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Judge OK's $5.6M Payout Plan in Missouri Cattle Fraud Case

Posted on: Tuesday, 30 August 2005, 18:00 CDT

Aug. 29--A judge approved a plan Friday to pay $5.6 million to the victims of a Missouri cattle fraud case, clearing the way for checks to be sent out as soon as next week.

U.S. Bankruptcy Judge Jerry Venters in Kansas City, Mo., approved the interim payments to the victims of George Young and Kathleen McConnell, who are serving federal prison terms for fraud.

An additional $600,000 will be divided among the victims after all expenses come in, bankruptcy trustee Robert Pummill said. The bankruptcy estate also is trying to collect on an insurance policy covering executive misconduct and $300,000 in federal income taxes that were paid by Young's businesses, which had reported false profits.

Altogether, the payments would amount to about 4.2 cents on each dollar of the $131.7 million owed to the defrauded businesses and individuals. Several Midwestern banks lost another $50 million in the case.

The check amounts will range from $7.21 to a telephone company to $340,000 to Elkhorn Valley Bank of Norfolk, Neb., on behalf of a cattle company.

Young and McConnell began losing money in the cattle business in 1999 but kept accepting investments and cattle, eventually using new money to pay off old debts and creating thousands of "phantom cattle" that existed only on paper.

The businesses collapsed in August 2001. Since then, the bankruptcy court has been unraveling the case and determining how to divide up the proceeds from selling the cattle and land that Young and McConnell actually owned.

Some of the victims had objected to Pummill's original payment plan, especially when he relied on McConnell's calculations to determine the check amounts.

Pummill said he talked with those who objected over the past month and resolved the disputes. The revised payment plan raises the amounts paid to a few of the victims and lowers slightly the amounts most will receive.

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Source: Omaha World-Herald

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