Lenders require that collateral be pledged in the event that the borrower defaults on their loan payment. For example, when someone is unable to pay off their mortgage or car loan, the house or car is repossessed and subsequently owned by the lender. Similarly, a farmer in Iowa pledged his crops as assets for collateral for a U.S. Department of Agriculture (USDA) farm loan, but he sold the assets and defaulted on the loan.
The assets pledged by the farmer included more than 100,000 bushels of corn valued at over $300,000. (This collateral secured two Farm Services Agency (FSA) loans worth nearly $200,000.) Then he sold it all with the intent to defraud the agency. (Court records indicate that more than 10,000 bushels of corn were sold prior to pledging the crop as collateral.)
The 59-year-old farmer pleaded guilty to one count of felony conversion of property pledged to a farm credit agency. The judge handed down a six-month federal prison sentence to be followed by two years of supervised release. He was also ordered to pay $137,682 in restitution to the Farm Service Agency and a $100 special assessment fee.
Through the FSA Farm Loan Program, the agency offers farmers the opportunity to ”start, improve, expand, transition, market and strengthen family farming and ranching operations.” This fraudster undermined the program to make a bit of extra cash. (Depending on the season in which his prison sentence is served, this criminal is going to have to work extra hard to grow some bountiful crops in order to pay back the USDA for the collateral damage done.)
Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Floyd Farmer sentenced to federal prison for farm loan fraud,” published by The Courier on October 13, 2016.
CEDAR RAPIDS — An Iowa farmer who pledged assets as collateral for a USDA farm loan but later sold the assets and defaulted on the loan was sentenced Wednesday to six months in federal prison.
Leroy Jones, 59, of Floyd, received the sentence after pleading guilty to one count of felony conversion of property pledged to a farm credit agency.