Kansas Cattleman Sentenced for Multi-Million-Dollar Bank Fraud

Joseph C. Donohue, 70, Greeley, Kan., has been sentenced to six months in federal prison followed by six months of house arrest for bank fraud, U.S. Attorney Lanny Welch said today. The court also ordered Donohue to pay $10 million in restitution.

Donohue pleaded guilty to one count of bank fraud. In his plea, Donohue admitted he provided false information to Lyons State Bank in order to obtain loans for purchasing and feeding cattle. In November 2007, Donohue signed a promissory note to the bank for more than $7.6 million. To secure the debt, he granted the bank an interest in all livestock he owned and he agreed to provide quarterly inventory reports on his cattle.

In September 2008 he provided the bank a financial statement claiming he had cattle inventory of more than $18.2 million when in fact value of the cattle was approximately $3 million. In an inventory report dated Oct. 31, 2008, he claimed to have 13,267 head of cattle. The bank determined there were only 650 head of cattle to secure the loan.

Donohue also obtained loans from other lenders based on false financial statements. Farmers and Merchants State Bank in West Pointe, Neb., loaned him more than $3.2 million and Farmers State Bank in Garnett, Kan., loaned him more than $1 million.

Welch commended the Federal Bureau of Investigation, Assistant U.S. Attorney Christine Kenney and Assistant U.S. Attorney Richard Hathaway for their work on the case.