Dec 01, 2022

NW Kan. man sentenced for scheme that cost banks millions

Posted Dec 01, 2022 2:01 AM
Plainville Livestock Commission
Plainville Livestock Commission

Hays Post

After a case lasting almost four years, the former owner of the Plainville Livestock Commission was sentenced Wednesday in federal court in Kansas City  on a multimillion check kiting scheme.

Tyler Gillum, former owner of the Plainville Livestock Commission, per a sentencing agreement, was sentenced by Judge Daniel Crabtree to 60 months in prison and more than $7.2 million in restitution.

Gillum's sentences on all counts will run concurrently. He will be required to serve three years of post-release supervision.

The restitution included $6.8 million to Landmark National Bank of Manhattan, Kan., $250,000 to Federal Insurance Company and $208,000 to TBK Bank of Dallas.

Gillum will owe an additional $3,300 in fines.

As a part of his sentencing agreement, he has agreed not to appeal his conviction or sentencing.

Gillum was convicted on 33 federal counts, including 31 counts of bank fraud, one count of making a false statement in connection with a Small Business Administration guaranteed loan, and one count of making a false statement in a loan or credit card application.

In the aftermath of Gillum's crimes, payments to ranchers for the sale of their cattle were delayed almost a year, banks were defrauded of millions of dollars and a rural bank closed.

Gillum owned and operated Plainville Livestock Commission Inc. from 2006 until 2019.

Between January 2015 and August 2017, Gillum wrote checks and made wire transfers between various accounts under his control at various banks in a scheme commonly known as check kiting, according to the U.S. Attorney's Office.

This is when checks are continually written back and forth to fraudulently inflate account balances, tricking banks into honoring checks written with insufficient funds. Gillum’s scheme resulted in losses of more than $10 million to the banking system, according to the U.S. Attorney's office.

Bank officials stepped in in February 2019. Almena Bank froze Gillum's accounts, including a custodial account, which was supposed to hold money due to ranchers who sold cattle at Gillum's livestock auctions.

Checks from the Plainville Livestock Commission for two sales — one at the end of January 2019 and the other on Feb. 5, 2019 — bounced.

Ranchers who were due more than $900,000 in auction proceeds had to wait more than 10 months to receive payment for their cattle.

Plainville Livestock Commission declared bankruptcy on March 1, 2019

In October 2020, Almena Bank failed. "The $69 million-asset bank was closed by its state regulator, then sold by the FDIC to Equity Bank in Andover," according to a story in the American Banker on March 26, 2021.

The delayed payment to ranchers and Plainville Livestock Commission bankruptcy had lasting effects on the Plainville and area ag communities.