Lawyers argue over who gets life insurance proceeds of dead Lincoln businessman

LINCOLN — Who deserves $3.6 million in life insurance proceeds: the family of a Lincoln businessman implicated in a multimillion-dollar fraudulent loan scheme, or the financial institutions ripped off by Aaron Marshbanks?

That question was argued Friday in court as the effort continues to resolve more than $34 million in claims against the Marshbanks estate made by banks, savings and loans and credit unions that loaned him money.

The collateral claimed by Marshbanks and his financial adviser in obtaining the loans was fictitious, and legal claims poured in to recover unpaid loans after Marshbanks was found dead inside his car in a downtown Lincoln parking garage in November 2022.

The official cause of death was a drug overdose, though Lincoln police said that a suspected suicide note was found.

Estate settlement moving slowly

Since then, the FBI and the Nebraska Department of Banking and Finance have investigated whether charges should be filed against any associates of Marshbanks, and the settlement of his estate has been slowly moving through the Lancaster County Court.

About $9.7 million in assets have been found so far to partially pay off the $34 million in approved claims still outstanding against the estate.

On Friday, arguments were submitted over who deserves to benefit from six life insurance policies, worth a total of $3.6 million, that Marshbanks took out in the years before he died.

In 2021, according to court records, Marshbanks named a family trust as the beneficiary of the policies.

Trust says creditors are paid first

Amy Jorgensen, an Omaha lawyer representing a special administrator appointed to round up assets and pay off creditors, said the trust clearly states that the trustee shall “pay the allowed claims” of the estate — the banks — prior to paying the beneficiaries, who in this case are Marshbanks’ wife and his four children.

However, the lawyer representing Jennifer Marshbanks, the widow, argued Friday that the trust was set up to benefit the family and that state law makes life insurance proceeds exempt from paying off creditors unless there was an explicit waiver of that exemption.

It is “discretionary” and not “mandatory” that the insurance proceeds can be used to pay creditors, said attorney William Lindsay of Omaha.

Because there was no “written assignment” allowing the use of the life insurance proceeds to pay creditors, the proceeds should go the family, he said, “the primary beneficiaries of the trust.”

Lancaster County Judge Holly Parsley took the case under advisement. It was unclear when she might rule.

Dozens of loans, dozens of LLCs

Investigators have said Marshbanks took out dozens of loans of up to $2 million and more from financial institutions in Nebraska, Iowa, Wyoming and Louisiana.

He invested in residential properties, primarily, renovating them and then renting them, under dozens of limited liability corporations he formed with names like 1 Chronicles 29:11 LLC which refers to a Bible verse, and Heavy Ventures LLC, which was set up by a Wyoming lawyer who specializes in cryptocurrency.

Millions of dollars in claims against the estate have been settled in cases where properties were put up as collateral.

A multimillion-dollar luxury home and “barndominium” complex Marshbanks was building east of Lincoln was purchased back by the bank that loaned him the money for it. It was sold, at a loss, to investors.