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Fox News
a day ago
- Business
- Fox News
Victims of 'Bernie Madoff of cows' take on major banks in massive ghost cattle Ponzi scheme
Victims of a deceased financier known as the "Bernie Madoff of cows" are suing three banks, alleging they enabled the fraud that resulted in a $100 million Ponzi scheme. Some of those duped by Brian McClain, of Benton, Kentucky, filed a lawsuit against Community Financial Services Bank, Rabo AgriFinance and Mechanics Bank, alleging the institutions ignored red flags that left dozens of Kentucky investors with financial losses, the New York Post reported. The fraud was uncovered days after McClain killed himself at age 52 on April 18, 2023. He initially promised 30% returns to investors while orchestrating a "ghost cattle" scheme in which the livestock never actually existed, authorities said. "CFSB strongly denies the allegations in question, and believes the claims against the bank to be entirely without merit," the bank said in a statement to The Post. "The bank through counsel has filed a Motion to Dismiss in the suit brought by the bankruptcy trustee." A spokesperson for Rabo AgriFinance told Fox News Digital that the courts will have the ultimate say. "Rabo AgriFinance remains strongly committed to providing financial solutions to U.S. cattle producers, feedlots, and processors," a statement from the bank reads. "As stated in prior court filings, the claims have no basis under the law, and many of the allegations are completely inaccurate. As the legal process unfolds Rabo AgriFinance will refrain from commenting further." Fox News Digital has reached out to all three banks named in the lawsuit. McClain's scheme collapsed when Rabo AgriFinance, McClain's primary lender, discovered a massive discrepancy in inventory, the newspaper reported. During an audit, only 10,000 cattle were found, far less than the 88,000 McClain claimed to have. While McClain claimed to have 88,000 head of cattle, only about 10,000 were found during an audit, exposing the bulk of the herd as "ghost cattle." After McClain's death last year, representatives from Rabo AgriFinance seized the remaining cattle from McClain's operation and sold them through Blue Grass Stockyards. Three of McClain's companies — McClain Farms in Benton, Kentucky; 7M Cattle Feeders in Hereford, Texas; and McClain Feed Yard in Friona, Texas — filed for bankruptcy in 2023. The unpaid livestock sellers could be protected under the Packers and Stockyards Act of 1921, which requires that all livestock purchased by a dealer in cash sales, along with any receivables or proceeds from those livestock, be held in trust for the benefit of unpaid sellers, according to the Department of Agriculture. McClain's moniker is named after Bernie Madoff, the former Nasdaq chairman who masterminded the largest Ponzi scheme in U.S. history by defrauding thousands of investors. Madoff died in 2021 at the age of 81 while serving a 150-year sentence at the federal medical care center in a North Carolina federal prison.
New York Post
a day ago
- Business
- New York Post
‘Bernie Madoff of cows' orchestrated $100M ‘ghost cattle' Ponzi scheme: lawsuit
Victims of an alleged $100 million Ponzi scheme orchestrated by a Kentucky rancher dubbed the 'Bernie Madoff of cows' have filed suit against lenders for allegedly failing to heed red flags, according to a report. Brian McClain, of Benton, Ky. — who died by suicide at age 52 on April 18, 2023, just days before the fraud was uncovered — is accused of orchestrating a yearslong 'ghost cattle' scheme that promised investors 30% returns while relying on borrowed money to pay off early participants. Last week, McClain's victims filed a class action lawsuit against Community Financial Services Bank, Rabo AgriFinance and Mechanics Bank – alleging that the lenders enabled the fraud and ignore 'clear signs of misconduct, causing devastating financial losses for dozens of Kentucky investors.' Advertisement 4 Brian McClain, 52, of Benton, Ken., has been dubbed the 'Bernie Madoff of cows.' Collier Funeral Home News of the lawsuit was reported by The Independent. 'CFSB strongly denies the allegations in question, and believe the claims against the bank to be entirely without merit,' the bank said in a statement to The Post. Advertisement 'The bank through counsel has filed a Motion to Dismiss in the suit brought by the bankruptcy trustee.' McClain's operation appeared to grow on paper — but in reality, the livestock didn't exist, according to Drovers Magazine, a trade publication covering the beef cattle industry. 4 While McClain claimed to have 88,000 head of cattle, only about 10,000 were found during an audit, exposing the bulk of the herd as 'ghost cattle,' according to a lawsuit. Luis – According to those familiar with the case, the business relied on a classic Ponzi scheme structure, where new investments were used to pay earlier backers. As his paper herd grew, the gap between reality and records ballooned. Advertisement The scheme collapsed in April when officials at Rabo AgriFinance, McClain's primary lender, discovered a massive discrepancy in inventory. While McClain claimed to have 88,000 head of cattle, only about 10,000 were found during an audit, exposing the bulk of the herd as 'ghost cattle,' according to a lawsuit cited by Drovers. The fallout has shaken the local agricultural community and left many investors grappling with financial losses and a sense of betrayal. Many of McClain's alleged victims were people from his own community — friends and neighbors who say they were blindsided by someone they trusted. His promises of unusually high returns lured in dozens of investors, some of whom initially received payouts that appeared legitimate. Advertisement 4 Last week, McClain's victims filed a class action lawsuit against Community Financial Services Bank. CFSB After McClain's death last year, representatives from Rabo AgriFinance seized the remaining cattle from McClain's operation and sold them through Blue Grass Stockyards. Three of McClain's companies — McClain Farms in Benton, Ky.; 7M Cattle Feeders in Hereford, Texas; and McClain Feed Yard in Friona, Texas — filed for bankruptcy on April 28, 2023 in US Bankruptcy Court for the Northern District of Texas. The US Department of Agriculture said unpaid livestock sellers may be protected under the Packers and Stockyards Act of 1921, which requires that all livestock purchased by a dealer in cash sales, along with any receivables or proceeds from those livestock, be held in trust for the benefit of unpaid sellers. 4 Bernie Madoff was a former Nasdaq chairman who ran the largest Ponzi scheme in history, defrauding thousands of investors Steven Hirsch Bernie Madoff was a former Nasdaq chairman who ran the largest Ponzi scheme in history, defrauding thousands of investors by using new money to pay fake returns to earlier clients. His scheme, which created the illusion of nearly $65 billion in profits, collapsed in 2008 during the financial crisis. Madoff pleaded guilty in 2009 and was sentenced to 150 years in prison, where he died in 2021 at age 82. The Post has sought comment from Rabo AgriFinance, Mechanics Bank, the USDA and trustees.
