Glasgow Daily Times, Glasgow, KY

Agriculture

November 15, 2010

Issues arise with area livestock purchaser

Federal agency investiages claims of bad checks from Eastern Livestock Company

GLASGOW — An Indiana livestock company that had dealings with local livestock producers is now under federal investigation for allegedly writing bad checks to producers.

The amount of unpaid transactions from Eastern Livestock Company, LLC., could be close to $100 million to producers throughout the United States, according to the Grain Inspection, Packers and Stockyards Administration of Des Moines, Iowa, and the Livestock Board of Trade. GIPSA is a part of the United States Department of Agriculture’s Marketing and Regulatory Programs.

When the investigation was first disclosed on Nov. 5, the unpaid bills were estimated to be only about $10 million. Numerous checks written by the company for livestock purchased have been returned as “refer to maker” and are now being returned as “insufficient funds,” according to the Livestock Marketing Association.

Eastern, a market agency that buys and sells feeder cattle as a dealer and on an order-buying basis, began issuing unfunded checks to producers for livestock purchased by Eastern in different markets on or around Nov. 3, according to the USDA. It is the owner of Edmonton Livestock in Metcalfe County.

Headquarters were located in Louisville in 1982, when the company was formalized, but now is in New Albany, Ind.

Kentucky is one of 30 states to be affected by the unpaid checks, Jim Brownlee of the USDA said. Brownlee said the USDA is not certain exactly how many checks have been returned or how many farmers have been impacted.

“There appears to be a significant amount that is owed for cattle to sellers in several states. As of Nov. 9, GIPSA documented returned checks totaling $81 million; total transactions are estimated at $130 million,” said a statement released by the USDA.

A representative from Eastern said the company had no comment, but said that as of Nov. 12, they had no business in the Barren County area. The Farmer’s Livestock Market of Glasgow ran an advertisement in the Daily Times announcing that it had no affiliation with Eastern Livestock or its holding companies.

Edmonton Livestock is where many of the affected farmers in the area sold livestock, according to Dave Maples, executive vice president of the Kentucky Cattlemen’s Association.

“The sad fact is that they might not ever get their money, and that’s really bad timing at the end of the year,” Maples said.

In the last livestock report, in fact, the Edmonton buying station received 1,767 sales, compared to the prior week’s total of 1,537. One year ago, they sold 1,323.

From what he has learned of the situation, GIPSA is recommending that farmer’s get an attorney, but Maples said Glasgow has a unique opportunity to regain some of the money lost from the livestock brokerage.

“I know it’s really, really bad, but you’ve got the auctions in Glasgow that [farmers] can go to, so that’s another option that they have,” he said.

On Wednesday, Fifth Third Bank of Cincinnati, Ohio, filed suit against Eastern, including a motion for the emergency appointment of a receiver. The receiver, appointed on Thursday, was Elizabeth M. Lynch, of Development Specialists, Inc., in Cleveland, Ohio, according to the LMA. Fifth Third claims a security interest in all of Eastern’s assets. Assets include livestock (farm products), inventory, accounts receivable and general liabilities, the LMA said. Summons have also been issued to Eastern and owner Thomas Gibson.

Producers who have not received payment due from the company should call GIPSA at (515) 323-2579 to file a bond claim or to receive information on financial protections. Brownlee said the first thing producers should do is call the number. Bond claims must be filed within 60 days of the transaction, according to GIPSA.

Matt Thacker of the New Albany Tribune contributed to this story.

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