Office of the Attorney General
Attorney General Conway Announces Guilty Pleas of Four Eastern Livestock Executives

Press Release Date:  Tuesday, March 27, 2012  
Contact Information:  Allison Gardner Martin
Communications Director
502-696-5651 (office)

Kentucky Attorney General Jack Conway and his Office of Special Prosecutions today announced the guilty pleas of four former executives of the now-defunct Eastern Livestock, LLC, based out of New Albany, Ind. The pleas were entered in Barren-Metcalfe Circuit Court and include terms that are expected to return, in the form of court-ordered restitution, all of the losses accounted for by the Kentucky Attorney General in the indictment. Restitution for farmers who sold their livestock at the Metcalfe County auction site totals more than $850,000.

Former Eastern Chief Executive Officer and founder, 71-year-old Thomas "Tommy" Gibson, and Eastern's former Chief Financial Officer, 58-year-old Steve McDonald, each pled guilty to all counts against them. Those counts include: one count of criminal syndication, engaging in organized crime; 17 counts of theft over $10,000; 144 counts of theft under $10,000/over $500; and 11 counts of theft under $500. Criminal syndication is a Class B felony carrying 10 to 20 years in prison. The Commonwealth will recommend a 10-year prison sentence for McDonald and Gibson, concurrent with any federal sentence received. Each still faces charges in the U.S. District Court for the Western District of Kentucky.

Gibson and McDonald admitted to being part of an on-going criminal collaboration of several people and/or entities between 2009 and 2010, the purpose of which was to commit on-going theft by falsely inflating the balances of the bank accounts of Eastern Livestock. By use of the falsely inflated accounts and check kiting, Eastern Livestock and its principles continued to buy cattle from Kentucky producers with essentially non-existent funds. Following several bank examinations of Eastern's operations, Fifth Third Bank of Cincinnati then decided to close Eastern's accounts and dishonor Eastern's outstanding checks in early November, 2010. This happened just days after Eastern had purchased more than $800,000 worth of cattle in Metcalfe County. The result was the collapse of Eastern's operations and the bouncing of more than $850,000 worth of checks to cattle producers.

Shortly following Eastern's collapse in November, 2010, investigators and prosecutors with the Kentucky Attorney General's Office, with the assistance of the Federal Bureau of Investigation, began to piece together the details of the ongoing criminal fraud that had sustained Eastern's operations since at least 2009. Much of this evidence consisted of tens of thousands of pages of records kept by banks that held Eastern's accounts, particularly Fifth Third Bank of Cincinnati. The Attorney General's Department of Criminal Investigations worked closely with the U.S. Department of Agriculture, Kentucky Department of Agriculture, Kentucky State Veterinarian Robert Stout, Federal Bureau of Investigation, U.S. Attorney's Office - Western District and other agencies in completing the initial investigation.

Also entering guilty pleas were former Eastern Livestock accountant 43-year-old Darren Brangers of Louisville and former Eastern Livestock affiliate 48-year-old Grant Gibson of Lanesville, Ind., who is the son of Eastern founder Tommy Gibson. Brangers and Grant Gibson each pled guilty to facilitating the operations of the criminal syndicate run by Tommy Gibson and Steve McDonald, and to facilitating the several instances of theft committed by the co-defendants. The Kentucky Attorney General will recommend a five-year sentence for each of these defendants, probated upon payment of restitution.

Defendant Grant Gibson's plea agreement includes terms under which he will fund $680,000 worth of the total restitution, with defendant Darren Brangers funding $210,000 of restitution. Distribution of restitution to approximately 170 victims will be handled by the Office of Attorney General. The Office of the Attorney General has identified all of the recipients and will be contacting affected farmers when plans have been finalized for the restitution distribution.

Final sentencing for Steve McDonald, Darren Brangers and Grant Gibson is June 12, 2012 before Barren-Metcalfe Circuit Judge Phil Patton. Tommy Gibson will be sentenced on June 26, 2012.