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RSS By: Steve Cornett, Beef Today

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Eastern Livestock and Dodo Birds

Jan 10, 2011

Eastern Livestock and dodo birds

They say the reason dodo birds went extinct was they were unaccustomed to predators and stood like a dodo while newly arrived humans harvested them for their dodo meat. They were what you call “naive.” Too trusting because they spent all their time with other dodo birds, I suppose.

A lot of rural folks, careful husbands of soil and livestock, careful about machinery upkeep and double careful with money management, are just about that naive, as well. It looks like Tommy Gibson was willing to take advantage of that well-known fact. At least that’s the gist of what James Knauer, the court appointed trustee for the Eastern Livestock bankruptcy, blogged on the Web site he established at http://www.easternlivestockbkinfo.com
after he got a look at the very-cooked books:

I am sitting here in this large building alone looking at a check made to Eastern Livestock for approximately $578,000 – allegedly in payment for a cattle shipment.  Aside from the fact that transactions of this size rarely, if ever, occur, and there are no records of any cattle deliveries to support it - there is an additional problem.  The person who is supposed to have signed the check had been dead for some time on the date the check was issued.  I think this typifies the type of problem we are up against in investigating this massive fraud.

“Massive fraud,” he calls it. I admit that I was raised rural and naive. I knew there were crooks and thieves and sharpies—I watched TV some—but I didn’t know how easily some people could lie to your face. When the Army sent me to New Jersey for a spell, I bought a car from a fellow soldier. He took the money and told me he needed to use the car a while. Then he sold it to somebody else and gave the other guy the title.

He was incredulous that I was angry. “What did you expect?” he asked. “You need to learn how we do business in Newark.” He convinced me, finally, that he gave me my money’s worth in education. I believe I’d paid him like $300, so that might have been a fair bargain, but through the year’s I’ve learned several times that I could have used more early education.
 

I am surprised to learn that Tommy Gibson was apparently kiting checks and double booking cattle. When they filed on him, Fifth Third said he had used fraudulent accounts, inflated his sales figures, claimed fraudulent cattle and all that typical stuff that you associate with your typical, low-life pig thief. I’ve talked to quite a few people who did extensive business with him and who are more shocked than I.
 

But I guess Bernie Madoff’s friends were surprised too.
 

There will, of course, always be crooks. What is more disturbing to me now is the apparent lack of any action at USDA as regards the laughably inadequate bonding requirements on cattle traders. I tried to ask them if they’ve got a program going. No call-back. I called the National Cattlemen’s Beef Association to see what they’ve heard. It turns out USDA hasn’t called them back, either.
 

Obviously, the powers-that-be at GIPSA are mad with NCBA over other issues. I presume that, somewhere behind the scenes, somebody in the agency or Congress is working to up date the bonds for traders. Sale barns and packers seem to be well covered, by the way, and that’s a good thing in this circumstance, because a lot of auctions were caught in this and many of their customers may have to rely on the sale’s bond.

But a set of regulations that requires packers and auctions to make immediate payment to their sellers and allows traders to float millions of dollars around the country backed by nothing more than tiny bonds and their good will is stuff even a dodo would avoid. It’s an example of the false sense of security afforded by laws and regulations designed by people who don’t understand what business is about.

They might as well get me to write the things and I trust everybody.

Until I hear from USDA that they have a new set of regulations on the books, I’d suggest every seller tell the order buyers, politely, not to send the trucks until they can have the driver deliver a certified check for the full amount. I, like most cattle people, have no way to assess creditworthiness. That’s what banks do. If the guy can’t get a bank to let him hold the cash, why should I let him hold my cattle?

Buyers will argue that they can’t do that without knowing the final weight of the cattle, but then I believe I’d suggest they just write the check big enough to cover the highest estimates.

And then I’d say, “I’ll send you a check for the difference after weigh up. You can trust me as much as I can trust you, don’t you think?”


Here's some links to related articles on Beef Today and AgWeb that you might find interesting:

Bouncing Bad Checks and Bad Guys

 

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COMMENTS (2 Comments)

bidme
That is why we have livestock auction markets. Consign your stock, watch them sell, see their weight and who bids on them and as soon as they are sold you can walk into the office and pick up your check...Very, very simple...
1:21 PM Mar 8th
 
Howdyjabo - Goldston, NC
I don't understand why this is not being treated as a bigger issue.

I was told if I asked for a certified check(even for less than the load should be) that there would be very few bidders on my calves.

I am checking into buying personal insurance against non payment.
1:10 PM Jan 12th
 

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