Owner of Illinois Agricultural Business Indicted on Fraud Charges

ST. LOUIS—The United States Attorney’s Office announced the indictment of Douglas Pennock on charges that he overstated the accounts receivable of JDL Longhorn in order to obtain a $10 million line of credit.

Pennock, chief executive officer, owned, operated, and was affiliated with a number of businesses, including a business known as JDL Longhorn, Inc. with principal offices in Pittsfield, IL. JDL Longhorn provided services relating to the construction of animal confinement systems.

According to the indictment, between approximately 2006 and June 2008, Pennock and JDL Longhorn obtained a substantial amount of financing from Corn Belt Bank, which was in Pittsfield, IL. In May 2008, when Corn Belt Bank was no longer able to provide sufficient financial support, Pennock arranged for financing with Peoples Bank in Troy, MO, which included a $10 million line of credit. The purposes of the loan included financing the operations of JDL Longhorn and paying off a prior loan from Corn Belt. Corn Belt Bank purchased a 20 percent participation in the loan. In February 2009, Corn Belt Bank was placed in receivership.

The indictment alleges that Pennock provided false information to Peoples Bank in order to secure the $10 million line of credit. As part of the loan process, Pennock provided fraudulent reports regarding the financial status of JDL Longhorn and the status of collateral, including his accounts receivable, so that Peoples Bank would approve and fund the $10 million line of credit. The indictment further alleges that, after the line of credit was approved and funded, Pennock continued to provide false information to Peoples Bank.

Ultimately, JDL Longhorn defaulted on the loan, resulting in a loss of most of the $10 million loaned to JDL.

DOUGLAS PENNOCK, of Pittsfield, IL, was indicted by a federal grand jury on one felony count of loan application fraud, two felony counts of bank fraud and one felony count of wire fraud. He is expected to appear in federal court next week.

If convicted, each count of the indictment carries a maximum penalty of 30 years in prison and/or fines up to $1 million. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

This case was investigated by FDIC-Office of Inspector General, Federal Bureau of Investigation, and Board of Governors of the Federal Reserve System-Office of Inspector General. Assistant United States Attorney John Bodenhausen is handling the case for the U.S. Attorney’s Office.

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.