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November 10, 2010

New Albany cattle company under federal investigation

Eastern Livestock allegedly wrote bad checks, owes nearly $100 million

NEW ALBANY — A New Albany cattle company allegedly owing more than $94 million in unpaid livestock transactions is being investigated by federal authorities.

Eastern Livestock Co., LLC, which has headquarters at 135 W. Market St., is described on its website as one of the largest cattle brokerage companies in the United States.

According to the U.S. Department of Agriculture, on or about Nov. 3, Eastern Livestock began issuing unfunded checks to producers for livestock purchased by Eastern. Numerous checks written by Eastern started being returned as “Refer to Maker” and later as “Insufficient Funds,” according to the Livestock Marketing Association.

The Grain Inspection, Packers and Stockyards Administration, which is part of the U.S. Department of Agriculture, sent investigators to the facility after receiving complaints about the returned checks.

“Currently, GIPSA has investigators at Eastern Livestock,” Jay Johnson, director of the agency’s regional office in Des Moines, Iowa, said on Wednesday. “There appears to be a significant amount that is owed for cattle to sellers in several states. The amount unpaid likely exceeds $94 million.”

No charges have been filed so far as a result of the investigation.

Fifth Third Bank, which reportedly claims a security interest in all of Eastern Livestock’s assets, filed a lawsuit Wednesday morning in Hamilton County, Ohio, where the bank’s headquarters are located, according to the Livestock Marketing Association. The bank reportedly filed a motion for a temporary restraining order and permanent injunction and for the emergency appointment of a receiver. A summons was issued for Eastern and its owner, Thomas P. Gibson.

According to Eastern’s website, the company began in the 1950s when Thomas Gibson began buying and selling cattle with his grandfather. He joined with his brother, John, who began expanding their business over the next couple of decades. The brothers formalized the business in 1982 in Louisville and later opened its headquarters in New Albany. Eastern Livestock now has branch facilities in 11 states throughout the country.

The company purchases cattle at auction and then sells them to feed lots where they gain weight and are prepared for slaughter.

A woman who answered the phone at Eastern on Wednesday said no one at the company would be available for comment.

Producers who have not received payment due from Eastern are encouraged to call GIPSA at 515-323-2579 for information on financial protection and for forms necessary for filing a bond claim, which must be filed within 60 days from the date of transaction.

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