Missouri grain dealer Cathy M. Gieseker pleaded guilty last week to mail fraud and admitted to a wide-ranging fraud scheme involving $27 million dollars in proceeds from the sale of farm commodities, according to Acting United States Attorney Michael W. Reap.
As part of the plea, Gieseker also agreed to forfeit millions of dollars in personal property and real estate.
Gieseker operated a “Ponzi” scheme whereby payments to farmers for grain sales were paid through monies gained through the subsequent sale of grain supplied by other farmers despite the fact that insufficient funds were generated to pay all farmers the promised rates. Ultimately, the scheme collapsed in February 2009 with scores of farmers left with no grain and no payments for their crops.
Gieseker operated a grain trucking and marketing company from her residence at 35424 Audrain Road 708, Martinsburg, MO. Between October 2002 and February 2009, in addition to transporting grain, Cathy Gieseker began to market grain on behalf of farmers. In this capacity she quoted above-market prices to farmers and represented that she had contracts from Archer Daniels Midland Company (ADM) to guarantee the prices. During the course of this scheme, Gieseker delivered and sold virtually all of the grain at ADM. However, Gieseker did not hold contracts that guaranteed the above-market prices she had quoted farmers from ADM. Instead, she sold all of her grain at the “spot price” (local cash price for immediate settlement and delivery) and used the proceeds from subsequent grain transactions to pay the above-market prices she had previously promised other farmers. In this manner, Gieseker defrauded approximately 180 farmers out of at least $27,000,000 in proceeds from grain sales she made on their behalf. Most of the proceeds went to pay other farmers who had previously been quoted above-market prices but Gieseker also used a substantial portion of these proceeds on automobiles, gifts to family and friends, and an expensive hobby of acquiring and showing livestock.
Gieseker, 45, Martinsburg, Mo., pleaded guilty to one felony count of mail fraud. She appeared before United States District Judge Charles A. Shaw in St. Louis.
Additionally, Gieseker pleaded to a forfeiture count, which requires the forfeiture of cash and property derived from the illegal activity. Subject to forfeiture are four parcels of property in Martinsburg, MO; one property in Rush Hill, MO; 22 vehicles consisting of multiple semi tractors, trailers, vehicles, and ATVs. Gieseker faces up to 20 years' imprisonment, a fine of up to $250,000, or both at sentencing which will occur on February 25, 2010. Restitution will also be ordered for the victims.
“For several years, Cathy Gieseker got away with her ponzi scheme," said Roland J. Corvington, Special Agent in Charge of the FBI in St. Louis. “But perpetrators of such schemes will always get caught once the victims at the bottom of the pyramid are left holding the bag and the scheme collapses.”
The Acting U.S. Attorney noted that, “This case, like most frauds, required a breach of trust. These hardworking farmers trusted Mrs. Gieseker to market their grain with honesty and integrity. I hope it is some comfort to them that Mrs. Gieseker has been called to account for such an outrageous breach of trust.”
Reap commended the work on the case by the St. Charles Office of the Federal Bureau of Investigation, the Missouri Attorney General’s Office, the Missouri Department of Agriculture; and Assistant United States Attorney Matthew Schelp, who is handling the case for the U.S. Attorney’s Office.
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