Bernie Madoff of cows value traders $100M in ‘Ghost Cattle’ Ponzi scheme: swimsuit | EUROtoday

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A Kentucky cattleman allegedly conned dozens of traders out of $100 million with guarantees of non-existent “ghost” cattle and the income from their slaughter earlier than taking his personal life.

Now, attorneys, investigators, his alleged victims, and his grieving household have been left to select up the items.

On Thursday, attorneys Mark Bryant, Emily Roark, and David Bryant of Bryant Law Center, Ron Parry of Strauss Troy, and William F. McMurry of William F. McMurry and Associates have filed a category motion lawsuit on behalf of residents in Kentucky who, they allege, have been defrauded in a cattle funding Ponzi scheme.

The lawsuit accuses Community Financial Services Bank, RABO AgriFinance, and Mechanics Bank of enabling the scheme by offering monetary backing and ignoring “clear signs of misconduct, causing devastating financial losses for dozens of Kentucky investors.”

About six years in the past, Brian McClain started in search of traders for his cattle enterprise. According to Turningwho spoke to sources aware of the scheme, McClain provided a “guarantee” of a 30 p.c return on their funding.

Brian McClain, a cattleman in Kentucky, allegedly carried out a multi-year Ponzi scheme involving “ghost” cattle. Since his 2023 death, investors and creditors have been scrambling to recover their losses

Brian McClain, a cattleman in Kentucky, allegedly carried out a multi-year Ponzi scheme involving “ghost” cattle. Since his 2023 loss of life, traders and collectors have been scrambling to get well their losses (Getty)

The cattleman operated a trio of companies: McClain Feed Yard Inc, McClain Farms Inc, and 7M Cattle Feeders Inc. He used his companies to mixture cattle from numerous sources — together with rodeos — all through Kentucky, the southeast U.S., Texas, and Oklahoma.

His corporations would then ship the cattle to places in Kentucky or Texas, the place they’d be handled for any excellent medical points and grown for slaughter.

He did have cattle. Some of his traders — his early traders — did revenue. But, in response to a brand new lawsuit, these early traders have been paid with money infusions from newer traders. It was, allegedly, a Ponzi scheme, comparable in construction, if not scale, to the large $4 billion one famously waged by Bernie Madoff.

McClain’s operation started to unravel in February 2023 after he reported his December cattle stock of greater than 88,000 head had fallen to only beneath 38,000 head. RABO AgriFinance, his lender, reportedly, turned suspicious of that declare and ordered a listing examine.

On April 4, a Rabo inspection discovered that “there were only 7,461 head of cattle in Texas and 3,094 head of cattle in Kentucky.”

Two weeks later, Chris Ward, a particular ranger for the Texas and Southwestern Cattle Raisers Association, traveled to McClain’s 7M property on the evening of April 18, 2023, to research McClain’s lacking cattle.

When he arrived, he knew immediately that the numbers have been off.

Phony financier Bernie Madoff pled guilty in 2009 admitting that he used his wealth management business to create a massive Ponzi scheme which enriched himself, his family and others. He was sentenced to 150 years, and died in prison in 2021.

Phony financier Bernie Madoff pled responsible in 2009 admitting that he used his wealth administration enterprise to create an enormous Ponzi scheme which enriched himself, his household and others. He was sentenced to 150 years, and died in jail in 2021. (AP)

“I don’t remember what the exact count was, but it was very obvious, from what he was supposed to have there, that he — those weren’t there,” he informed WPSD. “We’re expecting to see thousands of cattle, and there were not thousands of cattle there — that was obvious.”

McClain died by suicide on the identical day.

At least 102 collectors from 14 states, together with Texas, Kansas, Kentucky, Iowa, and Oklahoma, in addition to traders from Alberta, Canada, are owed cash by the businesses McClain managed. Both of these corporations and his feed yard at the moment are closed, in response to the Southwest Ledger.

The class motion swimsuit filed Thursday alleges that “RABO AgriFinance extended over $70 million in credit to McClain despite internal concerns about his poor recordkeeping, inability to verify cattle ownership, and other ‘red flags.'”

It additionally accuses Community Financial Services Bank, McClain’s native financial institution, of allegedly allowing “more than 100 days of overdrawn accounts, often by more than $1 million” and failing “to act despite clear signs of suspect intercompany transfers.”

“Mechanics Bank, working closely with RABO, is accused of knowingly participating in a pattern of massive overdrafts and transfers,” the criticism says. “These actions, the suit contends, enabled McClain to sustain the illusion of a profitable cattle operation while diverting new investor funds to pay earlier ones.”

Mark Bryant, the founding father of Bryant Law Center, mentioned the swimsuit was “about fairness and transparency.”

“Innocent, hardworking Kentuckians were misled and financially harmed by a system that prioritized profit over people. We believe the law is on their side.”

In an announcement to The IndependentRabo AgriFinance mentioned:Rabo AgriFinance remains strongly committed to providing financial solutions to U.S. cattle producers, feedlots, and processors. As the legal process unfolds Rabo AgriFinance will refrain from commenting further.”

Investors have been left scrambling within the wake of McClain’s loss of life and the information of his alleged fraud.

Kent Rise, an legal professional and licensed public accountant in Texas, was appointed to handle McClain’s former companies and to work to get well funds for the aim of paying again McClain’s collectors.

That consists of promoting McClain’s belongings and submitting litigation.

Ries recounted his go to to certainly one of McClain’s corporations to WPSD.

“These two facilities were just — they had no real office. I mean, I literally put my foot through the floor of this crummy little office I walked through because it was so poor. The pens were rusted and falling down. You know, for a place that had just gotten a loan a few years before from RABO of $50-plus million, I was pretty stunned that the facilities were in such lousy condition,” he informed the outlet.

Ries has been important of RABO AgriFinance and three different banks who, he argues, didn’t do sufficient to detect McClain’s alleged Ponzi scheme.

In March, Ries filed a criticism within the U.S. Bankruptcy Court for the Northern District of Texas alleging that the banks knowingly or negligently enabled a Ponzi scheme. He accuses the banks of fraudulent financial institution transfers and a scarcity of oversight that allowed McClain’s alleged scheme to proceed for years. HTLF Bank, Mechanics Bank, and Community Financial Services Bank, together with RABO, are named because the defendants within the lawsuit.

The Independent has requested remark from the defendants.

“Rabo ignored countless red flags during the loan application process and ignored many more red flags when it repeatedly extended and increased the Debtors’ supersized line of credit — even sidelining a discerning credit officer to keep funding McClain’s Ponzi scheme — while at the same time receiving millions of dollars of interest, fees, and principal payments from the Debtors,” the criticism reads.

https://www.independent.co.uk/news/world/americas/crime/cow-investors-ponzi-scheme-cattle-b2787482.html