Lawrence E. King Jr.

Even as the financial investigation was underway, a far more explosive scandal began to envelop Larry King Jr. in late 1988: allegations of a child prostitution ring centered on King and other prominent figures. Shortly after the credit union's collapse, rumors emerged that some of the missing Franklin money had been used to finance child sexual exploitation. In November–December 1988, Nebraska's Foster Care Review Board turned over to state lawmakers a dossier of reports alleging that children in foster care had been abused at parties attended by elites.^[9] These allegations, made by alleged victims, accused King of procuring and abusing children and hosting wild late-night "sex parties" at which minors were flown to various U.S. cities, "auctioned off" as sexual slaves, given drugs, and forced into illegal sex acts. By early 1989, dozens of prominent Nebraskans – businessmen, media personalities, police, clergy – and even national political figures – were being whispered about as possible co-conspirators, with King depicted as a central ringleader.^[10]

King categorically denied the accusations, dismissing them as "garbage" and claiming he was being framed.^[10] Nevertheless, the sensational reports gained traction. In response, the Nebraska Legislature in January 1989 established an investigative panel (the "Franklin Committee") to examine both the credit union's financial failure and the emerging child abuse allegations. State Senator Loran Schmit chaired the committee (with Senator Ernie Chambers as vice-chair), and it hired a private investigator, Gary Caradori, to dig into the claims. Law enforcement at multiple levels – local Omaha police, the Nebraska State Patrol, the FBI, and federal prosecutors – also opened inquiries into the alleged "Franklin child prostitution ring", as the case came to be known.

During 1989, Caradori and the Franklin Committee interviewed purported victims and witnesses. At least half a dozen young adults (most of them former wards of the state or ex-students of the Boys Town home) told stories of abuse at the hands of King and others. They claimed that as minors in the early-to-mid 1980s, they had attended lavish parties in Omaha and elsewhere where children were molested by older men, prominent officials, and businessmen. Some allegations went beyond abuse and included claims of ritual satanic abuse, drug trafficking, and even CIA-linked arms deals associated with the supposed sex ring. Media coverage of the Franklin case intensified in 1989 and 1990: local news outlets ran headlines about the "explosive" allegations, and in April 1990 The Washington Post dubbed the affair "Omaha's Hurricane of Scandal".^[11]

The Franklin Committee's investigation took a tragic turn in July 1990, when lead investigator Gary Caradori and his 8-year-old son were killed in a small-plane crash.^[12] Caradori's plane mysteriously broke apart in mid-air over Illinois as he was returning from a trip to collect evidence (he had reportedly obtained photographs said to implicate King)^{[citation needed]}. The wreck sparked immediate suspicion – Caradori's briefcase, allegedly full of new evidence, went missing from the crash site – and fueled theories that he had been murdered to suppress the investigation. Caradori's death, combined with anonymous threats on accusers, led several key witnesses to recant their stories in 1990. Both the FBI and Nebraska authorities came to view the allegations as potentially fabricated, and they warned witnesses that making false reports could lead to perjury charges.^[13]

In mid-1990, after hearing months of testimony, a Nebraska state grand jury (in Douglas County) concluded in July 1990 that the widely publicized tales of a child sex ring were unfounded. In a sharply worded report, the grand jury declared the affair a "carefully crafted hoax".^[14] A federal grand jury convened soon after and reached the same conclusion – in September 1990, it also found the abuse allegations to be baseless and agreed there was no organized child prostitution ring in Omaha. The grand jurors did not specify who they believed engineered the false stories, but they took the remarkable step of indicting two of the accusers for perjury. One of those indicted was Alisha Owen, a 21-year-old former foster child who had been one of the chief accusers claiming King sexually abused her. The other indictment remained sealed but was widely reported to be against Paul Bonacci, a young man who had also described being victimized. Owen was ultimately convicted of perjury in 1991 and sentenced to 9 to 15 years in prison. Her sentence was notably harsh for a perjury case, reflecting the court's view that the Franklin accusations had caused enormous harm to reputations. (Owen served over four years in prison before being paroled in the mid-1990s.) Paul Bonacci, the other main accuser, was indicted but never convicted of perjury; prosecutors dropped his case, possibly in exchange for his testimony. He later successfully sued King and won by default when King failed to provide a defense, which many speculated was to avoid incriminating evidence coming to light through court disclosure proceedings.

In 1992, former Nebraska state senator John DeCamp published a book, The Franklin Cover-Up, which fiercely criticized the official investigations and claimed that a political cover-up had hidden the truth of King's child exploitation ring. DeCamp's book (and later works by other authors) alleged that King's crimes went far beyond financial fraud, painting him as the linchpin of a nationwide child-trafficking network with links to Washington power brokers.^[15] These claims – which included lurid details of satanic ritual abuse and even murder – were never substantiated by any court or law enforcement agency, but they kept conspiracy theories about the Franklin case alive in some circles. A 1993 British television documentary (Conspiracy of Silence) that investigated the Franklin allegations was produced but never aired, which conspiracy proponents interpreted as further evidence of a suppression of truth. Meanwhile, mainstream journalists and scholars have frequently pointed to the Franklin case as an example of the "satanic panic" of the late 1980s – a period when sensational claims of ritual abuse and sex trafficking emerged in several communities, only to be debunked.^[10]

He served about 10 years of his 15-year sentence in federal prison (under parole guidelines of the time) and was released in the early 2000s. Upon release, King kept a very low profile, avoiding all publicity. He did not grant interviews about the Franklin matters, nor did he attempt to return to political or public life. In 1999, while King was still incarcerated, Paul Bonacci (one of his accusers) filed a civil lawsuit against him in federal court, seeking damages for alleged sexual abuse. King did not respond or appear in the case, and in default the judge awarded Bonacci a $1 million judgment in 1999, although this money was never paid.^[16][13] John DeCamp touted the outcome as a validation of the abuse claims, though it was a default judgment not tested at trial. A 2023 CNN report on the enduring mysteries of the Franklin scandal noted that King declined to respond to inquiries sent to him.^[5]