Mason City man to serve two years in federal prison for falsifying records to receive farm loan

A Mason City man was sentenced to two years in federal prison for making a false statement in regards to his assets for a Farm Service Agency line of credit.

Raymond A. Schaefer, 41, pleaded guilty in U.S. District Court in March for one count of making a false statement. He admitted to  obtaining a promissory note and received a $435,000 Farm Service Agency guaranteed line-of-credit through MidWestOne Bank. The note specified the agency would guarantee 90 percent of the farm operating line-of-credit for the crop years 2006 through 2010.

According to the plea agreement, the terms of the loan required the principle be paid down to $100 annually prior to advancing money for the next crop year, with accrued interest paid.  The terms also required Schaefer to supply accurate financial statements but in late 2007 and early 2008 the bank learned Schaefer was behind on his payments to various other debtors for farm inputs. In preparing the 2008 balance sheet, Schaefer provided information to the bank, misrepresenting the value and existence of his assets, in an attempt to convince the bank that his financial situation was better than it was. For example, Schaefer stated he had 68,000 bushels of corn and 4,000 bushels of soybeans, when he actually had none.

Schaefer gambled large amounts of money obtained from the line of credit loan and other financing, much of which was previously deposited into his used car business checking account and then withdrawn from the account without lenders' knowledge, including MidWestOne Bank.  To fund his gambling, Schaefer depleted the balance of his car lot bank account and his farm account with MidWestOne Bank.

Schaefer was also ordered to pay $370,804 in restitution - $157,587 to MidWestOne Bank and $213,216 to Farm Service Agency.

Schaefer was released on the bond previously set and will surrender to the United States Marshal July 29.