SALEM, Ohio – Trucks with trailers pulled into the United Producers Creston, Ohio, market Monday to sell their livestock.
Instead of unloading, they were waved away. The market was closed.
Creston was just one of United Producers’ livestock markets in six states closed this week.
Company spokesperson Amy Boeckmann said the closures were due to “complications” stemming from a series of lawsuits that held the cooperative responsible for multi-million dollar cattle marketing losses.
United Producers, based in Columbus, was held partially responsible for millions of dollars in personal losses in what the FBI called the largest cattle fraud in U.S. history. The fraud was exposed in August 2001.
Investigation. Federal Grain Inspection, Packers and Stockyards Administration economist Jaime Adams confirmed March 28 United Producers is currently involved in an investigation, but could not release further information.
Adams said GIPSA does not require markets under investigation to halt business.
What they’re saying. A memo issued from United Producers headquarters to local market facilities said “temporarily suspending business operations” was “due to the threat of action by judgment creditors.”
Spokeswoman Amy Boeckmann said this was merely a precautionary measure to protect the cooperative’s 40,000 farmer-members.
“This ensures, no matter what, any check written will still be very viable,” for farmers who expect payment for livestock sold, Boeckmann said.
The memo said United Producers “is not going away,” but acknowledged there are many unanswered questions about the situation.
No other Producers executive was available for comment.
Boeckmann says the 24 weekly auctions and 23 buying stations in Ohio, Indiana, Illinois, Michigan, Kentucky and Missouri will reopen for business April 4.
Background. Producers Credit, a division of United Producers, partnered with Missouri cattle buyer George Young, the mastermind behind the cattle buying scheme.
Young and his partner, Kathleen McConnell, were supposed to buy and feed cattle in late 1999 and early 2000 for Producers clients.
It was later discovered during Young’s bankruptcy proceedings that he and McConnell had bilked ranchers out of more than $160 million in investments since 1995.
Producers denied any knowledge of the scheme.
At the time Young and McConnell were discovered in August 2001, falsified records indicate they had 344,000 head of cattle under their control. Instead, fewer than 17,000 head of cattle actually existed.
The partners had created a Ponzi scheme, paying off early investors with money from later investors and buying few cattle in between.
In May 2004, Young and McConnell were sentenced to nine years and seven years, respectively, in federal prison without parole.
Related coverage:
$166 million cattle fraud tied to Ohio (9/2/2004)
Cattle buyers sentenced to jail time in Missouri ‘phantom cattle scheme’ (6/3/2004)
$160 million phantom cattle scheme involves Midwest victims (10/30/2003)
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