[Note: at the polite request of innocent family members, I replaced the name of the least culpable defendant with ****.]
Surprisingly, it appears that I am the first to break this story – that the “Cattlegate Cons” were sentenced this morning by U.S. District Court Judge Thomas E. Johnston as follows:
O’Brien was sentenced to 97 months of active incarceration and 3.4 million dollars in restitution.
Henthorn was sentenced to 9 months of incarceration and a $75,000 fine.
***** was sentence to 5 months of incarceration and a $50,000 fine.
ANOTHER UPDATE: The Register-Herald has now published a lengthy article on the sentencing yesterday. Reporter Christian Giggenbach noted in the article that Judge Johnston made some interesting observations about the case during the sentencing hearing.
Johnston also railed on Henthorn, 46, of Lewisburg, for abusing his position of trust in the banking community. He also insinuated this was probably not the only illegal act Henthorn had committed.
“You were living a privileged life and you threw that away,” Johnston said. “This is an example of what can happen when you allow greed to overcome you.”
Henthorn also apparently attempted to get his probation officer to remove negative letters that were going to the judge.
Former FNB board member James C. Justice II of Beckley was among family and church members who wrote letters in support of Henthorn. One document filed by a court official indicated the defendant called his probation officer on June 4 and asked her if “she would remove the negative” letters from his support file.
“The probation officer responded she would not do so … Mr. Henthorn was obviously upset by this answer and ended the conversation soon thereafter,” wrote U.S probation officer Peggy Adams.
Can you believe the arrogance of this guy? Judge Johnston also questioned why First National Bank of Ronceverte was suspiciously absent from this entire ordeal – despite the fact that their President and Board members caused this whole mess. According to the article:
Johnston also asked a rhetorical question about Henthorn’s former employers.
“I’m puzzled by the fact that First National Bank has not participated at all in this hearing,” the judge said. “I expect the whole story has yet to be told.”
However, there was a former board member and one former president of First National Bank there supporting Henthorn and *****, respectively (see Justice above). According to the article:
****** had about 15 friends and family members present for the hearing, including former state Commerce Secretary and ex-FNB president Tom Bulla, who Johnston vocally noted had come to support ******. Johnston said individuals filed more than 100 letters of support for ******, “the most I’ve ever seen in a case.”
So, “FNB” was not completely absent, they were represented by former officials – who were there to ask the judge to be lenient. I would note that one of those former officials himself resigned from the board only shortly before ***** and Henthorn themselves resigned from “FNB,” which was reported publicly, but not explained. Don’t you just love banks? Their only motivation is money, and even when their hands are publicly caught in the cookie-jar, they can just switch presidents and board members, and continue on foreclosing on people’s homes who do not have connections to the Board, and making sweetheart loans to crooks like O’Brien, who do have connections to the Board. For too long citizens have been abused by bank boards using their positions to help their buddies and harm innocent folks. A bank would slit your throat if they thought they could make a buck. And lawyers get a bad name….
To *****, Judge Johnston had this to say:
“You participated in a sorry effort to cover this up … which almost resulted in an obstruction charge,” Johnston said.
“Is this the way business is done in Greenbrier County? By being present when a bribe is slid across the table to a bank president?
Johnston then asked why ***** would have risked so much by setting up the bribes, but then not receive any money in return. Johnston also suggested this was not ***** first brush with illegal activity. Forbes told the court ***** turned down bribe money when approached by O’Brien.
“Why would a man of your experience get involved with this?” Johnston asked.
Lastly, the Register-Herald article noted that the case is still being investigated, and that the defendants will most likely enter prison within the next 30 to 45 days. It will be interesting to see whether Judge Johnston is right that “the whole story has yet to be told….”
Note: There also is a new Charleston Gazette article this morning.
– John H. Bryan, West Virginia Attorney.
Regarding the Greenbrier County “Cattlegate” case, the Register-Herald published an article this morning detailing defendant Kevin O’Brien’s presentencing memorandum filed by his defense attorney, in which his attorney states that this was not a typical fraud case because “many of his victims’ losses were unintended.”
Since when are ponzi schemes and check kiting not typical? It sounds like every other “white-collar” federal fraud prosecution that hits the headlines. I guess the word to pay attention to is “many.” There were a lot of victims, some of which were obviously intended. When you “sell” some poor sap a herd of cows that either don’t exist, or that you have already sold to someone else, you darn well intend to cheat that person out of their investment. Of course there were others that he didn’t know about. When you cheat someone, you also cheat others who were depending on the person you cheated. Although you may not intend to directly cheat those people, it is absolutely foreseeable that others will be affected and harmed.
O’Brien’s attorney argues that he will never be able to operate the same type of scams again because of the media coverage surrounding the case.
“Because (his) criminal prosecution has received a tremendous amount of media coverage in his community, it is highly improbable that individuals will place the trust in him necessary to engage in the same criminal conduct upon his return to the community.”
Yeah, but what if he moves to Florida? I guarantee that nobody there has ever heard of him. He could change his name, or use a pseudonym – and Florida is the third largest cattle-producing state. He could go right back into business. He obviously has no qualms about running a scam. He probably only regrets getting caught. If ever in the future he things he can do something like this again and get away with it, do you think he will hesitate? People would have no idea about his prior prosecution. But maybe if he serves a long stretch in federal prison, his desire to be a free man will overwhelm his greedy criminal tendencies.
– John H. Bryan, West Virginia Attorney
The Register-Herald published a rather lengthy and informative article about Greenbrier County’s “Cattlegate” scandal this morning. I have posted on this matter several times thus far, here, here, here, here and here, and I have noticed a lot of interest in this case from the sheer amount of search engine traffic directed to my site from searches about these individuals. I suppose that some people were relying on me to post an update to this matter since the sentencing was supposed to already have happened. But I really didn’t have any idea what was going on. But, I knew that Register-Herald reporter Christain Giggenbach was on top of it, so I need only wait until he published an article, which I knew he surely would – and this morning he did.
Apparently the sentencing was supposed to have taken place this morning, but it was continued, though there were no motions filed by either the prosecution or the defense. Well why was it continued? Apparently these angelic creatures have turned stool pigeons and are collaborating with authorities in investigating other individuals. But since all these canaries are proven liars, I’m not sure what their help is worth, and investigators better not give their words more than a micro-ounce of a grain of salt. The history books are full of tragedies which have occurred through the utilization of this type of snake-in-the-grass testimony. For example, see this post from Glen Graham at the Oklahoma Criminal Defense Blog.
The sentencings were continued to October 17 at 10:30 a.m. before U.S. District Court Judge Thomas E. Johnston in Beckley’s Federal Courthouse.
So what kind of sentences are they looking at? A lot of people have commented to me that this bunch is going to get away with probation, but that will not happen. They may however, get some type of home confinement, or mixed sentence. With respect to O’Brien, a presentencing memorandum filed by Assistant U.S. Attorney L. Anna Forbes recommended a prison sentence up to 10 years, but “indicated the defendant has provided more information about possible criminal conduct of others who may have filed claims in his multi-million dollar bankruptcy case.” Lastly, she writes to the Court that “a sentence within the advisory guildine range of 97 to 121 months of imprisonment is appropriate.” So fear not, even with his sleazy finger-pointing, he will be doing time.
With respect to Henthorn and *****, the AUSA recommended 6 to 12 months, while their lawyers are arguing for home confinement or a mixed-type of sentence – and they are apparently strenuously snitching as much as the feds will allow, in order to get what they want. Mind you, that all of these defendants already snitched on each other – one even reportedly wearing a wire in a conversation with the others.
I know that there are a lot of people out there, in Greenbrier County, Monroe County – and across the fruited plain – who want the Judge to stick it to them. The AUSA noted in her memorandum that:
“One of the victims is a single-mom with a couple children in college, another is a Virginia cattle farmer with a small farm who lost so much money and was so ashamed by his financial predicament that he could not, for a long time, bring himself to tell his wife about what the defendant had done,” Forbes wrote. “Many of the victims attempted to pursue claims in bankruptcy, a process that left some with unsatisfactory settlements, large legal fees and a sense, because of the perceived misconduct by other creditors, that they had not been treated fairly by the bankruptcy system.”
So this is a great group of guys. Real quality people, and I wish them luck on the 17th.
– John H. Bryan, West Virginia Attorney.
I apologize for not posting much this week, but it has been one of those end-of-the-month weeks…
As I had previously detailed, the sentencing for O’Brien, Henthorn and **** was scheduled for Friday, June 30, but now has been continued until sometime in the fall. This was likely a joint motion as probation officers had likely not completed their presentencing reports, which the lawyers must rely on and respond to accordingly, depending on what they contain. It’s important to remember that in federal court, the most frequent claim for legal malpractice comes out of mis-advice given by attorneys, to their clients, regarding the federal sentencing guidelines, so it is important to get it right the first time.
For those of you who don’t know, this is just a case that probably repeats itself in all other small towns across the country. You have good country folks who work hard to earn a living. Then you have the fat cats, who get high-on-the-hog by ripping off the working folks. Most times they are greedy, compulsive, narcissistic liars who have an obsession with all things underhanded. They will do anything for money – anything that is, except for actually earn it. They look down at the working peons as a bunch of suckers who were not blessed with the infinite wisdom they were born with, when in reality they were just born as spoiled rich kids with a lack of morals and manners.
It still blows my mind that this bank CEO, and they almost always become extremely rich legally, would throw his life away for $10,000 worth of bribes… In all likelihood, this was not the first time, there probably were many other bribes passed under the table, and that was what made it worth it in his mind, not this particular bribe.
You can read the full article here.
– John H. Bryan, West Virginia Attorney.
I have been asked many times recently what has happened with this case. Well, nothing has really happened since the sentencing has not yet taken place. The sentencing for these crooks will take place on June 30, 2008 before U.S. District Judge Thomas E. Johnston. There are also several civil cases currently pending in this matter, which undoubtedly will be detailed in the future.
You can read my previous post here.
– John H. Bryan, West Virginia Attorney.
From the Register-Herald:
Another lawsuit filed against bank, officials in alleged cattle fraud case
By Christian Giggenbach
LEWISBURG — Another lawsuit has been filed against First National Bank of Ronceverte and two former bank officials, this time by an Illinois man who alleges disgraced cattle broker Kevin Scott O’Brien defrauded him out of $104,000.
The lawsuit, filed by Robert Dwyer, named First National Bank, former bank president Charles A. Henthorn and former board director **** as defendants.
Henthorn and **** recently pleaded guilty in federal court, Henthorn for taking $10,000 in bribes from O’Brien, and **** for setting up bribes.
O’Brien pleaded guilty to a mail fraud charge involving the sale of cattle in fraudulent Ponzi schemes. A sentencing date has not been set for any of the defendants.
Dwyer claims he gave O’Brien $104,000 in February 2006 for “80 pairs of heifers and their calves,” which should have been shipped to Dwyer’s farm in Carthage, Ill.
“Instead of arranging for the cattle to be trucked to Dwyer … O’Brien sold the cattle to ****,” the lawsuit said. “O’Brien’s sale of the Dwyer cattle to **** was simply one of the last acts of fraud and deceit in O’Brien’s continuing scheme.”
Dwyer claims the bank knew about the **** deal, but looked the other way because O’Brien owed the bank money.
“The bank, through its senior management, including Henthorn and ****, devised a scheme with O’Brien pursuant to which O’Brien would sell **** cattle,” the lawsuit said. “The money that **** paid for the cattle was to be deposited into O’Brien’s checking account in satisfaction of debts that O’Brien owed the bank.”
Dwyer is seeking punitive damages on the basis of fraud, civil conspiracy, and aiding and abetting a wrongful act, among other charges.
Dwyer is being represented by Charleston lawyer James W. Lane.
Neither **** nor Henthorn could be reached for comment.
In February, another Illinois man, Frederic W. Nessler, filed a $340,000 lawsuit against the same three defendants alleging fraud.
O’Brien, who is currently mired in a multimillion-dollar bankruptcy, wasn’t named as a defendant in either suit.
— E-mail: email@example.com
From the Beckley Register-Herald:
Note: See my earlier post regarding this case here. Each defendant faces a maximum of 30 years in federal prison. Obviously each will receive less than that. Their sentencing, which will take place in June will follow the federal sentencing guidelines, which I will not attempt to decipher in this post. Almost positively however, they all will do time. You can also read today’s Charleston Gazette article about this case here, and the Charleston Daily Mail article here. – John H. Bryan, West Virginia Criminal Defense Attorney.
Three plead guilty in cattle, bank scandal
A businessman and two former bank officials pleaded guilty Monday in Beckley’s federal court to charges stemming from a Greenbrier County $4.2 million cattle and banking scandal.
A federal postal inspector testified that an investigation by State Police involving dirty dealings by cattle broker Kevin Scott O’Brien, of Ronceverte, also led to separate criminal charges being filed against former First National Bank of Ronceverte president and CEO Charles A. Henthorn and former First National Bank board director ****.
Last month, O’Brien, 28, was charged in an information with one count of mail fraud, but the complaint also listed several instances of fraudulent business practices including “phantom herding” — selling the same cattle to multiple buyers — check kiting, bribing a bank official, and running pyramid or “Ponzi” schemes.
Prosecutor’s say O’Brien used sophisticated schemes to defrauded investors and businesses out of $4.2 million beginning in early 2005 while brokering cattle deals in West Virginia, Illinois, Texas, Virginia and Nebraska.
Monday’s testimony revealed O’Brien signed a plea agreement with prosecutors in May 2006 and then helped police gather evidence against Henthorn, 48, by wearing an undercover wire which secretly taped the bank president incriminating himself about taking bribes.
Prosecutors then used that evidence and more in persuading Henthorn to wear an undercover wire which recorded incriminating statements made by ****.
There was no evidence that **** wore an undercover wire during the federal investigation which also included FBI and FDIC officials. State Troopers Sgt. V.S. Deeds and W.A. Pendleton, who brought their investigation to federal prosecutors, were present for Monday’s hearing.
Last month, Henthorn was charged with accepting nearly $10,000 in bribes from O’Brien, and **** was charged with aiding and abetting those bribes. Henthorn originally brokered his deal with prosecutors nine months ago and **** signed a plea agreement last August, Forbes said.
When asked why nearly two years had elapsed since O’Brien’s first contact with prosecutors, Forbes said O’Brien’s and Henthorn’s cooperation “took many months to develop.”
“There is no evidence that any criminal activity goes beyond these three defendants,” U.S. Attorney L. Anna Forbes said after the hearing.
O’Brien softly said “yes, your honor” when U.S. District Judge Thomas E. Johnston asked him point blankly: “Did you do it?”
Although O’Brien’s felony charge was specifically based on a $362,000 check he received in the mail after defrauding a Virginia cattle owner, much of Monday’s testimony concentrated on the four bribes O’Brien gave to Henthorn.
Postal Inspector Burl Fluharty testified **** introduced O’Brien to the bank president and told the cattle broker that Henthorn had “the keys to the bank.”
“**** advised O’Brien that payments to Charles Henthorn would help him procure loans,” Fluharty said. “**** facilitated these bribes to the bank president.”
Forbes said O’Brien gave Henthorn four separate bribes in late December 2005, with two cash payments totaling $2,200 and two checks written from his Shamrock Farms business account of $2,500 and $5,000. Forbes entered both checks into the court record as evidence against O’Brien and Henthorn. Henthorn was represented by Charleston lawyer James Cagle.
“It was expected that Charlie Henthorn would extend favorable treatment to Kevin O’Brien and be generally influenced in banking matters,” Fluharty told the court. No specific loan was tied to the bribes.
All three defendants posted a $10,000 unsecured bond and were immediately released after Monday’s hearing. None were available for comment. Each faces a maximum prison sentence of up to 30 years; however, it is unlikely that any of the sentences will be that stiff. Johnston set all three sentencing hearings for 10 a.m. June 30. The trio also face a bevy of fines.
O’Brien, a 1999 graduate of Greenbrier East High School, told the court he previously had worked for his father’s asphalt and excavating business and a NAPA store prior to brokering cattle deals. His federal bankruptcy case is still pending and one court official said O’Brien’s liabilities now total almost $8 million.
Forbes said “close to a dozen victims” were cheated out of money by O’Brien.
O’Brien’s defense attorney, Rodney Smith of Charleston, suggested that the $4.2 million number that prosecutors say his client defrauded investors will be challenged. Karin Nelson, who claims O’Brien cheated her out of $200,000, attended the hearing but declined comment.
Henthorn told the court he had been in the banking industry for 25 years. A former bank examiner, Henthorn resigned from First National last summer after working there for over 10 years.
****, who was represented by Charleston lawyer Michael Cary, said he began working in the real estate business with his father in 1974. He now owns two Virginia car dealerships and is a Realtor and auctioneer. **** had been on the bank’s board for eight years until his resignation last July.
From the Beckley Register-Herald:
3 charged in multimillion-dollar cattle scandal involving bank
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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