Cole Camp Business Owner Sentenced for Wire Fraud, Tax Evasion

Customers of Farm Supply Store Lost Nearly $950,000

February 12, 2010 - JEFFERSON CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Cole Camp, Mo., business owner was sentenced in federal court today for wire fraud and tax evasion related to a nearly $950,000 scheme to sell farm supplies at bargain prices.

Robert Thomas Bain, 44, of Cole Camp, was sentenced by U.S. District Judge Nanette K. Laughrey this morning to five years in federal prison without parole. The court also ordered Bain to pay $1,267,394 in restitution to 23 victims of his fraud scheme and to the IRS. Bain operated Heartland Farm Supply, which he incorporated as Heartland Farm Services, Inc., in February 2004, a retail business selling propane and farm equipment.

On Feb. 8, 2008, Bain pleaded guilty to wire fraud and tax evasion. Bain admitted that he developed a fraud scheme to offer propane, fertilizer and other farm supplies to customers at prices below the market rate. Bain knew he could not purchase these items for the price he quoted to his customers, but made the offer in order to induce customers to pay a membership fee and join Heartland. Bain required his customers to pay a deposit and, on some occasions, the full amount for the quantity of farm supplies ordered. Bain did not deliver all of the quantity of the product the customers paid for and had no intention of doing so.

The full amount of the loss to Bain's customers totals approximately $948,737.

The wire fraud charge to which Bain pleaded guilty refers to a $172,500 wire transfer from Illinois to Bain’s Heartland bank account, which was for the purchase of potash fertilizer that Bain never delivered to the customer and had no intentions of delivering.

During 2004, approximately $3 million Heartland gross receipts were deposited into the Heartland business checking account. Bain had business expenses of approximately $2.76 million during 2004. Bain failed to file a 2004 federal income tax return on taxable income of approximately $285,000. Bain also failed to report business gross receipts of $4,849 and expenses of $18,077 for A Taste of Germany, a business that his wife operated.

In 2003, Bain failed to report his Heartland business profits, and therefore his 2003 federal income tax return was false. For the year 2003, Bain had federal taxable income of $39,309 and owed federal tax in the amount of $13,138.

This case was prosecuted by Assistant U.S. Attorney Lawrence E. Miller. It was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation and the Missouri Attorney General’s Office.