Former Waterloo farm supplier faces charges in bank fraud scheme

A Waterloo agricultural supplier, who has been a fugitive since 2012 on federal bank fraud charges, was recently extradited from Brazil to Iowa.

Kelly Freese, 52, formerly of Waterloo, was charged June 21 with four counts of bank fraud and one count of making false statements to a bank. He was indicted in November 2012 but never arrested until earlier this year, according to court documents.

Assistant U.S. Attorney Steve Young said Freese was living with his family in Brazil and was arrested some months ago, but fought extradition to Iowa. He was returned to Cedar Rapids June 18. Young said he couldn't provide further details of the arrest.

Freese is accused of borrowing over $1 million from Lincoln Savings Bank in Cedar Falls for his business, Christy Corp., in 1998. From 2003 to 2005 he began selling the collateral assets, along with inflating the company's accounts receivables used to secure the loan, the indictment shows. By January 2005, Freese borrowed $1,035,687 from the bank.

His primary business operations were in the agricultural industry, spreading lime and chemicals on farm fields, but the company also handled snow removal, trucking and sales of used farming-related equipment. Christy Corp. also conducted business under Freese Ag Services and Ag-Zone.

As part of the scheme, Freese inflated the value of accounts receivables, falsely claiming in December 2014 that the company was owed over $260,000 when it was actually was owed about $115,000, the indictment shows.

Freese also sold equipment pledged as collateral, according to the indictment. For example, Freese sold equipment to Ag-Zone, a company formed by his wife Patricia Freese and his parents, who in turn sold the equipment at auctions and gave the proceeds to Freese. Christy Corp. failed to repay the money it had borrowed, causing a loss to the bank of $541,911.

The indictment includes a list of the collateral equipment, including conveyors, tractors, dump trucks, pickup trucks, road graders and forklifts, valued at more than $1.1 million. The equipment had been transferred to Ag-Zone, and some was sold to third parties.

Freese remains in custody pending his trial, set for Aug. 22 in U.S. District Court.