Two Plead Guilty in Grain Elevator Scam
CHICAGO (AP) _ Two agribusiness executives pleaded guilty Wednesday to mail fraud in the multimillion-dollar Ty-Walk grain elevator failure.
John C. ``Buzz″ Gibbons, 50, and Kathleen L. Lestina, 42, were released on their own recognizance after a brief appearance before U.S. District Judge Elaine Bucklo pending a Nov. 21 sentencing.
Gibbons and Lestina were charged May 29 with obtaining $63 million in credit lines from four lenders by lying about how much grain they had to pledge as collateral and putting up the same grain as collateral for more than one loan.
Gibbons was chairman, president and chief executive officer of Ty-Walk Liquid Sales Inc. Lestina was board secretary and vice president of grain policy and procedures.
Assistant U.S. Attorney Patrick Layng said the government’s recommended sentencing range for Gibbons would likely be 46 to 57 months and for Lestina 37 to 46 months in prison. The maximum penalty for mail fraud is 30 years.
He said the judge could order Lestina and Gibbons to pay a hefty restitution.
The entire $5.2 million Illinois grain insurance fund was wiped out to pay 330 claimants, five of them lenders and the rest Illinois farmers, after Minooka-based Ty-Walk collapsed in August 2001.
In addition, $4 million was appropriated from the state’s general revenue fund to cover the losses, and the Illinois Department of Agriculture liquidated the company’s assets to add to the amount paid out.
After the guilty pleas were entered, Layng said $34 million was still owed to the four banks _ Wells Fargo Bank, Brown Brothers Harriman & Co., AIG International Inc. and First Midwest Bank _ and the grain insurance fund.
Ty-Walk operated elevators in Minooka, Elwood, Joliet and Seneca. In addition, the company sold custom fertilizer for the turf industry.