LINCOLN, Neb. (DTN) -- A Clayton County, Iowa, farmer faces up to 30 years in prison after pleading guilty Dec. 1 to livestock theft, wire fraud and one count of making a false bankruptcy declaration while operating an unlicensed custom cattle farm known as "Fawn Hollow."
Michael Wayne Butikofer, 53, from Monona, Iowa, is being held in jail pending a new order from the U.S. District Court for the District of Northern Iowa, according to court records.
In Butikofer's plea agreement, he admitted to operating a large farming operation in northeastern Iowa and at satellite locations elsewhere in Iowa and Wisconsin. Butikofer operated a custom cattle feeding operation in which his employees raised and cared for cattle owned by other farmers and investors across the country.
SELLING OFF CATTLE
Fawn Hollow then sold the cattle primarily to a Wisconsin slaughterhouse.
According to court records, neither Butikofer nor Fawn Hollow was registered with USDA under the Packers and Stockyards Act of 1921.
Between July 2020 and February 2022, Butikofer converted the proceeds of cattle sales owned by six cattle investors for his use. According to the U.S. attorney's office, Butikofer convinced the cattle investors to allow him to sell the cattle in his name.
When he sold the cattle to a Wisconsin slaughterhouse, Butikofer falsely represented to the slaughterhouse that he had "good and merchantable title to" the cattle when he did not actually own the cattle.
"By convincing the cattle investors to permit Butikofer to sell their cattle in his own name and by fraudulently concealing the true ownership of the cattle from the slaughterhouse, Butikofer attempted to evade the requirements of the act and its regulations for registration, posting of a dealer bond and prompt payment, which would have protected the cattle investors' funds," the U.S. attorney for the Northern District of Iowa said in a news release.
Between July and August 2020, Butikofer defrauded USDA of more than $200,000 in emergency assistance funds designed to assist livestock producers during the COVID-19 pandemic.
COVID-19 FUNDS FRAUD
Specifically, applications were submitted in the name of an unnamed employee at Fawn Hollow and entitled "Coronavirus Food Assistance Program" (CFAP) payments.
A cattle producer qualified for CFAP payments on a per-head basis, based on the producer's owned inventory of eligible beef cattle on a date selected by the producer between certain dates in 2020.
It was part of Butikofer's wire fraud scheme that the CFAP applications falsely stated that an employee owned the cattle.
"It was part of the scheme that Butikofer would intercept or otherwise gain access to the CFAP funds once the USDA provided those funds to (the employee) and then use those CFAP funds for his own purposes," according to the U.S. attorney's office.
Butikofer received more than $1.5 million from the Small Business Administration as part of an application for an economic injury disaster loan in February 2022.
"Butikofer falsely stated to the SBA that he would use the proceeds 'solely as working capital to alleviate economic injury caused by' the COVID-19 pandemic," according to the U.S. attorney's office.
"In truth, upon receiving the $1.5 million from the SBA, Butikofer used no less than $75,000 of the funds to pay an attorney for services rendered in connection with a Chapter 11 bankruptcy proceeding that Butikofer filed on or about Feb. 28, 2022."
FALSE STATEMENTS IN BANKRUPTCY
In March 2022, Butikofer submitted a false and fraudulent statement of financial affairs in his bankruptcy case, according to court documents.
"In April 2022, Butikofer falsely testified under oath at a meeting of creditors and, in November 2022, repeatedly committed perjury before the bankruptcy court when asked questions about the ownership of his cattle operation," the U.S. attorney's office said.
"From April to November 2023, while on federal pretrial release, Butikofer recruited and caused an employee to recruit H-2A workers to the United States under false and fraudulent pretenses, representations and promises."
Under the U.S. Immigration and Nationality Act, temporary, nonimmigrant workers, known as H-2A workers, perform agricultural labor or services of a temporary or seasonal nature.
According to an Oct. 26, 2023, indictment, the false and fraudulent pretenses, representations and promises included the housing conditions provided to employees; location of the employees' work; terms and timing of reimbursement for the employees' work and expenses; and payment for injuries sustained during employment.
"Evidence at a detention hearing held on Dec. 1, 2023, and Dec. 4, 2023, showed that Butikofer attempted to tamper with grand jury and trial witnesses," according to the U.S. attorney's office.
In 2020, a federal district court entered a default judgment against Butikofer and in favor of H-2A workers from the Republic of South Africa for civil violations of the Fair Labor Standards Act and Trafficking Victims Protective Reauthorization Act in 2018.
As part of his plea agreement, Butikofer agreed to voluntarily terminate and cease participation in foreign labor programs for any program administered by the U.S. Department of Labor or U.S. Department of Homeland Security.
Butikofer faces a possible maximum sentence of 30 years in prison, a $750,000 fine and three years of supervised release.
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on X, formerly known as Twitter, @DTNeeley
(c) Copyright 2023 DTN, LLC. All rights reserved.