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Victims of a deceased financier known as the “Bernie Madoff of cows” are suing three banks, alleging they enabled the fraud that resulted in a $100 million Ponzi scheme.
Some of those duped by Brian McClain, of Benton, Kentucky, filed a lawsuit against Community Financial Services Bank, Rabo AgriFinance and Mechanics Bank, alleging the institutions ignored red flags that left dozens of Kentucky investors with financial losses, the New York Post reported.
The fraud was uncovered days after McClain killed himself at age 52 on April 18, 2023. He initially promised 30% returns to investors while orchestrating a “ghost cattle” scheme in which the livestock never actually existed, authorities said.
Brian McClain allegedly defrauded investors of $100 million in a “ghost cow” scheme. (AP)
“CFSB strongly denies the allegations in question, and believes the claims against the bank to be entirely without merit,” the bank said in a statement to The Post. “The bank through counsel has filed a Motion to Dismiss in the suit brought by the bankruptcy trustee.”
A spokesperson for Rabo AgriFinance told Fox News Digital that the courts will have the ultimate say.
“Rabo AgriFinance remains strongly committed to providing financial solutions to U.S. cattle producers, feedlots, and processors,” a statement from the bank reads. “As stated in prior court filings, the claims have no basis under the law, and many of the allegations are completely inaccurate. As the legal process unfolds Rabo AgriFinance will refrain from commenting further.”
Fox News Digital has reached out to all three banks named in the lawsuit.
McClain’s scheme collapsed when Rabo AgriFinance, McClain’s primary lender, discovered a massive discrepancy in inventory, the newspaper reported.
During an audit, only 10,000 cattle were found, far less than the 88,000 McClain claimed to have.
While McClain claimed to have 88,000 head of cattle, only about 10,000 were found during an audit, exposing the bulk of the herd as “ghost cattle.”
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Cows being fed on a farm. (Salwan Georges/The Washington Post via Getty Images)
After McClain’s death last year, representatives from Rabo AgriFinance seized the remaining cattle from McClain’s operation and sold them through Blue Grass Stockyards.
Three of McClain’s companies — McClain Farms in Benton, Kentucky; 7M Cattle Feeders in Hereford, Texas; and McClain Feed Yard in Friona, Texas — filed for bankruptcy in 2023.
The unpaid livestock sellers could be protected under the Packers and Stockyards Act of 1921, which requires that all livestock purchased by a dealer in cash sales, along with any receivables or proceeds from those livestock, be held in trust for the benefit of unpaid sellers, according to the Department of Agriculture.
McClain’s moniker is named after Bernie Madoff, the former Nasdaq chairman who masterminded the largest Ponzi scheme in U.S. history by defrauding thousands of investors.
Bernard L Madoff following his arrest for masterminging a large Ponzi scheme. (DON EMMERT/AFP via Getty Images)
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Madoff died in 2021 at the age of 81 while serving a 150-year sentence at the federal medical care center in a North Carolina federal prison.