys Town. Buffett is believed to play some significant role with the orphanage today, perhaps in his specialty-investment advice. All inquiry with Boys Town was referred to the in-house attorney for the orphanage, who, in answer to the simple question, "What is Mr. Buffett's precise role with Boys Town?" spent 25 minutes in two phone calls, not quite denying, but also carefully never confirming, that Buffett had a role with the facility. At any rate, Buffett has not complained lately about the size of Boys Town's endowment, although it is much larger now than it was in 1973.

Larry King was intimately involved with Boys Town. The institution came up repeatedly during the Legislature's Franklin investigation, and even earlier.

Foster Care Review Board Executive Director Carol Stitt's July 1988 plea to Attorney General Robert Spire, for an investigation of child abuse, included that youth care worker Kirstin Hallberg "told me about three youth at Boys Town who all reported inappropriate activities with Larry King of Omaha." On March 29, 1989, her colleague Burrell Williams told investigator Jerry Lowe, "that on several occasions in the past he had heard of kids transported from Boys Town and the north Omaha Girls' Club to functions allegedly linked to King."

Boys Town youth care worker Julie Walters, when she interviewed the Patterson Webb girls in 1986, reported her findings about Larry King and Boys Town youth, to the orphanage's executive director, Father Val Peter. According to an FBI and Nebraska State Patrol interview with the girls' foster mother, Kathleen Sorenson, "Walters related Nelly's statements to Father Val Peter. ... Val Peter then stated that Boys' Town would conduct its own discreet investigation into Nelly's statements." Peter apparently did nothing, as Carol Stitt informed the legislature's Executive Board on December 19, 1988: "It has been brought to my attention that no such investigation ever took place."

The FBI/NSP brief on Sorenson's interview said:

Sorenson stated that an unspecified time in the summer of 1988, Julie Walters spoke to two prominent black males and one black female at Boys' Town confirming Nelly Webb's statements about Larry King. Sorenson could not recall the names of these individuals. The individuals were either employees or associates of Boys' Town. These individuals told Walters not to ask questions about King "because it could be dangerous."

King was highly visible on the Boys Town campus, because of his distinctive yellow Tojan car. On March 27, 1989, Jerry Lowe interviewed Julie Walters by phone:

Julie indicated that she subsequently had a conversation with Val Peter regarding the yellow Tojan including discussions that several Boys' Town teachers, including those as having the last names Barksdale, Wilson, and Gary, had been seen driving the automobile. Julie indicated that when she brought the matter of the Tojan up to Father Peter, that he had initially denied any knowledge of the automobile, however, later on indicated that it was his belief that Omaha people couldn't accept black male teachers at Boys' Town and blamed the information regarding the Boys' Town black male teachers driving the Tojan, on racism.

Suddenly I remembered something I had seen in Valis; it came into my mind visually: a tight shot of the car which Fremount at the end of the film, Fremount re-elected but actually now Nicholas Brady, had emerged from to address the crowd. "Thunderbird," I said.

"Wine?"

"Car. Ford car. Ford."

"Ah, shit," Kevin said. "You're right. He got out of a Ford Thunderbird and he was Brady. Jerry Ford."

"It could have been a coincidence."

"In Valis nothing was a coincidence."

-- "Valis," by Philip K. Dick

At least one reported driver of the Tojan, John Barksdale, was closely associated with Larry King. Barksdale worked at the credit union, as well as at Boys Town, and had been tapped by King to head up a planned nationwide expansion, known as Franklin, U.S.A.

In January 1988, Father Peter summoned Kirstin Hallberg. She submitted her notes on the discussion to Franklin investigator Jerry Lowe:

Father Peter called me (Hallberg) and expressed an interest in Loretta's case and said he felt that Boys' Town could offer her "a safe place to heal." When I commented that she probably wouldn't feel too safe if she saw "the yellow Tojan," he (Peter) said that he heard it had "been around" and then quickly changed the subject.

Under pressure, Peter once again promised an investigation. Julie Walters recalled, in her March 27, 1989 phone conversation with Lowe:

Julie indicated that she later learned that Val Peter had given an individual by the name of Dave Shanahan, who is the Director of Admissions at Boys' Town, the responsibility of conducting, what Julie described, as a staff practice investigation of the Tojan automobile and the accompanying references to Boys' Town personnel riding in it. Julie indicated that she was uncomfortable about Shanahan investigating this as she expressed the personal opinion that she does not trust Shanahan. Julie indicated that Shanahan was a white male in his early forties and a long time employee of Boys' Town and indicated if she had to describe Shanahan she would describe him as being an individual with a good ole boy mentality who was not interested in the truth as much as making sure that nothing of a negative nature involving Boys' Town came out of the investigation.

Walters was right -- honest investigations of Larry King at Boys Town were quashed, as Franklin investigator Karen Ormiston found out when she interviewed former policeman Alan Kupres, on August 14, 1990.

Mr. Kupres indicated that he had worked as a police officer for Boys Town for approximately three years. He stated that he had run the license plates on a vehicle which was registered to Larry King several times, but that his superiors had directed him to "leave it alone."

Alisha Owen, Paul Bonacci, and Nelly and Kimberly Webb all reported that King took boys from Boys Town for his pedophile activities.

Omaha author Steve Bowman, who is preparing a book on the Franklin Credit Union for release in 1992, discovered as he interviewed Boys Town grads, that King's activities there were scarcely anomalous. "You would keep hearing the same thing, over and over again," Bowman said of the graduates, many of whom were homosexually involved with Larry King. "They would invariably say, 'I first discovered my homosexuality during counseling at Boys Town.'"

The homosexual ambiance at the orphanage was featured in a novel, reported on in the August 27, 1989 World-Herald:

An Omaha native said his new novel describing a youth's painful upbringing in a boys' home, including many homosexual encounters, is based on his eight years at Boys Town. Jimmy Cheshire, 44, of Yellow Springs, Ohio, said in an interview that "Home Boy" accurately depicts life as he saw it at Boys Town from 1955 to 1963 when he graduated as class valedictorian. ... Cheshire said homosexuality was "rampant" at Boys Town while he was there. "Everybody I knew was involved in it. After graduation, no one talks about it," he said. "In my opinion, one third of the Boys Town counselors were pedophiles. The only reason they were there was because kids were there. A lot of kids were seduced". ... Cheshire said he did not find any adults at Boys Town who were "reliable." "There were some brutal people, some sick people," he said. "The children turned to each other for support."

Father Val Peter said of Cheshire's book, "Boys Town would never condone any activity like that, nor do we have knowledge of it. I think sex sells, like the National Enquirer."

Boys Town officials deny with equal vehemence, that Larry King was associated with their facility in any way. Evidence from Franklin Credit Union files contradicts them.

Working relations between the credit union and the orphanage were in order as of a December 13, 1979 letter from Franklin employee Joel Rogers, one of King's homosexual lovers, to Boys Town Deputy Director for Development William E. Ramsey: "Mr. King, Mr. Larson, and myself are appreciative of your visit yesterday, and look forward to working with you and the Father Flanagan Boys' Home." The extent of the planned collaboration is not known, but at one point Franklin was paid $15,000 to do a study on the relocation of people who lost their houses because of an expansion of Boys Town.

Boys Town boys could get jobs at Franklin. King hired Brandt Thomas*, a 1984 graduate, to work at the credit union, according to a July 5, 1983 report from Doyle and Carol Gillespie, Boys Town family teachers. They also noted that "Brandt has moved in with his employer, Mr. King." Thomas was still under care of the school, and his change of residence was sanctioned by the highest official at Boys Town, then-Executive Director Father Hupp. His March 26 1983 letter to Brandt's mother, Lila Thomas*, was summarized by legislative Franklin committee researcher Jose J. Soto: "This letter from Father Hupp advises Brandt's mother of steps to take before Brandt moves in with Larry King." Hupp even attended the party King threw for Thomas, after the boy moved in.

Two and a half years later, Nelly Webb was to tell Julie Walters, that King frequently took Thomas around with him to serve as a homosexual prostitute.

By the time Franklin Credit Union met its fate, Boys Town had deposited, or planned to deposit, one million dollars in the credit union!

***

If his liaison to Boys Town were insufficient for his purposes, Larry King had the Omaha Girls Club as a hunting ground. Victim-witnesses consistently said both institutions were tapped by King to find candidates for sexual abuse. In an April 14, 1989 report, Jerry Lowe summarized what he heard from Loretta Smith:

Loretta furthermore told Carmean that many of the people who were taking the [pornographic] photographs were leaders of the north Omaha Girls' Club and included prominent people who used code names. When I asked Loretta what the code names were she indicated simple names like Mary, Jane, etc. She had told Carmean that doctors and lawyers were involved and when I pressed her on this she indicated at one of the photographic sessions she saw some files and someone said something to her about one of the men working in chambers.

Lowe wrote up, on May 8, 1989, observations from Nelly Webb:

Relative to the North Omaha Girls' Club, Cornelia indicated that she had heard that a couple of girls had slept with men who were somehow connected with the Girls' Club. ...

A week later, he learned from Kathleen Sorenson, that Nelly and Kimberly

talked about being at many parties at King's house on River Road and at another location. They were often taken to these parties at a moments notice. They said the parties were for very important people.

Caradori's investigation showed that King's control of the Girls Club was a matter of public record, for anybody who bothered to look. Checking the incorporation papers at the Secretary of State's office, Caradori discovered that the Girls Club was incorporated in December 1973, with Larry King as its president, "to promote. .. the health, social, cultural, vocational and character development of girls. ..." One of the three incorporators was Franklin officer Mary Jane Harvey, indicted with King for embezzlement there, and named by children as one person who transported them for sexual abuse.

Had such research been done by law enforcement at the time of the children's complaints, more could have been learned, about the "very important people" the girls saw partying with King. The stakes in keeping their identity under wraps were obviously very high.

***

The Omaha corporations that bankrolled Larry King and Franklin are also the major sponsors of youth organizations in Nebraska, such as Boys Club, Girls Club, Boy Scouts, Boys Town, Uta Halee Home for Girls, and others. These corporations donate millions of dollars per year to these organizations, as the annual reports of the recipients show. Many executives of these firms sit on the boards of the youth care facilities.

The donation of so much money and time would seem to indicate a great concern for Nebraska's youth. Key members of the Omaha business community, however, did nothing to help and plenty to wreck the Franklin committee's investigation into the sexual abuse, ritual torture, and murder of children.

Is it possible that some of these corporate leaders sit on the youth boards, for the same reason that Larry King founded the North Omaha Girls Club? Why, for instance, did the notorious pedophile Alan Baer join the board of the Boys Club? And after the extraordinary publicity over his pedophilia in 1989 and 1990, and his indictment for pandering, how is it conceivable that in 1991 Baer was still on the board of Boy's Club ?

Assume most corporate board members are not involved in child abuse. But judging by the behavior of the Omaha business community during the Franklin investigation, the ones who are guilty of such behavior enjoy toleration, or even protection, by the others.

***

These are the 1987 and 1988 boards of directors of the two FirsTier institutions. FirsTier was the bank Larry King's pilfered $40 million passed through, without anybody batting an eye.

FirsTier Financial, Inc.

1987

George P. Abel, Chairman of the Board, NEBCO, Inc.
Charles W. Durham, Chairman of the Board, Durham Resources
Perry E. Esping, Chairman of the Board, First Data Resources
John C. Kenefick, Pres. (ret.), Union Pacific Railroad
Walter Scott, Jr., Pres., Chairman of the Board, Peter Kiewit Sons
William C. Smith, Pres., CEO, FirsTier Financial, Inc.
Dale C. Tinstman, Chairman of the Board, Baton, Tinstman, Druhner
Neal E. Tyner, Chairman of the Board, CEO, Ameritas Financial Services
Milton E. Whitehead, Chairman of the Board, Whitehead Oil Co.
Michael B. Yanney, Chairman of the Board, America First Corp.

1988 additions

Michael H. Walsh, Chairman of the Board, CEO, Union Pacific Railroad
Robert H. Daugherty, Chairman of the Board, Valmont Industries

FirsTier Bank, N.A., Omaha

1987

Alan Baer, President, Alan Baer & Associates
Anne S. Batchelder, Secretary, U.S. Check Book Co.
John G. Bookout, President, Woodmen of the World Life Insurance Co.
Lawrence Comine, Jr., CBO, FirsTier Bank, Omaha
Roy Dinsdale, President, Dinsdale Brothers
Steven H. Durham, President, Durham Resources
Philip B. Fletcher, Pres. and CEO, ConAgra Prepared Foods
John R. Maenner, President, Maenner Co.
Martin A. Massengale, Chancellor, Univ. of Nebraska, Lincoln
Lloyd H. Mattson, Chairman of the Board, Industrial Chemical Laboratories
John D. Minton, V. Chair, Dep. CEO, Mutual of Omaha
Thomas N. Moore, Exec. V.P., FirsTier Bank, Omaha
David R. Parker, V.P., America First Corp.
Kenneth D. Power, V.P. and CEO, Northwestern Bell
A.J. Scribante, Chairman of the Board, ViTal Resources
William C, Smith, Pres. and CEO, FirsTier Financial, Inc.
Hugh L. Tinley, President Emeritus, Farmers National Co.
William F. Welsh II, President and CEO, Valmont Industries

Directors Emeriti

Edd H. Bailey, Pres. (ret.), Union Pacific Railroad
Thomas C. Quinlan, Attorney
V.J. Skutt, Chairman of the Board, Mutual of Omaha
Robert H. Storz, Chairman of the Board, Storz Broadcasting Co.

1990 addition

Howard G. Buffett

In 1981, Warren E. Buffett was on the board of the Omaha National Corporation, which merged with First National Bank of Lincoln in 1984, to become FirsTier.



An undated report from Franklin's Development Office cited Harold Andersen's fundraising for the credit union.



A letter to Larry King from V./ J. Skutt, then chairman and CEO of Mutual of Omaha, referred to lobbying for Franklin by Harold "Andy" Andersen.



Larry King wrote this memo to his staff about funds forthcoming from the Kiewit Foundation, associated with the Peter Kiewit and Sons construction firm.



In 1980, the Union Pacific Foundation informed Larry King of its latest grant. A handwritten note at the top instructs a Franklin employee to expedite the transaction.



According to this 1981 memo from Franklin Credit Union files, Boys Town, the famous orphanage,. planned to deposit $1 million with Franklin. Boys Town officials maintained that they had no connections with Larry King or Franklin.



Memorandum of a phone call to Joel Rogers, Franklin staffer and a homosexual lover of King, from a Boys Town official.