KANSAS CITY, Mo. - Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Braymer, Mo., man pleaded guilty in federal court today to a cattle fraud scheme that the government contends resulted in losses of nearly $300,000 to his victims.
Garland Joseph “Joey" Nelson, 21, of Braymer, waived his right to a grand jury and pleaded guilty before U.S. District Judge Howard F. Sachs to a federal information that charges him with fraud using property mortgaged or pledged to farm credit agencies.
According to the government, Nelson engaged in a three-part fraud scheme that caused a combined loss of at least $293,772.
Loan Fraud: $138,452
By pleading guilty today, Nelson admitted that he engaged in a scheme to sell at least 114 mortgaged head of cattle that were pledged to the Farm Service Agency (FSA), without notifying FSA of the sales, from April 1, 2013, through June 2014. He did not instruct purchasers to address proceeds checks to the FSA as well as to him, and he did not remit the bulk of the sale proceeds to FSA, as was required by the terms of his loans. Instead, Nelson admitted that he kept the funds for his personal use.
Nelson received two livestock operating loans in April 2013 totaling $158,000 for the limited purpose of buying and raising cattle. In violation of the express terms of his loans, and with fraudulent intent, Nelson conducted livestock sales from April 2013 to July 2014 under the name “Joey Nelson" to avoid detection. He conducted other sales in the name of a friend to further obfuscate his involvement. His friend then transferred the proceeds to Nelson.
Nelson ceased making repayments on his FSA loans as of Jan. 12, 2015. His outstanding principal balance is $138,452, plus applicable interest and penalties. Nelson filed for Chapter 7 bankruptcy on June 25, 2015.
Livestock Sales: $124,000
According to the government, Nelson also schemed to remove identification from cattle that was owned by others but placed in his care to graze. The government contends that Nelson removed identification tags from 646 head of cattle that belongs to others, and commingled these cattle with his own and with those owned by his neighbor and landlord, in order to sell livestock undetected. The government will present evidence at Nelson’s sentencing hearing that he sold those cattle for his own benefit, for a total loss to three victims of $124,000.
Insurance Fraud: $31,320
According to the government, Nelson also made false statements to Farm Bureau Insurance for the purpose of collecting insurance proceeds on cattle he had insured. Nelson did not disclose to Farm Bureau Insurance that the FSA had first lien on all of his chattel. From Dec. 15, 2013 through March 30, 2014, according to the government, Nelson made fraudulent statements to Farm Bureau Insurance by falsely indicating his livestock had drowned or been stolen. In fact, he had not lost the livestock in the manners claimed, and he was selling numerous cows and calves to various auction houses. Nelson filed four loss claims to Farm Bureau Insurance, resulting in a loss of $31,320.
Under federal statutes, Nelson is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $1,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by the U.S. Department of Agriculture, Office of Inspector General.
Source: U.S. Department of Justice, Office of the United States Attorneys
