Monday, December 08, 2008

North Missouri Farmer Indicted For Bank Fraud

Dustin Ray Sherwood, 36, Trimble, Missouri, who had a large farming operation in Buchanan and Clinton counties was indicted by a federal grand for bank fraud, making false statements to obtain loans, selling some of the crops that were supposed to secure loans, and obstruction of justice, which is related to the bankruptcy proceedings in which his farm property was sold.  The eight-count superseding indictment replaces an August 19, 2008, federal indictment that charged Sherwood with the single obstruction of justice count. Sherwood remains in federal custody.

According to the indictment, Sherwood and his spouse, Jennifer Sherwood, filed a Chapter 11 bankruptcy case on Sept. 25, 2007. The primary asset of the bankruptcy estate was a large farming operation. During the course of the bankruptcy, the indictment alleges, they fired their bankruptcy counsel, repeatedly violated bankruptcy court orders, and refused to cooperate with their creditors. Creditors filed a joint emergency motion to appoint a trustee, which the bankruptcy court granted on February 14, 2008.

The Sherwoods did not submit a viable plan of reorganization, the indictment says, and interest and attorneys’ fees on their massive debts were increasing at an alarming rate. The trustee sought permission to sell the farm equipment and real estate, and the court approved auction procedures to sell those assets. The farm equipment was sold at auction in April 2008 and the real estate holdings and residence were scheduled to be sold in August 2008.

Prior to the real estate auction, the indictment says, Sherwood filed a Notice of Lis Pendens on his property, which the court ordered him to remove. Sherwood allegedly told an employee of the trustee’s office that he would shoot anyone who came upon his property, and warned the auctioneer not to enter the property.

A federal criminal complaint was filed against Sherwood, and on July 30, 2008, he was ordered to be detained without bond. Sherwood’s property was sold at auction on August 5, 2008, for $3.89 million.

The indictment also charges Sherwood with two counts of bank fraud related to a $605,250 loan from Citizens Bank & Trust Company and a $250,000 loan from LibertyFirst Bank (now known as Patriots Bank). In order to be approved for those loans, the indictment alleges, Sherwood falsely represented that his 2005 federal income tax return had been filed with the IRS, when in fact, he had not filed a 2005 federal tax return. Sherwood allegedly represented to both banks that the sum of $99,716 had been paid in full, when in fact no such payment had been made.

Sherwood is also charged with two counts of making false statements related to loans he received from 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 allegedly 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 for which he was paid $71,518. Sherwood also allegedly 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, the indictment alleges that Sherwood did not own approximately 31,000 of the 59,000 bushels he claimed to have on hand.

Sherwood is charged with three counts of converting to his own use property that was pledged to the Commodity Credit Corporation. The indictment alleges that, on three separate occasions, Sherwood sold grain that had been pledged to secure Commodity loans, without the Commodity Credit Corporation’s authorization and without applying any of the proceeds from those sales toward his Commodity loans. Sherwood allegedly received a total of $168,219 from those sales.

Charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the U.S. Department of Agriculture and the Federal Bureau of Investigation.

mortgage fraud