LINCOLN, Neb. (Nebraska Examiner) – Nearly 14 months after the FBI searched Jesse Hill’s home and state regulators accused the Hickman financial adviser of fraud in helping a now-dead client scam banks for more that $30 million, no charges have been lodged against him.
The case, first reported by the Examiner, has been described as the state’s largest that involves bank fraud.
A year ago, a handful of banks filed civil lawsuits against Hill, alleging he provided fabricated financial statements that helped his client and friend, Aaron Marshbanks, get loans.
An FBI search of Hill’s rural home followed shortly therafter, and then the Nebraska Department of Banking and Finance went to court to freeze the financial adviser’s accounts and suspend his operations.
But those civil lawsuits are on hold, and nothing has come from the search or court injunction.
Parties involved in the bank lawsuits stated they were waiting for the conclusion of a federal criminal investigation against Hill. Indictments were expected in August or September.
Questions about delay
But those months have come and gone, leading to questions from those involved and those watching the case about what’s happening.
“I could use some information from the feds,” said Ed Hotz, an Omaha attorney hired to find any remaining assets in Marshbanks’ estate.
Marshbanks, a real estate investor who was a star athlete and later a school board member at Lincoln Christian High School, was found dead in his car Nov. 2, 2022, in downtown Lincoln.
Shortly thereafter, more than a dozen financial institutions filed claims against the Marshbanks estate, maintaining he left behind millions of dollars in unpaid loans — including several in which Hill provided allegedly fabricated financial statements showing, falsely, that Marshbanks had plenty of collateral.
A spokeswoman for the U.S. Attorney’s Office recently told the Examiner that the investigation into Hill was continuing but that she could not elaborate.
Hill’s attorney, Josh Dickinson of Omaha, said he was ethically barred from commenting on the ongoing civil lawsuits or federal investigation faced by his client.
Hill, 34, who grew up in Wayne and played basketball at the University of Nebraska at Kearney, has not returned several calls placed to him by the Examiner.
‘Looked up to him’
A friend of Hill’s, who spoke on the condition he not be identified, described him in a past interview as “very religious” and a good family man who was the last person he could imagine being involved in fraud.
“I looked up to Jesse. He was a smart guy,” the friend said.
Hill’s past investments had garnered great returns, the friend said, but two more recent pooled investments, called the Outlier Funds, tanked in early 2022, according to state regulators.
After the fund administrator for the Outlier Funds resigned and told investors the assets value was zero, the friend said Hill disputed that, saying it was only “paper losses.”
“The hope I’m holding out is that Jesse was telling the truth,” the friend said.
‘Process takes time’
A spokeswoman for the Nebraska Department of Banking and Finance, which filed suit in December 2022 to freeze Hill’s assets and seek funds to repay investors, said recently “that process takes time.”
Attorney David Skalka of Omaha, the receiver appointed on behalf of the banking department to find those funds, recently told the Examiner that he had identified nearly $900,000 in assets in accounts associated with Hill but that he is continuing to negotiate with other parties to obtain additional funds.
At this point, Skalka said that the funds he’s recovered would repay Hill’s former investors about 13 cents on the dollar.
The attorney added that he has no role whatsoever in the FBI investigation into Hill’s actions.
“I’m not any cog in that wheel,” Skalka said.
Hill fined, sanctioned in 2018
Hill was not unfamiliar to state finance regulators.
In October 2018, he was fined $5,000 by the state banking department and ordered to pay another $2,500 in investigative costs for selling securities that were not registered with the state and for not being a registered financial adviser.
Hill was also ordered to repay investors in his JT Equity Trading fund, which had amassed $4 million from 47 investors, according to state records.
Among the claims made in the banking department’s latest legal action against Hill is that he violated conditions of that 2018 consent agreement, which included complying with state securities laws.
As part of the investigation of the bank fraud, FBI agents searched Hill’s rural Hickman acreage on Dec. 12, 2022 — about six weeks after his client, Marshbanks, was found dead.
But nothing has come of that search since then.
The state banking department served a subpoena on Hill six days after the FBI search and then moved, on Dec. 26, 2022, to freeze Hill’s assets. Skalka was then appointed to find any assets to repay Hill’s investors.
Among the claims in the state banking department’s lawsuit were that “between March 11, 2021, and September 23, 2022, Marshbanks and Hill made fraudulent statements with at least 14 banks, securing over $20 million in loans.”
The lawsuit also maintained that Hill had signed 22 “control agreements” with banks attesting, falsely, that Marshbanks had upwards of $6 million in investments kept by Hill that could serve as collateral for the loans.
Catastrophic investment losses
But the accounts didn’t exist, the banking department charged, and the statements presented to the banks were fake.
Hill, the department alleged, also lied to his investors, maintaining that they had realized a 13% return on their investments when, in fact, almost all of their funds were gone.
The department’s lawsuit stated that Hill, in January 2022, launched a “highly aggressive options trading strategy,” that resulted in catastrophic losses of 90% of the investments. Twenty-four investors had provided more than $4 million for his Outlier Funds sold through his firm, First SOJO Capital Group.
What followed, the banking department said, was a suspicious fund swap between Marshbanks and Hill. In March, a limited liability company run by Marshbanks, Chronicle Holdings, provided $2.2 million to two investment funds operated by Hill. Six months later, Hill transferred the $2.2 million back to Marshbanks.
The state’s lawsuit indicated that Hill had been successful in generating profits for investors in 2020 and 2021 — Marshbanks, it was indicated, had invested $10 million with Hill and garnered $3 million in earnings.
But 2022 was different.
Hill’s investments cratered, and the state banking department alleged he had committed the same violations that had gotten him into trouble with regulators in 2018, pooling money from multiple investors in his personal account and using it to invest in securities.
The civil lawsuits filed against Hill, according to court records, indicated a year ago that a “federal criminal investigation” was underway based on the same allegations as in the lawsuits.
Civil lawsuits ‘should be stayed’
“Because of the adverse consequences attendant to invoking the Fifth Amendment privilege,” one lawsuit stated, “Plaintiff and Hill agree that this lawsuit should be stayed for six months to allow the criminal matter to proceed.”
That six-month wait ran out in August.
Hotz, who was appointed to search for assets left behind by Marshbanks, said he’s hoping a federal indictment comes soon.
The probate court has approved $30.5 million in claims against Marshbanks’ estate. Several million dollars in other claims were either satisfied and dismissed, settled without being totally satisfied, or rejected.
In some cases, homes purchased by Marshbanks, provided as collateral, were sold to satisfy debts to business partners and financial institutions.
A half-finished luxury home and “barndominium” he was building on an east Lincoln acreage was purchased by the bank that had loaned $2.5 million on the project. Last fall, it was sold to an investment group for $2 million.
It is a complicated search for any remaining assets to pay off a portion of the claims, Hotz said. Some money might have been invested in cryptocurrency, which is difficult to trace, and there are indications that some assets were held offshore.
Marshbanks’ investments in properties spanned the country, from Wyoming to Iowa, Louisiana and Puerto Rico.
The FBI, Hotz said, has investigative powers that he doesn’t have that might assist in discovery of more assets to eventually repay the financial institutions that issued the bad loans.
“We’re working away,” Hotz said recently. “But I could use some information from the feds.”
Bank claims against Marshbanks estate
Among the claims filed against the estate of Aaron Marshbanks that were allowed by the probate court:
Western National Bank, Chester $3.3 million
State Nebraska Bank, Wayne $3.1 million
Security First Bank, Lincoln $2.8 million
I3 Bank, Omaha $2.7 million
First Nebraska Bank, Valley $2.6 million
NFS Holdings, North Platte $2.6 million
City Bank & Trust, Crete $2.5 million
Home Federal Savings, Grand Island $2.5 million
Columbus Bank and Trust, Columbus $2.4 million
Lincoln Savings Bank (of Iowa). $2.1 million
Midstates Bank, Council Bluffs, Iowa $2.1 million
Charter West Bank, Omaha $2 million
Western Nebraska Bank, North Platte $1.8 million
Access Bank, Omaha $1.3 million
BTAM Enterprises, Lincoln $722,000
First State Bank, Ralston $714,000
National Bank of Commerce, Lincoln $500,000
Liberty First Credit Union, Lincoln $53,000
Nebraska Medical Center, Omaha $19,000
Among the claims either dismissed as satisfied, or dismissed as settled and partially satisfied:
United Republic Bank, Omaha $2.8 million
Pinnacle Bank, Omaha $2.7 million
Cattle Bank & Trust, Lincoln $65,000
Why so long?
Why could it take so long to charge Jesse Hill?
A trio of attorneys who have been involved in federal criminal cases suggested that it just takes longer to file charges in federal court than in state courts.
“The federal system is just the opposite of the state system,” said veteran litigator Vince Powers.
County prosecutors, Powers said, often get investigative reports quickly. Charges are filed, he said, and “then they work up their case.”
Federal prosecutors, Powers and others said, work the case and then file charges, often months later. “Even in obvious cases, it may take two to three years before they file charges,” he said. “U.S. attorneys are just very thorough.”
“There’s a reason they have a more than 90% conviction rate,” Powers said.
Former U.S. Attorney for Nebraska Tom Monaghan said federal prosecutors require more detail to present to a grand jury, which can take time.
In addition, he said, criminal prosecutions often take precedence over white-collar crime, thus diverting investigators.
A delay also might indicate there is a lack of evidence to charge Hill.
Overall, those interviewed said, unraveling a complicated, white-collar fraud case that involves assets outside the country can take extra time.
Nebraska Examiner is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Nebraska Examiner maintains editorial independence. Contact Editor Cate Folsom for questions: [email protected]. Follow Nebraska Examiner on Facebook and Twitter.
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