Eastern Livestock, one of the biggest cattle brokers in the United States, is under investigation by the U.S. Justice Department and the U.S. Department of Agrilculture. The investigation stems from multiple cattle farmers' and banking institutions' complaints that Eastern allegedly issued $81 milion dollars in bad checks or did not make any payment at all, to farmers sending cattle to market earlier this month from November 3 to November 9, 2010.
Eastern Livestock's corporate offices are based at 135 West Market Street in New Albany, Indiana. Court papers indicate that Thomas P. Gibson is the principal owner and operator of the company. Additionally, an Ohio court appointed receiver assumed Eastern's assets, froze all of the company's accounts at Cinncinati's Fifth Third Bank, and confirmed Eastern was responsible for the theft of $13 million dollars from the Bank via a "sophisticated check-kiting scheme." Fifth Third also claims that Eastern defaulted on a $32.5 million dollar loan.
Farmers from all 48 continental United States have been affected by Eastern, with those from the mid-South to the West most significantly impacted. Eastern has cattle operations throughout 11 states. Eastern's bond is worth $875,000 dollars and when that is cashed in, farmers who received the bad checks will only be paid "pennies on the dollar." The national effect of Eastern's financial difficulties could potentially impact smaller auction markets and stockyards though Mark Mackey, CEO of the Livestock Marketing Association stated: "We're still trying to sort through what the real effects are."
Bluegrass Stockyard's CEO Jim Akers, operator of the largest cattle marketer based in Kentucky, offered some reassurance in a statement with the Courier-Journal. He offered: "We have multiple buyers, multiple brokerage firms, many, many local farmers, feedlots out West that are all actively buying in our markets every day of the week...We've got a very fluid, very healthy marketplace. Eastern was but one player in that marketplace."