State has distributed nearly $900,000 in restitution to farmers
FRANKFORT, Ky. (July 16, 2013) — Kentucky Attorney General Jack Conway and his Office of Special Prosecutions today announced the distribution of an additional $56,500 in restitution to victims who were swindled by the now-defunct Eastern Livestock. The state has distributed nearly $900,000 in restitution to Kentucky farmers who fell victim to a check-kiting scheme operated by top executives at the cattle brokerage, previously based in New Albany, Ind.
Conway’s office last week mailed checks totaling $56,537 to 35 farmers who were not listed in the original indictment of Eastern’s Chief Executive Officer and founder, Thomas “Tommy” Gibson, former chief financial officer Steve McDonald, and two other top executives, Darren Brangers and Grant Gibson. The average pro-rated restitution amount for the post-plea victims was $1,600. The farmers were not listed in the original indictment because they did not respond to numerous attempts to complete paperwork to register their losses. They contacted the Attorney General’s Office after the settlement and restitution was announced.
“I understand some people didn’t fill out the paperwork because they didn’t believe we’d ever recover any money,” Conway said. “With this payment, all of the restitution pursuant to the plea agreement has been paid out to Kentucky farmers swindled by Eastern Livestock. I appreciate the hard work of my investigators, prosecutors and support staff, as well as our state and federal partners, who helped bring this case to a successful close. We have worked hard to protect the interests of Kentucky’s farmers and to ensure that those responsible for this scheme were held accountable.”
Tommy Gibson and McDonald each pleaded guilty in March 2012 to all counts against them including, one count of criminal syndication, engaging in organized crime; 17 counts of theft over $10,000; 144 counts of theft under $10,000/over $500; and 11 counts of theft under $500. Criminal syndication is a Class B felony carrying 10 to 20 years in prison.
In June 2012, Barren-Metcalfe Circuit Judge Phil Patton sentenced McDonald, Grant Gibson and Brangers to court-ordered restitution of nearly $900,000 to cover all of the losses accounted for by the Attorney General’s Office in a September 2010 indictment. Both Gibson and McDonald faced additional federal mail fraud charges. Tommy Gibson is serving a six-year prison term, while McDonald is serving five years. Both face an additional two years of probation.
As part of their guilty pleas, Tommy Gibson and McDonald admitted to being part of an ongoing criminal collaboration of several people and/or entities between 2009 and 2010, the purpose of which was to commit on-going theft by falsely inflating the balances of Eastern Livestock bank accounts. By use of falsely inflated accounts and check kiting, Eastern and its principles continued to buy cattle from Kentucky producers with essential non-existent funds.
Following Eastern’s collapse, investigators and prosecutors with the Kentucky Attorney General’s Office, with the assistance of the Federal Bureau of Investigation (FBI), began to piece together the details of the ongoing criminal fraud that had sustained Eastern’s operations since at least 2009.
Much of this evidence consisted of tens of thousands of pages of records kept by banks that held Eastern’s accounts, particularly Fifth Third Bank of Cincinnati. The Attorney General’s Department of Criminal Investigations worked closely with the U.S. Department of Agriculture, Kentucky Department of Agriculture, Kentucky State Veterinarian Robert Stout, Federal Bureau of Investigation, U.S. Attorney’s Office – Western District and other agencies in completing the initial investigation.