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Ranchers Get Screwed

Mike

Well-known member
Ranchers still owed money


New owners: business practices are different

By Amy Bickel

The Hutchinson News




[email protected]

SOUTH HUTCHINSON - These days, rancher Leon Zoglman tries to forget about a bounced $36,000 check - about that day Feb. 7, 2006, when he loaded up 44 head of cattle to sell at a South Hutchinson sale barn.


But it still makes him a little sick to the stomach to think about how the bank told him his check from Central Livestock Corp. wouldn't go through - how the now defunct auction house closed its doors the next week and was being investigated by a government agency.

He had to borrow money to cover the loss. He spent months wondering if he'd see that money again and how it would affect his Cheney-area dairy and beef operation.

That was a year ago, and he's moving on, he said. It's all he can do.

"I've never had that happen in 35 years," the longtime rancher said. "I hope I never have to go through it again."

The Central Livestock debacle affected more than 100 ranchers and consigners, who either didn't get paid or received notice from their banks that the sale barn's owner didn't have the funds to pay them the more than $300,000 they were owed.

USDA complaint

Central Livestock, owned by Sterling resident Mac Frederick, closed Feb. 14, 2006 - the same week customers like Zoglman started encountering problems when they tried cashing checks from the sale barn.



Stafford rancher Alan Hildebrand pours mineral in a bunk for his cows Thursday morning. Hildebrand is one of several ranchers who lost money after he sold cattle in the Feb. 7, 2006, Central Livestock sale.

Ranchers began filing complaints with South Hutchinson Police Department as auditors with the Grain Inspection, Packers and Stockyards Administration - a division of the U.S. Department of Agriculture - began investigating the South Hutchinson business.

Officials filed a complaint with the USDA Jan. 16 and released it to The News on Thursday.

The case alleges:

* Between Sept. 30, 2004, and Feb. 21, 2006, Frederick failed to properly maintain the custodial account that held shippers' proceeds, therefore endangering the payment due to owners and consigners.



Cattle are auctioned at Central Livestock in December 2003.

* Frederick misused custodial funds and failed to properly reimburse that account. On four occasions between Dec. 30, 2005, and Jan. 31, 2006, Frederick transferred $230,500 in funds from the account to his own account to cover shortages in a company he created to purchase and sell cattle, Atlas Cattle Co.

* Frederick, doing business as Atlas Cattle, wrote $197,000 in bad checks for purchases he made from two sale barns and a rancher.

Past problems mirror similar incidents experienced by Central Livestock and its owner.

A complaint filed in 1999 with the U.S. Secretary of Agriculture showed financial problems associated with the auction market, which Frederick purchased in the mid-1990s. That complaint alleged Frederick also misused custodial account funds.

It also said Frederick used funds from livestock sales to pay on a bank loan rather than pay consigners, and, in an effort to correct the custodial account shortage of $130,837 that existed Aug. 26, 1998, Frederick gave investigators false information regarding his accounts.

Frederick never admitted to the violations but did sign a cease-and-desist order settling the complaint.

Meanwhile, in the recent case, ranchers received payouts from the sale barn's $75,000 bond - the minimum required by the USDA. A settlement reached in Reno County District Court in August paid another $250,000 to ranchers. According to the case filing, Frederick still owes livestock consignors $45,672.

Also, after payout from the Atlas Cattle bond, $44,328 remains unpaid by Frederick for livestock purchases.

John Barthel, regional manager of the Grain Inspection, Packers and Stockyards Administration's Denver office, said Frederick has 20 days after receiving the complaint to file an answer. Frederick could also ask for an extension.

It could take months for the case to go to hearing, Barthel said. Ramifications, if any, include civil penalties, sanctions and suspensions.

He said the agency would take into consideration any effort made by Frederick to rectify the situation.

Frederick told The News on June 6 that he was trying to repay his debtsusing a portion of the money - about $250,000 - from the sale of the auction house to twin brothers Ronald and Donald Jordan.

Most ranchers received about 90 percent of their money back after entering a class-action lawsuit filed by Hutchinson Attorney Stan Juhnke. A judge awarded the money in August.

Additionally, $32,707 from the sale went to pay back taxes on the property for the years 2003 through 2005.

Frederick also owed the Small Business Administration $650,000 for a guaranteed loan he received in 2003 from the Business Loan Center in New York City. SBA guaranteed 50 percent to 80 percent of the loan amount.

Frederick, however, won't face felony charges for his involvement. The News reported last summer that the livestock company faces six counts of failure to account promptly for the sale of livestock - a class C nonperson misdemeanor that carries a fine of $200 to $500.

Reno County Assistant District Attorney Ben Fisher said Kansas law prevented filing of harsher charges against the company and its president. Nothing has been done in the case. Frederick retained state legislator Terry Bruce as his attorney, and county officials are waiting for Bruce to finish the current legislative session.

Roughly 125 ranchers reported claims against Central Livestock, including Zoglman, who had the largest check at $35,868.

New business

On Feb. 7, 2006, Stafford rancher Alan Hildebrand decided to load up three head of livestock to sell at Central Livestock.

"Only time I sold there," he said.

It wasn't one of his best ideas, he said. His check for $2,164 bounced.

He received roughly 90 percent back through the lawsuit.

"That's what everyone says, it's better than nothing," Hildebrand said. "But it still comes up short."

He won't see the rest of that money, he suspects. All he can do now is move on.

So has the sale barn.

No longer is it Central Livestock. After the sale barn was closed more than three months, Ronald and Donald Jordan purchased the buildings and property, renaming it Hutchinson Commission Co. The first sale was June 6.

And in no way are the brothers connected to Frederick or Central Livestock, Ronald Jordan said, adding they are still trying to change that perception.

Some folks are spreading rumors Frederick still is involved, saying a truck parked outside the sale barn is his, Jordan said. That is not true, and a sale barn cafe employee owns the truck.

"Central Livestock closed in February 2006," Jordan said. "(Hutchinson Commission Co.) isn't even the same business."

The brothers made changes, too, including updating the facility and quickening the process for loading and unloading livestock, he said. They created a bigger hay market, and future enhancements include adding Internet auctions.

The Jordans continue to make their mark in the community in other ways, also. Ronald Jordan's wife, Karen, said she is opening a rustic furniture business in the old sub sandwich building near the sale barn. She also plans a monthly flea market for the sale barn parking lot sometime this spring.

In addition, both families are involved in Jordan's Center Cut Steaks N Grill, a food-vending endeavor that includes offerings like hamburgers and pork chops on a stick. Besides going to national shows and area auctions, the twins are taking the trade to local companies for lunch.

Meanwhile, Ronald Jordan said, the sale barn is filling a needed niche. And while livestock numbers aren't as big as they first expected, customers and sellers continue to increase each week.

Without the sale of the facility, he said, ranchers probably wouldn't have been paid.

And rancher Zoglman is glad to see the sale barn reopen, saying he's taken three or four loads of cattle to the sale in the past couple of months.

"Ronald, Donald, those guys seem to be really nice guys," Zoglman said. "They seem to be doing a good job. I haven't heard any complaints."

While he too, is moving on, he still thinks about that Feb. 7, 2006, day.

He still is short at least $6,000.

"It's still a bad deal," he said. "I still have hard feelings about it. It was money I should have had, all of us, not just me.

"I just happened to sell on a bad day."



02/10
 

Econ101

Well-known member
You can get in more trouble rustling a few head of cattle than the outdated and incompetent penalties that GIPSA has to work with. That is even if you "rustle" over $100,000.00 worth of cattle through an auction barn.

Our law enforcement provisions that are supposed to protect producers from abuses in the market are a total joke, as this case shows.

You have to wonder why the govt. spends any money at all on GIPSA when they are so ineffective at their stated purpose.

Why hasn't GIPSA worked on new regulations to increase fines/penalties to deal with current values of the dollar? It is because the Congressional oversight committee heads are being paid off by big business who don't want the threat of these fines/penalties.

In this case it seems to be a little operator. The interference of big money interests just trickles down.
 

Big Muddy rancher

Well-known member
You would think that such an active group as the LMA that wants a finger in ranchers dealings would have had a bonding requirement cover this sort of thing.
 

Jason

Well-known member
In Alberta we pay 10 cents a head for an insurance fund that covers any situation so the seller gets paid.

If that had happened here, the sellers would have had a cheque in short order as soon as the shortage in funds was reported.
 
A

Anonymous

Guest
Jason said:
In Alberta we pay 10 cents a head for an insurance fund that covers any situation so the seller gets paid.

If that had happened here, the sellers would have had a cheque in short order as soon as the shortage in funds was reported.

Same in Montana...
 
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