Farm Press Release
For immediate release - Friday, August 17, 2001.
Contact Bob Brammer - 515-281-6699 (home is 255-2314)
Miller: Court Names State "Receiver" in Cattle Case
Defendants allegedly sold cattle multiple times.
Des Moines. Attorney General Tom Miller said Friday that a District Court Judge in Decatur County has ordered that the State of Iowa be named a temporary receiver in connection with a cattle feeding and investment arrangement Miller alleged has violated Iowa's Consumer Fraud Act.
Attorneys for the Farm Division of Miller's office filed a petition Friday alleging the consumer fraud violation and seeking the receivership. The receivership was ordered by District Court Judge Dale B. Hagen. "This will help us stabilize the situation and preserve any assets," Miller said.
At a news briefing Friday afternoon, Miller said: "Our most serious concern is that the defendants sold investments in certain cattle, but that more than one investor was assigned to the cattle. We alleged this was a misrepresentation and harmed consumers."
Miller declined to speculate on what level of losses might be involved. "We don't know those numbers yet, but this is clearly a very serious situation. We know some persons had six-figure investments in cattle in this enterprise."
The consumer fraud suit alleged that the defendants "sold more, or failed to purchase, cattle as represented in their marketing, resulting in what is commonly known as a 'Ponzi' scheme."
Defendants in the law suit are Professional Business Services, Inc., or PBS; United Livestock Services LLC; Rio Baca, Inc; George L. Young; and Kathleen I. McConnell. (More details below.)
"Our objective in seeking the receivership was to freeze the situation so no further harm can be done," Miller said. "We wanted to prevent the defendants from dissipating any assets, and also to prevent other parties from taking unilateral action to control assets in ways that might be chaotic or inequitable."
Miller said the temporary receivership means the State has control of all assets of the defendants, such as cattle or cash. "We want to preserve the assets and be sure any distribution is done fairly and equitably."
Miller said three principal groups are involved in the situation - cattle feeders who are feeding cattle that do exist, investors in cattle, and banks who lent money to investors.
"The receivership should help stabilize the situation so that no one takes hasty unilateral action to gain a special or unfair advantage," he said.
Miller encouraged contract cattle feeders involved in the situation to contact their own attorney and to consider filing a priority lien that might help them obtain protection for payments they are owed under the contracts. Feeders can file such liens with the Iowa Secretary of State up to 45 days after they receive cattle for feeding. Information on the liens can be found at the Attorney General's web site - www.IowaAttorneyGeneral.org. (Click on "farm advocacy" and then "farm laws and regulations.")
Judge Hagen ordered a hearing be held on the matter at 1:30 p.m. August 31 at the Decatur County Court House in Leon, Iowa.
Defendant Professional Business Services Inc. is a Missouri corporation with its registered office at 1220 Washington, SU 300, Kansas City, Missouri. Defendant United Services LLC is a Missouri company. Defendant Rio Baca Inc. is an Iowa corporation located at Grand River, Decatur County, Iowa. Defendant George L. Young is an officer of PBS, United Services and Rio Baca and is from Grant City, Missouri. Defendant Kathleen I. McConnell is an employee and officer of PBS and is from Kansas City, Missouri.-30 -