Eastern Livestock Co., a cattle buying brokerage firm operating out of New Albany, Ind., recently bought cattle with checks that were returned to farmers marked refer to maker or insufficient funds.
Farmers can file a claim against Eastern's bond, but according to the United States Department of Agriculture, the company's bond amount is only $875,000. With over $130 million dollars owed to producers by Eastern nationwide, that wouldn't be a drop in the bucket in recouping the amount of the bounced checks.
Company Being Investigated
Eastern has operations in 11 states, but buys and sells cattle throughout the continental United States.
The company is being investigated by the USDA Office of Inspector General, US Postal Inspection Service, the FBI, and the US Attorney's Office.
On Friday Nov. 19, 2010, the US Department of Agriculture's Grain Inspection, Packers and Stockyards Administration filed a complaint, charging Eastern with: failure to pay for livestock purchases; failure to pay for livestock purchases in a timely manner; and failure to maintain an adequate bond.
Kentucky Revokes Eastern License
Kentucky is the largest cattle producer east of the Mississippi River and Eastern operated a buying station in Edmonton. As soon as the federal government filed an administrative claim against Eastern on Nov. 19, 2010, the state's attorney general, Jack Conway revoked the company's license.
On Nov. 4, 2010, GIPSA deployed investigators to Eastern's Indiana headquarters, and also began deploying investigators to markets across the country that have been impacted by Eastern's failure to pay for livestock.
In addition, letters were issued to unpaid sellers encouraging them to submit a bond claim.
Kentucky Agriculture Commissioner Richie Farmers says he and the attorney general's office are working closely together, along with the federal government to assist in the investigation of Eastern. "Many Kentucky farmers are deeply upset," he said adding, "For many producers the amount of money is a significant part of their livehoods." According to the Glasgow, Ky., Daily Times Sunday newspaper, dated Dec. 5, 2010, farmers with returned cattle checks from Eastern should e-mail the Kentucky Attorney General's Office at: consumer.protection@ag.ky.gov or call 502-696-5300.
Bank Files Suit Against Eastern
Fifth-Third Bank of Cincinnati, filed a civil suit against Eastern Livestock in Hamiliton County, Ohio, on Nov. 9, 2010, and Elizabeth M. Lynch of Development Specialists, Inc., Cleveland, Ohio was appointed as receiver.
In the Dec. 3, 2010 issue of Progressive Farmer magazine, some of the farmers were interviewed who sold their cattle to Eastern at the Edmonton, Ky., buying station.
Gary Bell was one of those farmers and he says those in the local area that had checks returned shouldn't be lumped in with all of Eastern's unsecured creditors. "I tend to believe that prior to the time we sold our cattle, Fifth -Third Bank of Cincinnati possibly had already decided that this was going to happen and may have even frozen Eastern's accounts," he said. Bell added that he is more frustrated with the system than anything else. "How was this allowed to happen? How can a bank end up with proceeds from our cattle, when we weren't even paid for them."
Bell, who sold twenty steers for $14,000 at the buying station in Edmonton, Ky., on Nov. 2, 2010, says all he wants is his money and if he can't get that he would like to have his cattle back. USDA officials say the case against Eastern is being investigated as a criminal case.
David Keith - David Keith
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