By Lori Ehde
A former Pipestone City Administrator and former CEO of the hog operation Global Ventures Inc. was indicted Thursday, Feb. 21, by a federal grand jury.
David S. Logan, 65, Pipestone, was charged with one count of conspiring to defraud the United States, one count of misapplication of bank funds and one count of mail fraud.
The jury alleged that Logan and a "senior bank officer" at First National Bank, Pipestone, conspired to violate banking regulations regarding lending limits and insider loans.
The bank officer allegedly caused a series of illegal loans to be made to companies controlled by Logan, including two in which the bank officer held an interest.
The indictment follows testimony before a grand jury earlier in the week by Pipestone residents.
Alleged illegal activity
According to the indictment, the senior bank officer caused illegal loans to be made to FAMAR Inc., a company owned by Logan.
Proceeds from one of the loans was used by Logan and the senior bank officer to invest in Global Ventures, a company in which the bank officer actively concealed that he held a 30-percent ownership interest. A second loan made to FAMAR was used by Logan to purchase stock in First National Bank, Pipestone and Garretson.
Logan and the bank officer allegedly utilized another company, Gandami Inc., doing business as Global Feeds, a corporation in which the bank officer had ownership interest, to obtain improper loans for the payment of personal debt and other unlawful purposes.
According to the indictment, Logan and the senior bank officer also created a fictitious company, Willey Contract Nursery Services, to act as a nominee to obtain loans for use by Global Ventures and its principals.
Through this fictitious company, Logan and the bank officer were able to obtain several illegal loans, including a $1 million Small Business Administration loan in March 1996 that was used for payment of $500,000 in construction costs for a Global Ventures hog facility.
The grand jury also alleged that Logan had knowledge that Global Ventures was being used as a nominee in a $400,000 loan that was actually being used to purchase a $1.1 million problem loan of a radio broadcasting station in Sioux Falls, S.D., in order to deceive federal bank regulators.
It is alleged in the indictment that beginning prior to June 1996, Logan devised and executed a scheme to deprive others of the intangible right of honest services in connection with matters involving Pipestone County and Rock County.
As part of that scheme, Logan allegedly made arrangements through the bank officer to provide preferential loans and cash to former Rock County Feedlot Officer John Burgers, Hills. The intent was to influence Burgers and obtain preferential treatment for Global Ventures.
Global responds
In a statement released Feb. 21, Global Ventures made it clear Logan is no longer affiliated with the company.
"In September of last year he resigned as an officer, director and employee," the statement read. "He has no voting rights in any shares of company stock. No one currently with the company had any knowledge or involvement with the alleged criminal wrongdoing of Mr. Logan."
The statement goes on to say Global Ventures has nothing to do with the indictment.
"The allegations do not pertain to the company and have no direct effect on its operation," the statement reads. "The provisions relating to forfeiture would involve personal assets of Mr. Logan only, and do not involve any assets of the company. This is an individual matter between Logan and the government."
Global Ventures raises about 175,000 hogs per year in Pipestone and Rock counties and markets an additional 550,000 hogs for area family farmers.
Possible sentence
If convicted, Logan faces a maximum potential penalty of five years in prison and/or a $250,000 fine on each count of conspiracy to defraud the United States and mail fraud. He could be sentenced for up to 30 years in prison and/or up to $1 million in fines for misapplication of bank funds.
Any sentence would be determined by a judge based on sentence guidelines.
The case is the result of an ongoing investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigations. Assistant U.S. Attorney Hank Shea is prosecuting the case.