One of the founders of defunct cattle broker Eastern Livestock was sentenced Tuesday to almost six years in federal prison and the former chief financial officer was sentenced to nearly five for their roles in a $32 million check kiting scheme.
U.S. District Judge Thomas B. Russell also ordered company founder Thomas “Tommy” Gibson and CFO Michael Steven McDonald to two years of probation. Gibson and McDonald pleaded guilty to mail fraud in January.
Both men were charged with running a scheme to deposit billions of dollars worth of checks issued from various bank accounts, even though there wasn’t enough cash on hand to cover the checks. In doing so, the company got Fifth Third Bank to release more funds from Eastern Livestock’s $32 million line of credit.
“Gibson and McDonald caused widespread damage to the livestock industry and devastating harm to numerous individual cattle farmers in Kentucky and elsewhere,” U.S. Attorney David J. Hale said in a statement. “Many other businesses associated with the livestock industry were also damaged by the Eastern Livestock fraud. These lengthy prison sentences hold Gibson and McDonald accountable for their federal crimes.”
Former employees and business associates of Eastern Livestock in New Albany and Glasgow, Ky., flooded Russell with hundreds of pages of letters from around the country in support of Gibson. Many of the letters ask Russell for leniency, citing Gibson’s honesty as a businessman in dealing with them.
One person, L.E. “Jim” Byrd, owner of Oak Lake Cattle Company in Okeechobee, Fla., described himself as a victim of Eastern Livestock’s collapse. But, Byrd asked Russell to be lenient with Gibson and described business dealings with him as fair. Byrd blamed Fifth Third Bank, which handled the company’s line of credit, for honoring checks that weren’t backed by deposits.