DALLAS, TX--(Marketwired - Jan 25, 2017) - On January 20 in the 271st Judicial District of Texas in Jack County, a jury found Tony Lyon, Owen Lyon and Monna Lyon responsible for defrauding Sidney, Nebraska-based cattle broker Midwestern Cattle Marketing, LLC through the use of a check kiting scheme involving the alleged purchase and sale of cattle in one of the largest cattle fraud cases in Texas history. The Jack County jury awarded $23.1M to Midwestern Cattle in a unanimous verdict.
"At its heart, this case was about the reputation of the Texas livestock industry. I told the jury they had the power to send a message to the rest of the country that Texans do not tolerate cattle fraud and they would protect all people who buy and sell cattle in the Lone Star State. And, God Bless Texas, this jury definitely sent that message," said Bell Nunnally Partner Chris Trowbridge. Trowbridge represented Midwestern Cattle along with Bell Nunnally Partner Heath Cheek and local counsel Todd Parks of Walters Balido & Crain in Decatur, Texas.
In 2011, Midwestern Cattle, a cattle brokering company with roots in Sidney, Nebraska and Greeley, Colorado, began doing business with Lyon Farms - a cattle business operated by Owen and Monna Lyon in Perrin, Texas. Tony Lyon, Owen and Monna Lyon's son and representing Lyon Farms, bought and sold cattle through Lyon Farms to Midwestern Cattle, coordinating the sale of the cattle to third-parties. After three years of doing business and hundreds of transactions and to facilitate simultaneous exchange of money for cattle, Midwestern Cattle allowed Tony Lyon to use a Midwestern Cattle checkbook and signature stamp. Lyon Farms, in turn, sent the cattle broker checks pre-signed by Monna Lyon to be filled out with the amounts of transactions.
In 2014, Tony Lyon introduced Midwestern Cattle to "big money" cattle buyer named John George who owned George Cattle Company in Fort Worth, Texas. Midwestern Cattle then began receiving numerous invoices from Lyon Farms for proposed transactions with George Cattle Company via Lyon Farms, which handled all aspects of the transactions -- from purchase, to payment and delivery of cattle. In total, 133 transactions occurred over several months involving over 50,000 head of cattle and $87M.
Unbeknownst to Midwestern Cattle, George Cattle Company was a fictitious company, invented by Tony Lyon. While Tony Lyon was purportedly facilitating the purchase and sale of cattle from and to George Cattle Company, he was engaging in a check kiting scheme wherein he would issue a large check from the Owen and Monna Lyon Cattle Account, overdrawing its balance, and then replenish the account with a check from the Midwestern Cattle account. Lyon Farms sent fictitious invoices from the George Cattle Company that were then paid by Midwestern Cattle -- thus inducing deposits into the Lyon Farms account. Lyon Farms took advantage of the float, overdrawing the Lyon Account and then using funds from Midwestern Cattle to make it appear positive before sending funds back to Midwestern Cattle. In reality, the Lyon Account was consistently overdrawn.
This cycle, involving an ultimately fictitious company, more than 100 invoices and large, complex cash flow streams, came to a head in June 2015, when the Lyon Account was drained, and a check for more than $5M bounced. Ultimately, checks written from Midwestern Cattle to the Lyons Account by Tony Lyon covered the overdraft and paid off obligations of Owen and Monna Lyon to their bank, but Midwestern Cattle was left with all of the damages from Tony Lyon's check kiting scheme, and its account was overdrawn by more than a million dollars.
At trial, Midwestern Cattle's President Jason O'Connell of Greeley, Colorado, testified that when asked about the account status, Tony Lyon confessed to him that "there were no cattle, there was no George Cattle Company, and there was no money to turn over." Later, when deposed, Tony Lyon refused the question and asserted his Fifth Amendment right against self-incrimination.
In a separate federal criminal matter, on Nov. 4, 2016, Tony Lyon pleaded guilty to wire fraud on a related transaction and is awaiting sentencing in March.
After a four-day trial and four hours of deliberation, a jury determined that Tony Lyon, Owen Lyon and Monna Lyon engaged in a conspiracy to commit fraud against Midwestern Cattle, awarding $23,193,765.02 to Midwestern Cattle. The jury also determined Owen Lyon and Monna Lyon aided and abetted Tony Lyon's fraud against Midwestern Cattle and found that Owen Lyon and Monna Lyon had independently committed fraud and civil theft against Midwestern Cattle. The case is Midwestern Cattle Marketing, LLC vs. Tony E. Lyon d/b/a Lyon Farms, Owen Lyon, and Monna Lyon, Cause No. 15-07-061, in the 271st District Court in Jack County, Texas.
"Cattlemen from North Texas to North Dakota and beyond had their eyes on this case. I am heartened that through this verdict, the Texas livestock industry -- where a man can and should rely on a handshake -- will remain strong," said Bell Nunnally's Trowbridge.
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With more than 50 attorneys and three decades of doing business, Bell Nunnally & Martin LLP is among the most respected business law firms in Texas, one of the 25 largest in North Texas and one of the state's fastest-growing firms. The depth of the firm's knowledge and breadth of its expertise sets Bell Nunnally apart. The firm, a member of the global law firm network Legalink, provides a full range of services, including litigation, appellate law, commercial finance, corporate and securities, creditors' rights, bankruptcy, intellectual property, labor and employment, healthcare, immigration, real estate, entertainment, mergers and acquisitions, estate planning, tax and white collar criminal defense. Bell Nunnally is ranked in Chambers USA 2016 by Chambers & Partners and is regularly singled out as a "Go-To" firm by America's largest companies each year in Corporate Counsel magazine.