Piggy Bank Bust: Swine Operations Caught in Check-Kiting Scheme 

Ag lender Compeer Financial is taking three Iowa and South Dakota-based swine operations to U.S District Court for a billion-dollar check-kiting scheme.

Check-kiting 101: This expert-level check fraud takes advantage of “float time” (the delay between when a check is deposited and when funds are actually cleared).

Here’s how it works: A company writes a check from one bank account and deposits it into another account it owns, even though neither account has enough funds to cover the check. 

Then a check is drafted from the second account for the same sum back to the original account.

And, repeat! This cycle creates a phony positive balance of funds in both accounts when, in reality, there are none. Womp-womp.

Case in point: Compeer Financial uncovered a history of fraudulent fund transfers by the three farms’ management entity, Sunterra Group. And get this, international parent company Sunterra Enterprises recently filed for bankruptcy protection in Canada.

Pig priorities: Compeer is out $36M, so guess who’s babysitting Sunterra’s 110K piglets? The court placed Sunterra’s American hogs under the receivership of Pipestone Management, who will oversee their raising and finishing. 

It gets crazier: Now, the three defendants are pushing back, seeking case dismissal and compensation for punitive damages (aka, dollars for defamation and false claims).

Sunterra argues that Compeer not only KNEW about the farms’ cash flow problems, but also ENABLED the questionable transfers by bolstering credit line advances. Which is… kinda sus.

Turns out, when the piggy bank busts, everyone starts squealing.