Bureau County Farmer Pleads Guilty to Defrauding Bank of $2 Million and Bankruptcy Fraud
Peoria, Ill. – A Bureau county farmer, David L. Duckworth, 40, of Buda, Ill., waived indictment and pled guilty today to an information charging him with money laundering and bankruptcy fraud. Duckworth appeared in federal court in Peoria today before Senior U.S. District Judge Joe B. McDade. Sentencing is scheduled on Dec. 12, 2011.
During court proceedings and according to court documents, in December 2008, Duckworth sought and received a $1.1 million line of credit to be used toward the 2009 crop year. As collateral, Duckworth pledged stored grain from the 2008 crop year and future grain from the 2009 crop year. However, unbeknownst to the bank, Duckworth was selling corn in nominee names, including Lighthouse Farms, Midwest Farms and others, thereby avoiding the bank’s liens.
Duckworth completed another financial statement in January 2010, and requested a loan of $950,000 to be used for the 2010 crop year. As part of the loan process, Duckworth provided the bank with a grain inventory letter stating that Duckworth had 337,892 bushels of corn in storage when in fact, the elevator did not issue the letter and there were actually only 4,819 bushels of corn in storage.
In October 2010, Duckworth told the bank that it had been a bad year and he needed to further extend the note. When the bank contacted the elevator to verify the amount of grain in storage, the bank learned that the entire 2009 inventory had been sold and that there were only 26,633 bushels in storage for the 2010 crop. Duckworth admitted that from February 2009 to October 2010, he sold more than $460,000 in corn in the names of third parties and nominees.
In fraudulently obtaining and extending the loans, Duckworth defrauded the Bank of Toulon of approximately $2 million.
Shortly before filing bankruptcy in November 2010, Duckworth incorporated Power Trading LLC in Indiana and opened a bank account for Power Trading. Duckworth consolidated the funds from Lighthouse Farms and Midwest Farms accounts and transferred those funds to an undisclosed Power Trading account at a different bank.
Duckworth further admitted that when he filed for bankruptcy, he falsely stated that he had $200 in cash and only $200 in bank accounts when the Power Trading account had a balance of $76,248. During a deposition in the bankruptcy case, while under oath, Duckworth falsely denied having any signatory authority, bank accounts or relationship with Power Trading.
The statutory penalty for money laundering (one count) is up to 10 years in prison and a fine of up to $250,000; the offense of bankruptcy fraud (one count) carries a maximum statutory penalty of five years in prison and a fine of up to $250,000.
The charges were investigated by the Internal Revenue Service Criminal Investigation Division and the United States Postal Inspection Service. Supervisory Assistant U.S. Attorney Darilynn J. Knauss is prosecuting the case.
“Full and accurate disclosure of assets is a cornerstone of our nation’s bankruptcy system,” stated Nancy J. Gargula, U.S. Trustee for Region 10. “We are grateful to U.S. Attorney Lewis, Supervisory Assistant U.S. Attorney Knauss, the U.S. Postal Inspection Service and the IRS Criminal Investigation Division for their commitment to combating bankruptcy fraud and abuse, as demonstrated by this successful prosecution.” Region 10 of the U.S. Trustee Program is headquartered in Indianapolis, with additional offices in South Bend, Ind., and Peoria, Ill. The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
James A. Lewis
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