ST. LOUIS — A Missouri woman was sentenced Thursday to nine years in federal prison for a grain fraud scheme that bilked 179 farmers out of a combined $27.4 million and earned her the nickname the "Madoff of the Midwest."
Cathy Gieseker, 45, of Martinsburg, pleaded guilty to one felony count of mail fraud in November. U.S. District Judge Charles Shaw also ordered Gieseker to pay restitution to the victims, though he doubted she could ever come up with such a large amount of money.
"These people trusted you," Shaw told Gieseker at the hearing. "You took advantage of them."
Gieseker read a statement in court apologizing to the victims and to her family, including her two daughters who sobbed as the sentence was read.
"All of these people were like family to me," Gieseker said of the victims. "I never intended to hurt anyone."
She said she will do everything possible "to make sure they are paid what they are owed."
That seems like a long shot. State agriculture officials have estimated the victims will likely get about 2 percent of their losses back.
About a dozen of the victims were in the courtroom. All declined to comment after the hearing.
The Ponzi scheme has led some to refer to Gieseker as rural America's version of Bernard Madoff, the financier who pleaded guilty to bilking investors out of billions of dollars. While the scale of Gieseker's theft didn't come close to Madoff's, many of her investors, like Madoff's, are facing financial ruin. In a court document, prosecutors said 43 victims suffered losses in excess of $200,000, and seven suffered losses greater than $500,000.
For years, Gieseker and her husband, Timothy, ran T.J. Gieseker Farms and Trucking in Martinsburg. She continued the business after he died of cancer in 2007.
Gieseker was active in the tiny northeast Missouri community, working with 4-H and serving on the school board.
Neighbors have said there was no evidence she was living a lavish lifestyle.
But Assistant U.S. Attorney Tom Albus said Gieseker did spend extravagantly — a half-million dollars on show pigs, $28,000 on hunting expenses. She owns five properties in Martinsburg and nearby Rush Hill that have a combined 450 acres, as well as 22 vehicles, including a tractor-trailer, SUVs and ATVs.
"That's what Mrs. Gieseker wanted to do with other people's money," Albus said.
The judge ordered Gieseker to forfeit all of the property and vehicles.
Prosecutors said the Ponzi scheme began in 2002. Gieseker told farmers she had contracts with Archer Daniels Midland Co. that would give them returns of 50 percent to 100 percent above market. ADM confirmed there was no such agreement, and Albus said there was no evidence the company did anything wrong.
Instead, Gieseker sold the grain at spot prices. To keep the scheme going, she would sometimes pay inflated returns to some farmers as false evidence that she really had a contract, prosecutors said.
But other farmers started to worry as Gieseker kept putting off their payments, and eventually turned to regulators with the state Agriculture Department. An audit revealed financial irregularities. In February 2009, state regulators froze the company's assets and suspended its license.
What followed were several heated meetings where farmers gathered with regulators to talk about their losses. Gieseker was charged with 15 state and federal counts. The state charges are still pending.
Prosecutors for the Missouri Attorney General's office have discussed a plea deal in the state case, but no settlement has been reached. Spokeswoman Nanci Gonder said the state was waiting to see results of the federal sentencing first.
Agriculture officials said Gieseker served as broker between grain farmers in northeast Missouri and buyers in St. Louis; Louisiana, Mo.; Mexico, Mo.; and Quincy, Ill.
The case led several state lawmakers to consider proposals aimed at protecting farmers from fraudulent grain dealers, but none of the proposals have passed.