Man pleads guilty to $8M cattle fraud schemes with ties to Callaway County
Monday, June 27, 2011
A former Howard County, Mo., man pleaded guilty in federal court Monday to operating two cattle fraud schemes in which 28 victims, including The Callaway Bank in Fulton, Mo., as well as numerous individuals, lost nearly $8 million.
Kevin Ray Asbury, 44, formerly of Howard County, waived his right to a grand jury and pleaded guilty before U.S. Magistrate Judge Matt J. Whitworth to a federal information that charges him with bank fraud, wire fraud and money laundering.
By pleading guilty today, Asbury admitted that he was involved in two separate fraud schemes, both of which involved his cattle business, R&K Angus Ranch in Howard County, Mo., from December 2006 to October 2008.
Asbury’s business included soliciting investors throughout the United States to pay a portion of the purchase price for cattle, which he would raise and sell. Investors then received a predetermined return from the sale of that cattle. Both of Asbury’s fraud schemes involved false and fraudulent statements that he owned, bought and sold cattle when, in reality, he had not done so.
Cattle Investor Fraud Scheme
Asbury admitted that in May 2007, when he began to have insufficient funds to pay both personal and business debts, he began operating a Ponzi-type scheme. Asbury continually solicited new investors in cattle transactions based on the false promises that he would use their funds to purchase cattle. Instead, he misappropriated the funds for personal use, to pay debts and to pay purported “returns” to investors in prior fraudulent transactions. Asbury also obtained loans from persons that had previously invested in fraudulent cattle transactions, based on his false representations that he owned cattle that he would soon sell to pay back the loans; in reality, Asbury admitted, he did not own the cattle.
Through this scheme, Asbury defrauded at least 27 individuals and businesses of approximately $5.1 million.
Asbury pleaded guilty to one count of wire fraud and one count of money laundering in relation to this scheme.
Callaway Bank Fraud Scheme
Asbury obtained a $4 million business line of credit from The Callaway Bank in February 2007. The majority of the collateral for that line of credit was to be cattle that Asbury claimed to own, though in reality he did not own the cattle. Asbury admitted that he showed several thousand head of cattle to a bank representative and falsely claimed to own all of the cattle on land he falsely claimed to lease. Although Asbury claimed to own approximately 6,000 head of cattle worth approximately $7 million, in reality, he did not at any time own anywhere near that amount of cattle.
When the bank sent representatives to Asbury’s farm to recover collateral in October 2008, Asbury told them he did not own any cattle. The bank was able to recover some collateral, including some farm equipment, but lost more than $2.7 million as a result of the fraud scheme.
Asbury also admitted that he had sold assets that were pledged as collateral for his business line of credit from The Callaway Bank, including cattle that he did own, but did not inform the bank of the sale of those assets or provide the proceeds from those sales to the bank.
Asbury pleaded guilty to one count of bank fraud in relation to this scheme.
By pleading guilty today, Asbury must forfeit to the government all property involved in the bank fraud and wire fraud schemes, including a money judgment of $9,095,005.
Under the terms of this plea agreement, the government and Asbury will make a non-binding recommendation to the court for a sentence of nine years in federal prison without parole. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
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