Farmer Sentenced for Selling Loan Collateral

Allison Tussey —  September 14, 2009 — 1 Comment

Dustin Ray Sherwood, 37, Trimble, Missouri, who had a large farming operation in Buchanan and Clinton counties, has been sentenced in federal court for making false statements to obtain loans and for selling some of the crops that were supposed to secure loans. Sherwood was sentenced by U.S. District Judge Ortrie D. Smith on Wednesday, Sept. 9, 2009. The court ordered Sherwood to pay $553,185 in restitution and serve nine months (including a halfway house). The restitution amount includes $348,761 to the U.S. Department of Agriculture and $204,423 to Patriots Bank, related to a loan that was fraudulently obtained.

Sherwood and his wife, Jennifer Sherwood, filed a Chapter 11 bankruptcy case on Sept. 25, 2007. Their farm equipment was sold at auction in April 2008 and their real estate holdings and residence were sold in August 2008 for $3.89 million.

On Dec. 19, 2008, Sherwood pleaded guilty to making false statements to the Commodity Credit Corporation, a federal corporation with the U.S. Department of Agriculture that lends money to persons using their stored grain as collateral. Sherwood also pleaded guilty to selling assets that had been pledged as collateral to secure loans he received from the CCC, without applying the proceeds of the sales toward repayment.

Sherwood claimed that he had 226,420 bushels of stored corn when he applied for a loan on Dec. 28, 2006, and was advanced $434,726 with that corn pledged as collateral. Although Sherwood did have that amount of stored corn on hand when it was measured in early November, he had sold 20,164 bushels of corn and did not apply the $71,518 in proceeds to the CCC loan. Sherwood also claimed that he had 59,000 bushels of stored soybeans when he applied for a loan on Dec. 28, 2006, and was advanced $298,890 with those soybeans pledged as collateral. However, Sherwood did not own approximately 31,000 of the 59,000 bushels he claimed to have on hand.

On three separate occasions, Sherwood sold grain that had been pledged to secure CCC loans, without the CCC‘s authorization and without applying any of the proceeds from those sales toward his CCC loans. Sherwood received a total of $168,219 from those sales.

Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri, announced the sentencing.

This case was prosecuted by Assistant U.S. Attorneys Jane Pansing Brown and Lucinda Woolery. It was investigated by the U.S. Department of Agriculture, the U.S. Department of Agriculture, Office of Inspector General and the Federal Bureau of Investigation.


Allison Tussey

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One response to Farmer Sentenced for Selling Loan Collateral

  1. February 15, 2010 at 1:13 am

    My employer has a loan on several large items of equipment. One of the items was sold recenlty without notification to the bank that holds it as collateral,and without remorse. I am concerned. Is this mortgage fraud? I feel it is not my place to report, but should I?

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