Closings, Cancellations and Delays

Cattle in foreclosure case will be inspected and sold

Ellen Bardash, The Daily Republic - April 10, 2019

ARMOUR -- More than 15 attorneys representing two dozen parties gathered in the Douglas County Courthouse Wednesday morning for a motions hearing in the multi-million-dollar foreclosure case against Robert and Becky Blom of Corsica.

Though a decision to inspect and ultimately sell the cattle involved was made after nearly three and a half hours, Judge Bruce Anderson said that none of those attorneys, their clients or himself were able to answer all the questions that arose during the hearing.

“This is possibly the biggest stinkin’ legal mess I’ve ever seen,” said Anderson, who later said that the case has taken and will likely continue to take so much time and attention that he would consider having a retired judge preside over it.

The motions hearing addressed controversy among the parties about whether or not the cattle that have not yet been moved should be sold.

Those that wanted sales to move forward stated that keeping the cattle on the feedlots is not only incurring significant costs, but is putting the cattle at risk, as they have started to slip and fall in the mud, increasing the possibility for injury or death.

Receiver Lew Dirks, who was appointed by the court at the beginning of February to investigate the case and has a credit account with First Dakota National Bank that is used to cover expenses while the case is pending, said he’s already used over $100,000 and that expenses like feed and yardage are costing an estimated $84,000 each week the cattle remain unsold.

The parties in opposition to selling the cattle immediately argued that the animals need to be investigated before the sale to identify which belong to whom. One of the attorneys present said that selling the cattle would be good for the bank, but no one else involved.

Anderson’s decision was to allow for a 20-day inspection period, during which a brand inspector and interested parties can mark down which of the cattle on the feedlots they believe are theirs and what, such as tags or brands, makes them think so.

Dirks is responsible for organizing a schedule of when each pen of cattle will be evaluated. He estimated at the hearing that, based on past experience, it would take a week of 10-hour workdays to get through all the cattle.

After that 20-day inspection window ends, Dirks will start liquidating the cattle, and the claims from parties will then be compiled into an internet portal to evaluate which groups of cattle are in dispute. Proceeds from sales will be put into an escrow account.

Anderson concluded the hearing by urging the interested parties that filled the courtroom to be prepared to negotiate, as there are not enough cattle to fulfill every contract involved with the Bloms, and the case would take decades to resolve if parties refuse to concede any of their claims.

“You have to get it in your head that you’ve sustained a loss,” Anderson said.

Dirks testified Wednesday that throughout his investigation, he found that Robert Blom conducted business in “rotations” that involved him receiving invoices from people for agreements to keep their cattle on his feetlots, then covering up the names on those same invoices and sending them to people who thought they were buying cattle he owned, making it appear as though the cattle he was selling were his, when in reality they were not.

Blom would, according to Dirks, sell the same group of cattle numerous times to multiple people. For example, Dirks said he tracked sales that showed one particular group was sold 7.88 times. (In some sales, only a fraction of the group was sold).

“Every time he did a rotation, he would have less money than he needed to pay out,” Dirks said.

Many of Blom’s documents were handwritten, and Dirks said that he didn’t think he’d ever seen a business with fewer records.

Dirks said that though he was given the information from two computers from the Blom’s home, they had “virtually no useful information on them.”

Earlier this month, it was estimated that more than 27,800 head of cattle were unaccounted for, with more than two dozen parties claiming to have had cattle on the Blom feedlot and the other lots with which the Bloms had contracts. Dirks estimated in a report filed March 5 that only 4,953 head of cattle were present on the feedlots and 529 were recorded as having been moved to Nebraska for slaughter, while parties were claiming a total of 32,758.6 head should be there.

The case was brought by First Dakota National Bank on Feb. 8 with a complaint stating the Bloms had overdrawn their account by more than $1 million and owed a principal amount of more than $6.7 million.

Robert and Becky Blom were not present at Wednesday’s hearing on March 27.

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