Following $23.1 M settlement in Texas cattle fraud case, TSCRA ranger warns ranchers to protect themselves
January 31, 2017
Don't mess with Texas.
That's the message a jury sent in a recent cattle fraud case, which found Tony Lyon, Owen Lyon and Monna Lyon guilty of a check kiting scheme against Midwestern Cattle Marketing, LLC, a Nebraska-based cattle broker.
In a unanimous ruling regarding the civil suit determined on Jan. 20 in the 271st Judicial District of Texas in Jack County, the jury awarded $23.1 million to Midwestern Cattle, making it one of the largest cattle fraud cases in Texas history.
Dating back to 2011, Tony Lyon, working on behalf of Lyon Farms, located in Perrin, Tex., and owned by Lyon's parents, Owen and Monna, started conducting business with Midwestern Cattle, which operates out of Sidney, Neb., and Greeley, Colo. According to reports, Lyon bought and sold cattle through Lyon Farms to Midwestern Cattle, often using a third party to coordinate the sales.
“In 2001, Lyon was charged and went to the penitentiary for similar crimes, and he still owes several million dollars in restitution from that ruling.” John BradshawLaw Enforcement Officer
Fast forward three years and hundreds of transactions, Midwestern Cattle entrusted Lyon with the company checkbook and signature stamp. Meanwhile, Lyon Farms sent Midwestern pre-signed checks by Monna Lyon to be filled out with the dollar amounts of the transactions.
In 2014, Lyon fabricated a cattle buyer named "John George," who owned George Cattle Co. in Fort Worth, Texas. Because Lyon handled the purchase, payment and delivery of the cattle, he was able to issue large checks from the Lyon Farms account, overdraw its balance, and recoup the funds with a check from the Midwestern Cattle account.
Through the fictitious George Cattle Co, Lyon was able to make 133 false transactions occurring over a period of several months, which involved over 50,000 head of cattle and $87 million. Ultimately, the jig was up for Lyon after a $5 million check bounced, which alerted both banks and Midwestern Cattle to trouble.
Despite the shocking revelations of this massive cattle fraud case, this isn't Lyon's first rodeo when it comes to criminal duplicity.
"Lyon is currently facing some federal charges that are pending, as well," said Jeremy Fuchs, Texas and Southwestern Cattle Raisers Association director of public affairs. "He has pled guilty to a multi-million dollar wire fraud and will be sentenced in a few months. Once that case wraps up, that's where we get more involved because Lyon faces other state charges pending here in Texas."
TSCRA has 30 special rangers, stationed throughout Texas and Oklahoma, who handle cases of farm and ranch theft. One of these licensed law enforcement officers is John Bradshaw, who helped facilitate the FBI investigation of Lyon.
"Although we've had comparable cases of cattle theft and fraud in Texas, a $23.1 million decision is the largest judgement I've ever seen tied to criminal cattle fraud," Bradshaw said. "In this wire fraud case that Lyon has pled guilty to, he had purchased 545 steers valued at $798,000. The victim in the case came from Nebraska, and they had discussed how long Lyon would lease them on the land he managed down in Texas. Soon, word got out that there might be an issue, and the victim came down from Nebraska to investigate himself. Lyon told him there weren't any cattle because he had gotten in a bind and needed to sell them. When the victim asked where his money was, Lyon told him that the cash was also gone because he had to use it to get out of what was 'hanging over his head.'"
The case won't be taken before a grand jury, Bradshaw explained, until after Lyon is sentenced through the Federal system. On the charge, Lyon could face jail time ranging from two to 99 years.
"Lyon is a liar," Bradshaw said. "He's a charismatic, likable guy, and that's why he's been able to dupe so many people. What he has done isn't by accident. He could have potentially been charged with over 140 counts of wire fraud, but the feds are only charging him with one."
Bradshaw said Lyon has a long history of fraud and theft that dates back to 2001.
"In 2001, Lyon was charged and went to the penitentiary for similar crimes, and he still owes several million dollars in restitution from that ruling," Bradshaw said. "In 2011, Lyon was investigated but ultimately not charged for an alleged $3 million case of fraud and theft that victimized at least three people. My hope is the courts put him away for what he's done because there's no doubt in my mind that he would do this again. It's all he knows how to do."
In 2014, when cattle prices were at an all-time high, so were crimes of cattle rustling. Now with down-trending markets, theft may not be as likely, but Bradshaw said some folks who get themselves in a bind may turn to illegal activity to weasel their way back out of financial trouble.
Across the country, cattle ranchers have watched the Lyon case intently to see how the court would handle this massive case of cattle fraud. However, Bradshaw said the case should serve as a warning for folks to take extra measures to protect their own operations.
"The cattle industry is still largely based on the honesty of a handshake, and to some degree, that's a good thing," Bradshaw said. "However, ranchers still need to be smart and safeguard themselves from those who mean them harm. People are always willing to put security on their homes, but they hesitate to take extra precautions to safeguard millions of dollars worth of cattle in a pasture or a feedlot."
So what can cattle owners do to protect themselves from fraud? Bradshaw offers some advice based on what he's learned in the field.
"Before you do business with someone new, contact your local law enforcement and ask them if the person checks out okay," he suggested. "We get calls all of the time from TSCRA members who ask us to verify people before they do business with them, and that helps avoid a lot of pain and loss. Some of Lyon's victims were honestly blindsided by what he did, but others were warned and went ahead and did business with him anyway. It's better to be safe than sorry, and it doesn't hurt to ask. We're very discreet, and nobody will ever know about your quiet inquiry about a person."
Bradshaw says having a few check points to verify the cattle is another good measure that buyers, sellers and bankers should require.
"Lyon was able to have three different guys under a lease contract, but he used the same set of cattle when the bankers came by to verify that they were on the pasture they were supposed to be," Bradshaw said. "If they had required brands or even ear tags, it would have been obvious that the cattle weren't what they were supposed to be. Consider making branding a part of your contracts. In cases of theft, if the cattle aren't branded, it is very impossible to prove ownership in our investigations."
Bradshaw says cattle thieves often target pastures that are far from houses and not found on well-traveled roads. A rancher may feel pretty vulnerable in that type of scenario, but a simple lock on the gate could ward off trouble.
"I had a case where a rancher had been stolen from on numerous occasions in a period of eight months," Bradshaw said "When we finally caught the thieves and got their confession, I asked them why they always targeted this particular rancher. They said it was because he didn't have a lock on his gate. Even though the rancher drove through his pastures every day, he didn't count them every day. However, if he had a lock that they would have had to cut, he would have been alert to the theft and the criminals wouldn't have had much time to run the cattle through a sale barn without getting caught."
Tony Lyon's days of cattle fraud schemes may finally be coming to an end, but his case serves as a strong warning for producers to protect what's theirs, be thorough in vetting new business partners and to take extra steps to safeguard their cattle investments. ❖