Raymond A. Schaefer, Making False Statements to a Financial Institu…

CEDAR RAPIDS, IA – A Mason City, Iowa farmer is headed to federal prison after admitting to a brazen scheme to defraud lenders out of over $370,000. Raymond A. Schaefer, 41, was sentenced July 8, 2013, to 24 months imprisonment for making false statements to a financial institution, a federal crime that carries significant penalties.

Schaefer pled guilty March 21, 2013, to the charge after investigators uncovered a pattern of deception surrounding a $435,000 Farm Service Agency (FSA) guaranteed line-of-credit obtained through MidWestOne Bank. The loan, intended for legitimate farm operating expenses from 2006-2010, was predicated on Schaefer maintaining accurate financial records and paying down the principal annually. He failed on both counts.

As the bank began to notice Schaefer falling behind on payments to other farm input suppliers in late 2007 and early 2008, he doubled down on the lies. In preparing his 2008 balance sheet, Schaefer fabricated the existence of substantial assets – claiming to hold 68,000 bushels of corn and 4,000 bushels of soybeans when, in reality, he had none. This was a calculated effort to paint a rosier financial picture than the grim reality.

But the farm wasn’t the only place Schaefer was funneling money. Investigators discovered he was gambling away significant portions of the FSA line-of-credit, along with funds from other financing sources. These funds were deposited into a checking account for his used car business, then quickly withdrawn, kept hidden from lenders like MidWestOne Bank. He systematically depleted both his car lot and farm accounts to fuel his habit.

United States District Court Chief Judge Linda R. Reade delivered the sentence in Cedar Rapids, ordering Schaefer to pay $370,803.89 in restitution – $157,587.43 to MidWestOne Bank and $213,216.46 to the Farm Service Agency. In addition to the prison term, Schaefer faces a $100 special assessment and a five-year term of supervised release upon his release. There is no parole in the federal system.

Schaefer was released on bond and ordered to surrender to the United States Marshal on July 29, 2013. The case was prosecuted by Assistant United States Attorney Jamie Bowers and United States Attorney Sean Berry, with investigative work conducted by the U.S. Department of Agriculture-Office of Inspector General, the Farm Service Agency, and the Iowa Division of Criminal Investigation. Court file information can be found at https://ecf.iand.uscourts.gov/cgi-bin/login.pl, case file number 12-3047.