$5.1M Restitution Stands on Bank Fraud

LINCOLN, Neb. (DTN) -- A federal appeals court Monday ruled a Nebraska farmer sentenced to prison time for bank fraud will have to pay a court-ordered $5.1 million in restitution to Great Western Bank, after the producer alleged on appeal the restitution amount was inaccurate.

The U.S. Court of Appeals for the Eighth Circuit rejected those claims made by Gering, Nebraska, farmer George Liakos who was sentenced in October 2023 after he pleaded guilty to one count of bank fraud. Liakos had faced a grand jury indictment going back to October 2021 on four counts of bank fraud and one count of making a false statement.

Liakos argued the district court erred by including an amount that Great Western Bank spent to purchase a lien on Liakos' property from Prudential Insurance.

"In light of Prudential's lack of incentive to seek more than just its own lien amount and Great Western Bank's inability to pass clean title, we conclude that the district court did not clearly err by concluding that it was commercially reasonable for Great Western Bank to pay the value of the note in addition to the premium for Prudential's superior lien," the appeals court said in its ruling.

In addition, Liakos' appeal alleged the district court improperly valued his farm in calculating restitution. The appeals court disagreed.

"Although the farm sold for $5,788,908 and Liakos was credited for restitution purposes with $6,325,000, Liakos asserts that the farm was actually worth something more like eight to 11 million dollars," the court said.

"But Liakos failed to present any evidence supporting this assertion, and the district court determined that Liakos's 'opinion as to the value of his collateral is not supported by any type of commercially reasonable methodology for appraising property, and therefore is not credible for these evidentiary purposes.' This was not clear error."

Liakos has 14 days to petition the Eighth Circuit for a rehearing or a rehearing before the entire circuit.

Beginning in April 2017 and continuing through May 2019, Liakos misrepresented the number of commodities he had in storage, cattle inventory and crop acres.

In addition, Liakos concealed his debt from Great Western Bank to secure approximately $11 million in loans, according to the U.S. attorney's office in Nebraska.

Liakos owned about 2,000 acres of farm ground that he claims is worth at least $8.5 million, according to the brief.

Great Western Bank, which was acquired by First Interstate Bank, was a banking corporation with locations in Iowa, Colorado, South Dakota and Nebraska, including a banking office in Scottsbluff, Nebraska. Great Western Bank's deposits were insured by the Federal Deposit Insurance Corporation.

Liakos conducted a farming operation in Bayard, Nebraska, primarily growing beans, corn and sugar beets as well as raising cattle.

To obtain money from Great Western Bank, on June 2, 2017, Liakos executed loans and a security agreement with the bank. The loans and security agreement consisted of a revolving line of credit, a machinery and equipment loan and a livestock loan.

In approving the loans and security agreement, Great Western Bank relied on information from Liakos reflecting current commodity and livestock inventory, accounts receivable, loans and accounts payable that he knew "materially overstated his commodity inventory and materially understated and failed to report loans and accounts payable," according to the U.S. attorney.

According to court documents, the loans were secured by Liakos's farm and personal property. Great Western Bank moved to seize and sell the collateral. Liakos's farm, however, already was subject to a $3.4 million lien held by Prudential.

Read more on DTN:

"Nebraska Farmer: $5.1M Judgment Too High," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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