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May 21, 2013

2 Eastern Livestock officials sentenced to prison

Company once had downtown New Albany office


“It does not serve my interests or anyone else’s for Mr. Gibson to serve a lengthy sentence,” Byrd wrote.

Another business colleague, Linus A. Thornton of Savannah, Tenn., described Gibson as being well-known and thought of “from coast to coast” with a reputation for honesty in business dealings.

“The only way you accomplish this and continue to be in business this long is basically your word, honesty and character,” Thornton wrote.

Eastern Livestock, which had stockyards in 11 states, did business with ranchers in 30 states. The company mainly bought calves throughout the South and sold them to feed lots in big cattle states including Texas and Oklahoma where they are fattened for slaughter.

The indictment states that by inflating the amount of money in the company’s cash collateral account, the company could get Fifth Third Bank to release more funds from Eastern Livestock’s $32 million line of credit. The line of credit with the bank ended on Oct. 15, 2010, though the men are charged with continuing to kite checks against the account. Prosecutors said the scheme resulted in millions of dollars in worthless checks being issued.

Federal agriculture officials filed an administrative complaint against Indiana-based Eastern Livestock, accusing it of bouncing checks for livestock purchases and failing to maintain an adequate bond to cover its debts. The company owes money to about 740 ranchers in 30 states, according to the U.S. Department of Agriculture. Three of those owed money sued and forced Eastern into involuntary bankruptcy.

The bankruptcy is still pending in the southern district of Indiana.

“Our seizure of $4.7 million from the defendants has preserved a significant portion of the crime proceeds, which will ultimately be distributed to victims of the fraud,” Hale said. “Equitable disbursement of these funds to victims will be accomplished through a coordinated process involving two Eastern Livestock bankruptcy cases pending in the Southern District of Indiana, and the forfeiture action brought by my office in federal court in the Western District of Kentucky.”

The company’s accounts were frozen by a judge in Ohio, and USDA records show the company is bonded for only $875,000.

McDonald and Gibson were also sentenced to 10 years in state prison after pleading guilty to charges of fraud. Two other men, Grant Gibson and Darren Brangers, received five-year sentences that were probated pending the payment of more than $900,000 in restitution to victims.


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