MADISON — A former Onalaska-area farmer who fraudulently obtained and then defaulted on a $650,000 loan was sentenced Thursday in federal court to one year and a day in prison and ordered to make restitution.
Henry Berg, 43, endured two successive drought years in 2013 and 2014 that left his Animal House Farms LLC, in desperate financial straits.
Not wanting to give up the farm he had worked for all his life, Berg obtained a $650,000 loan in 2015 from Badgerland Financial ACA but didn’t inform the lender of an outstanding $196,000 loan, according to Assistant U.S. Attorney Meredith Duchemin.
However, Berg didn’t farm in 2015. Instead, he subleased land to a relative, didn’t repay the loan and sold off the collateral and kept the proceeds.
“I don’t know how any farm-loan fraud case gets any worse,” Duchemin told District Judge James Peterson.
While Duchemin said Berg didn’t represent a “danger to the public,” he committed a serious crime that required a sentence within the 30- to-37 month advisory guideline range.
“I’m a white-collar prosecutor and people want the government to protect them from people who steal money,” she said
Peterson noted that the offense against Berg was four years old and in the meantime he has moved to Illinois, gotten a new job, is meeting some financial obligations and stipulated to not participating in any USDA programs in the future.
“The delay between offense and punishment goes against sound judicial theory,” Peterson said.
Berg told Peterson that he grew up on a dairy farm and farming was all he ever wanted to do. He had won a national high-yield crop award on land he restored to production that had been overgrown after years in the Crop Reserve Program.
In 2012, Berg decided to expand operations but after two successive years of drought and no net income, he realized he was going to lose the farm.
In a desperate move, he invested in commodity futures hoping to put himself back in the black.
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“But everything got out of control and I kept digging the hole deeper and deeper,” Berg said
“I was scraping change from the floor of the car to buy milk for the kids.”
The shame of his situation and harming his family’s reputation for “doing things right,” caused him to move to northern Illinois where he’s become the “right-hand man” to the owner of a turf company.
“Let me continue to do the positive things I’ve done recently,” he said, and serve a sentence of home confinement, probation and restitution.
His attorney, Sarah Schmeiser, said Berg hasn’t repaid the FSA loan because 30 percent of his paycheck goes to child support after the garnishments other lenders have obtained against him
Peterson said Berg is unlikely to reoffend, and seems to have gotten his life in order, but his crime is “a profound insult to the government and the programs we have to support family farms.”
Instead of facing the consequences of his actions, Berg turned to illegal activity in a desperate attempt to reverse his fortunes and escape embarrassment from the community.
“Your pride and colossally bad, short-term judgment put you here today,” Peterson told Berg.
The $650,000 loss is significant and requires incarceration in order to treat Berg similar to comparable defendants, Peterson said.
“This is not that much different from most people who come before me. People don’t deal with the consequences they’re in but turn to illegal activity,” the judge told Berg.
The year-and-a day sentence allows Berg to earn good-time credit toward early release. Peterson also imposed four years’ supervised release during which time he is to make at least nominal restitution payments.
Berg is to report to prison on Oct 4.