Are Your Grain Deals at Risk? Lessons from a $27 Million Ponzi Scheme

The last place a farmer wants to spend a summer day is in a court room. But that is exactly where more than a hundred Missouri farmers found themselves this past week, trying to be made whole on grain transactions that went horribly wrong and left them holding $27 million in lost grain sales.  The culprit of the scam was a small grain dealer and hauler named Cathy Gieseker. A rough-hewn, working class gal who tried to build up her grain hauling business after the death of her husband in 2007.  Around this time, she told farmers she had special deals with ADM Grain. These deals, which she claimed a farmer could only get by doing business with her, included well above market prices, exotic contract terms and multi-year contracts. And none of it in writing.  But it was all a lie. Gieseker was a fraud and had fabricated these deals to advance one of the biggest Ponzi schemes to ever hit the grain belt. Indeed, she was labeled the Madoff of the Midwest and subsequently sentenced to 9 years in prison in 2010. In her plea agreement with U.S. attorneys, she stated she acted alone in this fraud. But that didn’t help the farmers. Her assets paid out to farmers amounted to only about $1 million, so there was still a gaping hole in their wallet from this fiasco.