Court hearing involving huge bank fraud case is postponed; former investor hoping funds remain

LINCOLN, Neb. (Nebraska Examiner) — The first court hearing associated with what has been labeled one of the state’s largest bank fraud cases in history has been postponed to Tuesday.

State banking officials were scheduled to argue in court Thursday for an injunction against a financial adviser, Jesse Hill of Hickman, to freeze his accounts and prevent any destruction of records.

Hill is an associate of deceased Lincoln businessman Aaron Marshbanks, and the pair have been implicated in a bank fraud case involving more than $40 million in loans from more than 20 banks in Nebraska and Iowa.

Law firm needs time

At the last minute, the court hearing was postponed until Tuesday at 2 p.m.

Lancaster County District Judge Ryan Post extended a temporary injunction until then.

Court documents filed Thursday indicate that Hill had retained the Omaha law firm of Spencer Fane and that the lawyers needed more time to prepare for a hearing. Discussions are underway to agree on modifications to the current injunction, court files indicated, that would eliminate the need for a court hearing.

Multiple violations alleged

On Dec. 28,  the Nebraska Department of Banking and Finance obtained a temporary injunction against Hill and his investment firm, First SOJO Capital Group, pending a court hearing. It alleged multiple violations of the State Securities Act.

Among the claims was that Hill made false claims about Marshbanks’ assets and helped fabricate financial records that aided Marshbanks in obtaining millions of dollars of loans from banks, savings and loans and credit unions.

The Nebraska Attorney General’s Office, in its filing on behalf of state banking officials, said that, in fact, Hill and SOJO Capital never had financial accounts assigned to Marshbanks. The department also said that Hill provided false information after his financial records were subpoenaed in November.

Former investor shocked

A former investor with Hill told the Examiner on Thursday that he had great admiration for the financial adviser and that Hill had tripled the money he and his father had invested with a previous fund Hill managed.

The investor said he still can’t believe that Hill could be involved in a bank fraud.

“If I was to line up 100 people, he would be the last one I would think would do this,” said the investor, who spoke on the condition that his name not be used.

He said that his father stands to lose around $200,000 if no assets are left in SOJO Capital Group, a hedge fund launched in late 2021 that he described as only for “high asset individuals.”

Investment firm insolvent

SOJO, according to state banking officials, is now insolvent after suffering “catastrophic losses” at the beginning of 2022 when it  launched a “highly aggressive options trading strategy.”

The strategy, by the end of February, resulted in losses in two funds of 94% and 98% of their value, respectively, the banking department said. It prompted the resignation of the fund’s administrator, Piedmont Fund Services, over concerns about the investment plan.

Losses ‘only on paper’?

The former investor told the Examiner that he saw the last financial statement issued by Piedmont in March 2022. Hill, he said, explained that while the statement “looks like on paper that it’s zero (net asset value)” the losses were only “on paper” and “not real losses.”

“I took him at face value … he seemed to know what he was talking about,” he said. “As (more) things come out, it doesn’t look promising.”

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