Riding Herd “The greatest homage we can pay to truth is to use it.” – JAMES RUSSELL LOWELL
October 15, 2019 • www.aaalivestock.com
Volume 61 • No. 9
The Check’s in the Mail BY LEE PITTS
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hy do bad things happen to such good people? Dwayne Mays and Scott Van Winkle, owners of Ogallala Livestock Market in Ogallala, Nebraska, are two of the nicest and most honorable men I’ve ever met. Their auction market, previously owned by Jerry Speck and family became one of the finest auction markets in the country. When Jerry decided to retire he sold it to the two men he’d been grooming to take his place and Dwayne and Scott have not disappointed. Their reputation in the industry is solid gold. In the Fall of 2015 they had an “incident” with cattle dealer Charles “Chuck” Leonard who had been doing business with the market since the 1970’s. Chuck’s family had been trading cattle since Chuck’s forefathers “walked the bricks” at the old terminal markets. Dwayne and Scott had a great deal of confidence in their friend Chuck and his checks always cleared. Everyone in the midwest marketing sector knows Chuck Leonard. He’s a larger than life storyteller and was always the life of the party in cow town bars from Winnemucca to Torrington. He’d have been the last guy I’d have suspected of cheating Dwayne and Scott. But then, it seems like it’s always the guys you’d least suspect.
OUCH!
NEWSPAPER PRIORITY HANDLING
Dwayne and Scott had three transactions with Chuck during a short period in the Fall of 2015, one on video cattle, another through their auction market, and a trade on a set of country cattle. The total came
There is no better place to heal a broken heart than on the back of a horse. to three million dollars with the country dealer trade accounting for a million of that. You can imagine the reaction in the offices of the Ogallala Livestock Market when their banker called and told them there were insufficient funds to cover the checks. How could this be, wondered Dwayne. He called Chuck who said he was working with his banker and they’d work things out and that Dwayne and Scott should just send the checks back through the bank. They did so and this time when the bank called they said all of Chuck’s accounts had been swept clean and the accounts closed. Keep in mind that the cattle Chuck had purchased with the money had been moved into feedyards who paid Chuck Leonard for those cattle in good faith. The Ogallala Livestock Market became the totally unpaid seller!
“WOW!,” said Dwayne. “It was devastation. I’d never experienced anything like it before.” Meantime, according to Packer and Stockyard Act the custodial account at the market had to be balanced within seven days. In other words, Dwayne and Scott had to come up with the missing three million or be shut down. It’s a good thing they had a good working relationship with their banker because the P&S was in their office nearly every day checking to make sure the custodial account was brought in balance. “Believe me,” said Dwayne, “you get to know all the people in the P&S real quick and are on a first name basis with them.” Later a USDA Agricultural Marketing Service investigation found that Chuck had failed to pay $4.7 million and issued insufficient funds checks for $5.8 million in livestock purchases. The investigation also revealed
that Leonard operated while insolvent. Leonard’s insolvency ranged from $1.2 million on Aug. 31, 2015, to $3.3 million on Oct. 19, 2015. Unpaid sellers filed on the dealer’s GIPSA bond and received less than 5 cents on the dollar. For Ogallala, this meant Leonard’s bond covered $140,000 of the $2.9 million owed.
Going Postal This debacle followed on the heels of the spectacular crash of Eastern Livestock, the largest livestock dealer in the country. In 2010, Eastern Livestock was forced into bankruptcy, owing approximately $112 million to creditors, including hundreds of livestock producers, dealers, and markets. Eastern was in the business of buying cattle at auction and in the country and then combining them to offer larger lots of cattle to cattle feeders who liked to buy in big bunches, not onesies and twosies. Eastern had operating branch facilities in eleven states. For his role in the crime owner Tommy Gibson, of Lanesville, Indiana, age 73, was sentenced to 70 months in federal prison, followed by two years of supervised release. His accomplice in the multi-million dollar continued on page two
Forbidden: The Curious Case of an Agriculture Loan Denied BY CHRIS BENNETT / DROVERS JOURNAL
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hoda Rein was stunned by the bank’s decision—agriculture loan denied. The 25year U.S. Bank customer, anticipating approval on a $27,000 operating loan, listened in disbelief as a bank representative cited the rationale behind Rein’s denial: animal reproduction is forbidden. Is animal reproduction an activity deemed ineligible for a bank loan? Yes, in Rein’s case, and the rejection was triggered specifically due to her operation’s involvement in horse breeding. The details of Rein’s loan denial may draw concern from livestock producers across the United States, particularly due to the explicit language in bank documents delineating Rein’s rejection, and the seemingly contradictory explanations offered by U.S. Bank.
Not Appropriate? Twenty minutes east of Denver, alongside her husband, Darren Miller, Rein runs a 46-stall horse training and breeding business on 40 acres—Darren Miller Stables, Inc. Rein, 53, and Miller, 57, were instrumental in founding the Colorado Reined Cowhorse Association (CRCA), and have served on the board of directors for the RMQHA, RMRHA and NRCHA. Miller is an AQHA, NRCHA and
NSHA judge. Since the mid-1990s, Rein has been a client of U.S. Bank at the Hampden Crossing branch, obtaining business loans on a consistent basis. In 2003, she opened a line of credit (cash flow manager) attached to Darren Miller Stables, revolving at a roughly 8 percent interest rate. In 2018, the interest rate steadily rose, climbing to 11.25 percent by April 2019. Alarmed, Rein consulted with Tracey Romero, her U.S. Bank representative, regarding a rate decrease. Boiled down, Rein chose to apply for a brand new loan of $27,000: Wipe the slate clean and start over with a lower interest rate. According to Rein, the NAICS code 112920 (equine production) was used in the loan application. However, when the paperwork came back, the loan was denied. The initial application was turned down April 21; an appeal was turned down April 24. Do not pass go. No loan, period. On May 1, U.S. Bank sent Rein an explanatory letter: “After careful review of your application, we are unable to extend credit to you at this time for the following reasons: Product is not considered appropriate for this industry.” Rein visited the Hampden Crossing branch to get an explanation on May 8. “I couldn’t believe it and Tracey also seemed shocked,” Rein continued on page four
by LEE PITTS
A Day Is A Life-time
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’m 67 years old and thought I was a goner at 40. The Doctors thought so too. If you’d have offered me a deal back then that I could live to be only 45 years old I’d have taken the deal in a heartbeat. The thought of living to be 67 was crazy. I’ve looked death square in the face many times in my life, have been opened up and carved on from the Mayo clinic to local quacks and have suffered two significant strokes. After this last one there were days I thought I didn’t have 24 hours to live. I see doctors on a weekly basis, it takes 11 different prescriptions to keep me alive, I haven’t been able to eat normally for 27 years, have to sleep in a chair, can’t drive or travel 20 miles from home without getting pancreatitis, and I’m in constant pain. And I think I’m the luckiest guy in the world! I’m one tough son of a gun and people who know my story often ask how I do it. I always reply, “One day at a time,” If you break it down into its smallest parts you’ll realize that a day is a very long time indeed: 24 hours, 1440 minutes or 86,400 seconds. If a hug with my beautiful wife lasts 5 seconds that means I could hug her 17,280 times in a day, although I doubt she’d let me. In a single day do you know how many dogs you could pet, how many times you could smile at the cat and how many times you could tell your spouse or kids that you love them? How long does it take to enjoy a sunup or a sundown, to play peek-a-boo with a baby or spend a few minutes in quiet reflection enjoying your aloneness while digging in the dirt, the potting soil of life.(Hard work is the fertilizer.) It only takes a few minutes to romp in the rain, read good writing, sing old songs off key at the top of your lungs while dancing as if no one is watching, relax in a rocking chair on the front porch and wave to everyone who passes by, ride a bicycle into the wind, fly a kite, sail a boat, play checkers with a youngster and let them win, or shovel the snow off the front walk of an elderly person and then enjoy a hot cup of cocoa with them after-
continued on page four