Eastern Livestock executives plead guilty in federal court
By Amanda Loviza Vickery Glasgow Daily Times, Glasgow, Ky.
Guilty plea agreements have been fi led in a federal case involving 2 Eastern Livestock, LLC, executives, more than a year after they were indicted.
Thomas P. “Tommy” Gibson and Michael Steven McDonald pleaded guilty in Decem- ber to 1 count of mail fraud in U.S. District Court. Gibson and McDonald were indicted on Sept. 21, 2011, for a 6-year scheme to artifi cially infl ate Eastern Livestock bank accounts through check kiting. The check kiting scheme came to a head in Kentucky on Nov. 2, 2010, when Fifth Third Bank closed Eastern Livestock’s account and the company issued nearly $850,000 in cold checks to local farmers at the Edmonton buy- ing station. Gibson and McDonald, along with Grant Gibson and Darren Brangers, were also indicted in September 2011 in Metcalfe County Circuit Court for charges of criminal syndication and theft by deception. All 4 defendants entered guilty pleas in Met- calfe Court in March, and Tommy Gibson and McDonald’s federal case was passed until after the circuit court sentencings were fi nalized in June.
After initially pleading not guilty in the federal case, Gibson and McDonald fi led their pleas of guilty in a change of plea hearing on Dec. 13. In the plea agreement fi led the same day, Gibson and McDonald acknowledged their guilt and waived any rights associated with a trial. As part of the plea, the defendants agreed to forfeitures of multiple accounts.
Brian Butler, Gibson’s Louisville defense at- torney, said his client never intended to hurt anyone, and they are glad the case is now making progress.
“He’s taken full responsibility for what’s hap- pened,” Butler said.
if they have a bonded custodial account for shippers’ proceeds. A bonded custodial account is a bank account separate from the order buyer’s own money. Proceeds received on the sale of cattle go into this account, and sellers are paid from this account. The order buyer must keep his or her own personal money sepa- rate. By doing this, the proceeds of cattle sales are not considered part of the order buyer’s “funds” and are not subject to liens of their creditors. The P&S Act requires certain
cattle buyers, like licensed mar- ket agents, to maintain custo- dial accounts. However “dealers” who may be buying cattle for themselves or as an agent for someone else are not required to have a custodial account. Ba- sically, this means money from the proceeds of a livestock sale or purchase are not required to be kept separate from the dealer’s funds. Since the funds are not kept separately, they are subject to liens of creditors. “A bonded custodial account
is the same type of account that livestock markets have. Most or- der buyers don’t have it, but if I was dealing with a buyer I didn’t know, he would have to have it,” Odle says. “To me, that’s a big deal. If they didn’t have it, I would require a wire transfer before the cattle leave. “You have to ask your order
buyer if he has this type of ac- count. It’s not a requirement of P&S, but it should be. That would prohibit the bank from coming in and offsetting the account.” The National Cattlemen’s Beef
Association (NCBA) recommends asking a buyer if he is regis- tered with the Grain Inspection,