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Police Misconduct, Civil Rights Law

Greenbrier County Residents Headed to Federal Prison After Bank/Cattle Scandal

From the Beckley Register-Herald:

3 charged in multimillion-dollar cattle scandal involving bank

Christian Giggenbach
Register-Herald Reporter

Ending months of speculation and rumors, the U.S. Attorney’s Office in Charleston filed criminal charges Wednesday against a businessman, a former bank president and a former bank board member for alleged crimes stemming from a multimillion-dollar cattle scandal in Greenbrier County involving First National Bank of Ronceverte.

Named in the information were Kevin Scott O’Brien of Ronceverte, Charles A. Henthorn of Lewisburg and **** of Covington, Va. An information allows prosecutors to bypass a grand jury and usually indicates a defendant is cooperating with authorities.

O’Brien, 27, was charged with one felony count of frauds and swindles, according to court documents. O’Brien first made headlines in April 2006 when State Police began investigating the cattle broker after he filed a multimillion-dollar bankruptcy case.

Federal prosecutors say O’Brien brokered the sale of cattle in Greenbrier and Monroe counties and several other locations, including Virginia, Illinois, Nebraska and Texas, under the business names of Shamrock Farms and K&M Properties Investments.

Prosecutors allege O’Brien devised “schemes” to “defraud and obtain money by means of false and fraudulent pretenses” while selling cattle “at the expense of numerous farmers, banks and other business entities.”

The five-page criminal charge against O’Brien alleges in the spring of 2006 he under-reported his liabilities and distributed false financial statements to lenders and investors and “solicited and procured substantial sums of money” with the “false promise that he would invest the monies in specific cattle sale transactions.”

“It is further part of the scheme that (O’Brien) defrauded these various investors and lenders out of a total of approximately $4.2 million,” federal prosecutor L. Anna Forbes wrote.

O’Brien also allegedly engaged in “phantom herding” — selling the same group of cattle to multiple buyers — and pyramid schemes, where money from one investor is used to fund business dealings with another investor. Other allegations lodged against O’Brien include:

– Giving Henthorn, former First National Bank of Ronceverte president, bribes totaling approximately $10,000.

– Tendering worthless checks for large amounts of money.

– Directing banks to stop payment on checks for the purpose of quelling the investors’ mounting suspicions of fraud and to dissuade investors from reporting him to police.

– Engaging in check-kiting activities involving hundreds of thousands of dollars with various financial institutions to stave off financial disaster.

O’Brien could not be reached for comment Wednesday. If convicted, he faces a maximum sentence of 30 years in prison, with five years of supervised released and a possible $1 million fine.

Henthorn, who abruptly resigned as president and CEO of First National Bank of Ronceverte last June, was charged with one felony count of accepting bribes from O’Brien totaling about $9,700. Henthorn, a former bank examiner, had worked at the bank more than 10 years, starting out as a senior loan officer and vice president.

“(Henthorn in his capacity as bank president) did accept said payments by a customer … intending to be influenced in connection with business and transactions between (O’Brien) and the First National Bank,” Forbes wrote.

When reached by phone Wednesday, Henthorn refused to comment. Court documents indicated the bribe payments were paid in the fall of 2005 through December 2005.

****, who had served on the bank’s board of directors since 1999, resigned last July. **** was charged with one felony count of aiding and abetting the bribes that O’Brien gave to Henthorn. The criminal charge did not state that **** received any bribe money from O’Brien.

****, a Realtor, broker and auctioneer, owns Greenway’s Real Estate & Auction Co. and two car dealerships in Covington. When reached by phone Wednesday, he respectfully declined to talk about his pending charges.

“Everything will work its way out in the end,” he said.

Both **** and Henthorn face maximum prison sentences of 30 years each, five years of supervised release and possible $250,000 fines.

First National Bank chair Ron Snyder, who was out of town Wednesday, told The Register-Herald by phone he had not yet seen the charges leveled against his two former bank associates, but was “relieved to see this finally out in the open.”

“We are happy that this has finally been filed and now the rumors can either be quashed or reinforced,” Snyder said. “We understand the only wrongdoing were by the actions of these two individuals and this bears that out because they are the only ones that were charged.”

But left in the wake are nearly a dozen individuals, banks and businesses that O’Brien allegedly defrauded for millions of dollars. Lewisburg lawyer Steve Hunter, who represents Karin Nelson — who claims O’Brien cheated her out of more than $200,000 — said there are still many unanswered questions that need to be addressed.

“There are still pending motions left in the bankruptcy case. I still don’t think we have gotten to the bottom of this whole story and we won’t know until O’Brien is questioned under oath by lawyers representing the victims,” Hunter said Wednesday. “We still don’t know whose cattle went where and there are a lot of people who are out of a lot of money.”

Creditors named in O’Brien’s bankruptcy case include The Bank of Monroe, United Bank and Farm Credit of Lewisburg. These alone total $2.5 million. During his initial bankruptcy filing, O’Brien stated he owed First National Bank nearly $400,000. One Virginia cattle dealer filed worthless check charges against O’Brien two years ago totaling 270,000.

In August 2006, O’Brien attended one bankruptcy hearing after skipping out on several others. At that time, he invoked his Fifth Amendment right against self-incrimination more than 100 times.

Hearings to accept pleas from the three men will most likely be set in the next five days.

Note: Since the three men who were charged were charged by information rather than by indictment through a grand jury, it indicates that all three have made plea deals with the government already. Indeed, speculation for months has been that all three of these characters had in fact already made plea agreements. It has been noted through the grapevine that one of the defendants either wore a wire or had a recorded telephone conversation with the other – ensuring his conviction. With all of the rumors flying around, it will be interesting to see which of them are true. The fact of the matter is that when you are charged federally, your chances of not going to prison are extremely, extremely low. So, it is safe to say that all of these guys are going to do time in the federal pen – and deservedly so. – John H. Bryan, West Virginia criminal defense attorney.

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January 31, 2008 - Posted by | Cattlegate, Conspiracy, Embezzlement, Plea Agreements, Prosecutors, White Collar Crime

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