Dealer Responsible for Largest Grain Brokerage Failure in Missouri History Sentenced to Prison for Mail Fraud

February 26, 2010 - ST. LOUIS, MO—The United States Attorney’s Office announced today that Cathy M. Gieseker was sentenced to 108 months in prison for mail fraud and a wide-ranging fraud scheme involving $27 million in proceeds from the sale of farm commodities. Gieseker was also ordered to forfeit millions of dollars in personal property and real estate.

Gieseker operated a “Ponzi” scheme whereby payments to farmers for grain sales were paid through monies gained through the subsequent sale of grain supplied by other farmers, despite the fact that insufficient funds were generated to pay all farmers the promised rates. Ultimately, the scheme collapsed in February 2009 with scores of farmers left with no grain and no payments for their crops.

Gieseker operated a grain trucking and marketing company from her residence in Martinsburg, Missouri. Between October 2002 and February 2009, in addition to transporting grain, Cathy Gieseker began to market grain on behalf of farmers. In this capacity she quoted above-market prices to farmers and represented that she had contracts from Archer Daniels Midland Company (ADM) to guarantee the prices. During the course of this scheme, Gieseker delivered and sold virtually all of the grain at ADM. However, Gieseker did not hold contracts that guaranteed the above-market prices she had quoted farmers from ADM. Instead, she sold all of her grain at the “spot price” (local cash price for immediate settlement and delivery) and used the proceeds from subsequent grain transactions to pay the above-market prices she had previously promised other farmers. In this manner, Gieseker defrauded approximately 180 farmers out of at least $27 million in proceeds from grain sales she made on their behalf. Most of the proceeds went to pay other farmers who had previously been quoted above-market prices, but Gieseker also used a substantial portion of these proceeds on automobiles, gifts to family and friends and an expensive hobby of acquiring and showing livestock.

“I don’t know why people think they can get away with ponzi schemes when they always eventually collapse,” said Roland J. Corvington, Special Agent in Charge of the FBI in St. Louis. “Nevertheless, there will continue to be people who take advantage of unsuspecting victims who do not question something that is too good to be true.”

CATHY M. GEISEKER, Martinsburg, Missouri, pleaded guilty last November to one felony count of mail fraud. She appeared today for sentencing before United States District Judge Charles A. Shaw in St. Louis.

Additionally, Gieseker agreed to the forfeiture of four parcels of property in Martinsburg, Missouri; one property in Rush Hill, Missouri and 22 vehicles consisting of multiple semi tractors, trailers, vehicles and ATVs.

This case was investigated by the St. Charles Office of the Federal Bureau of Investigation, the Missouri Attorney General’s Office, and the Missouri Department of Agriculture. Assistant United States Attorney Tom Albus handled the case for the U.S. Attorney’s Office.