September 14, 2018
By Dominic J Bartolone
Contributing Editor, Fraud Friday
Fraud Friday — Two Years in Jail for Photoshopped Cattle Inventory Statements in $2 Million Fraud
Another cattle rancher is going to prison for fraud after providing phony cattle numbers to his bank.
Last July, we wrote how a North Texas man was indicted for fraud after defaulting on $5.8 million in bank loans leveraged against cattle he did not own.
Now we have another another case of cattle fraud. A federal investigation has led to the arrest and conviction of a Montana rancher after he was found to have intentionally misled his bank by inflating the number of cattle he held on his ranches.
On Aug. 27, Darrell Alan Hartley, 67, of Miles City, Montana, was sentenced to two years in prison and ordered to pay $2.1 million in restitution to the bank. Hartley was convicted of a single count of wire fraud in U.S. District Court in Billings, Montana.
“I’ve seen quite a number of wire fraud cases come through here since I’ve been on the federal bench,” says Judge Susan Watters. “I have yet to have a case in front of me where I’m talking about more than $2 million in restitution.”
Hartley took out a loan from a Texas-based bank in 2002 to help cover the expenses of his ranching operations in Oklahoma, Texas, Wyoming, and other states.
By 2015, Hartley had started inflating the number of cattle he was running on those properties. This false reporting violated the terms of the loan made by Capital Farm Credit, which required that the $8 million loan balance be paid down as the cattle were sold.
In July 2017, auditors from the bank planned an inspection of Hartley’s cattle operations. About a month later, Capital Farm Credit’s vice president of lending flew to Hartley’s Wyoming ranch to inspect the cattle. During the visit, Hartley informed the bank executive that the head of beef he claimed to own was inaccurate and admitted that he had been “padding his numbers” since around October 2015.
Hartley explained to law enforcement that he had used the proceeds from the unreported cattle sales to reinvest into his struggling ranching business. He said he had hoped to repay the bank as soon as the cattle market recovered.
Court records show that Hartley allegedly earned more than $2.1 million from cattle sales during the time he misled the bank with fraudulent cattle numbers.
After sentencing, Hartley apologized for the crime, telling the court, “I’m sorry for the embarrassment that I’ve caused my family and friends.”
Hartley received a reduced charge after he agreed to a plea deal in April which required him to pay restitution to Capital Farm Credit.