Kentucky cattle farmer lied to lender. The sentence is 36 months and $1.2 million.

A Kentucky cattle farmer who failed to tell a lending institution he owed $800,000 restitution in an earlier criminal case has been sentenced to three years and two months in prison for bank fraud.

The sentence for Brian E. Shepperd, of Pulaski County, also includes $1.2 million in restitution to the lender, Farm Credit Mid-America.

U.S. District Judge Claria Horn Boom sentenced Shepperd in federal court in London on Monday.

Shepperd pleaded guilty to fraud in 2004 in connection with financing for a car dealership. He was sentenced to 21 months in prison and ordered to pay $829,077 in restitution, according to court documents.

When Shepperd sought a loan from Farm Credit in 2013, he did not disclose the outstanding restitution, Assistant U.S. Attorney Kenneth R. Taylor said in a court document.

Shepperd said in court Monday that he didn’t think he had to list the debt, which is still over $800,000, on the loan application with Farm Credit Mid-America because an officer at another bank had told him his credit report didn’t list the judgment.

Shepperd said he believed Farm Credit knew of his earlier conviction because it was no secret in the community.

In fact, Shepperd said he talked about the case at Baptist churches in Pulaski and Lincoln counties because he emerged from prison a better man.

“I had no malicious intent to deceive” the lender, Shepperd said.

However, Taylor said Farm Credit Mid-America didn’t know about the outstanding judgment.

And Taylor said it’s inconceivable Shepperd wouldn’t have known that such a sizeable debt would be an important consideration for the institution in deciding whether to give him a loan.

In his plea agreement, Shepperd acknowledged lying to the lender, not about the outstanding debt, but about his collateral.

Shepperd initially borrowed $71,460 for his cattle operation in 2013, but upped that to a $1.5 million line of credit in September 2015, according to a court record.

Cattle prices were good in 2013 and 2014 as Shepperd’s operation grew, but dropped sharply in late 2015, Shepperd’s attorney, John G. Prather Jr., said in a court document.

A cow that would have cost Shepperd $1,038 to buy in September 2015, with another $300 tacked on for feed and other needs, would only have sold for $722 by December 2016 even at 300 pounds heavier, Prather calculated in a court document.

Shepperd got into a hole because of the market downturn, Prather said.

“This was a tough business he was in,” Prather told Boom.

Shepperd’s loan with Farm Credit Mid-America required him to keep 900 to 1,700 cattle on hand as collateral, but he began selling off cattle without telling the lender.

By June 2017, he had few cows left, but told Farm Credit he still owned 1,713, Christopher Hubbuch, an FBI special agent, testified at Monday’s hearing.

Shepperd showed other people’s cows to employees of Farm Credit Mid-America to keep up the appearance that he was maintaining the required collateral, according to his plea agreement.

He also falsely told officials from the lender that the U.S. Environmental Protection Agency had barred him from keeping cattle on his own farm.

Taylor said in a court document that it appears Shepperd “has a significant penchant for fraud on financial institutions.”

Boom allowed Shepperd to remain free on bond until he reports to prison in late March.

This story was originally published February 5, 2019 at 10:29 AM.