MARTINSBURG, Mo. | Farmers hoping to recover money lost in a multimillion-dollar Missouri grain fraud scheme left a Friday administrative hearing sorely disappointed.
Most of the 180 farmers who together lost an estimated $27 million can expect to receive payments worth only 2 percent of their total claims, Department of Agriculture officials said.
“This is a sad day for Missouri agriculture,” said Jon Hagler, the state's agriculture director. “Our farm economy is built on trust. When that trust is violated, entire communities are harmed.”
Cathy Gieseker, a grain dealer and owner of a northeast Missouri trucking company, faces 15 state and federal felony charges accusing her of operating the largest grain fraud scheme in the state's history.
Prosecutors say Gieseker promised farmers returns 50 percent to 100 percent above market through nonexistent contracts with Archer Daniels Midland Co.
She instead sold grain at spot prices and used proceeds from other grain sales to pay inflated prices to some farmers, the indictment alleges. Others earned nothing in what authorities call a classic Ponzi, or pyramid, scheme.
Neither Gieseker nor her lawyer, Travis Noble Jr., attended the brief hearing. Noble has previously said his client was promised a certain amount of money for the farmers' grain from an unnamed buyer.
No farmers testified during the 30-minute hearing, and few wanted to discuss their losses with reporters afterward. The audience included two lawyers who said they are considering filing a civil lawsuit against Gieseker.
Jilted investors could still recover additional money should state or federal courts seize Gieseker's personal property, Hagler said. Those assets include four parcels of land in Martinsburg and another property in Rush Hill as well as 22 vehicles, including tractor-trailers and ATVs. But that would not be enough to cover all the losses.
“I don't want to give anybody false hopes,” Hagler said.
State regulators froze the assets and suspended the license of T.J. Gieseker Farms and Trucking in February after a Missouri Agriculture Department audit uncovered financial irregularities connected to the business. Gieseker, a 45-year-old widow, ran the business named after her late husband, Timothy.
The case prompted several rural lawmakers to propose legislation in March that would have increased the minimum bonding requirements for licensed grain dealers and set criminal penalties for unlicensed dealers.
Lawmakers also considered creating an indemnity fund for farmers who lose money in speculative commodity markets, similar to accounts maintained in several other states. Neither measure passed the legislature.