Ponzi grain scheme shocks, shakes Mo. farmers

>What was once synonymous with Enron and Wall Street tycoon Bernie Madoff has trickled into the agriculture industry of a rural Missouri town. Cathy Gieseker was arrested in Martinsburg (pop. 330) last month, charged with stealing as much as $50 million from 180 farmers in a grain-buying pyramid scheme, Phillip O’Connor reports for the St. Louis Post-Dispatch. (Encarta map)

T.J. Gieseker Farms and Trucking became one of the largest grain shippers in Missouri when the Ponzi scheme reached its peak in early 2009. In eight months, investigators say Gieseker's accounts payable rose from $13 million to at least $27 million. An excerpt from the federal indictment outlines the timeline: Gieseker began marketing grain in 2002, offering farmers up to double the price that they could receive in the spot market. Gieseker claimed she could pay higher prices because she had grain contracts with Archer Daniels Midland, when in fact, she did not. Instead, she sold almost all her grain at the spot market price.

Despite the allegations, there are mixed feelings about Gieseker, who grew up in the area 100 miles northwest of St. Louis, and served on the local school board. Some, like farmer and native Steve Hobbs, just want answers. "Now people can maybe get some facts," he said. "There's already been plenty of speculation." But other residents and industry advocate groups are less understanding. Linus Rothermich (above, center) sold Gieseker almost his entire crop last year, only to be forced to take out loan just to continue farming. Missouri Agriculture Department head John Hagler told O’Connor, "This is a sad day for agriculture.” (Read more)