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Press Release

Mason City Man To Federal Prison And Ordered To Pay Over $300,000 In Restitution For Farm Fraud

For Immediate Release
U.S. Attorney's Office, Northern District of Iowa

A man who made false statements for purposes of influencing a financial institution was sentenced July 8, 2013, to two years in federal prison.

Raymond A. Schaefer, 41, from Mason City, Iowa, received the prison term after a March 21, 2013, guilty plea to making a false statement.

At the guilty plea, Schaefer admitted he obtained a promissory note and received a $435,000 FSA (Farm Service Agency) guaranteed line-of-credit through MidWestOne Bank. The note specified that FSA would guarantee 90% of the farm operating line-of-credit for the crop years 2006 through 2010. The terms of the loan required that the principle be paid down to $100 annually prior to advancing money for the next crop year, with accrued interest paid. The terms also required Schaefer to supply accurate periodic financial statements. In late 2007 and early 2008, the bank learned Schaefer was behind on his payments to various other debtors for farm inputs. In preparing the 2008 balance sheet, Schaefer provided information to the bank, misrepresenting the value and existence of his assets, in an attempt to convince the bank that his financial situation was better than it actually was (for example, Schaefer indicated that he had 68,000 bushels of corn and 4,000 bushels of soybeans, when in fact he had none). Schaefer gambled large amounts of money obtained from his FSA line of credit loan and other financing, much of which was previously deposited into his used car business checking account and then withdrawn from the account unbeknownst to his various lenders, including MidWestOne Bank. To fund his gambling, Schaefer depleted the balance of his car lot bank account and his farm account with MidWestOne Bank.

Schaefer was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Schaefer was sentenced to 24 months’ imprisonment. A special assessment of $100 was imposed, and he was ordered to make $370,803.89 in restitution, $157,587.43 to MidWestOne Bank and $213,216.46 to Farm Service Agency. He must also serve a five-year term of supervised release after the prison term. There is no parole in the federal system.

Schaefer was released on the bond previously set and is to surrender to the United States Marshal on July 29, 2013.

The case was prosecuted by Assistant United States Attorney Jamie Bowers and United States Attorney Sean Berry. It was investigated by the U.S. Department of Agriculture-Office of Inspector General, the Farm Service Agency, and the Iowa Division of Criminal Investigation.

Court file information is available at The case file number is 12-3047.

Updated February 19, 2015