One of Arizona’s busiest stockyards lost $3 million in fraudulent cattle sales at the hands of an employee, federal prosecutors say.
The scheme began to unravel in August 2017 when well-known rodeo cowboy Clay Parsons discovered $1.3 million missing from the accounts of the Marana Stockyards and Livestock Market, which his family has operated for nearly 30 years. The stockyard’s line of credit also was drawn down inexplicably by nearly $2 million, according to records from U.S. District Court in Tucson and reported by the Arizona Daily Star.
Court records indicate the trail of fraudulent documents led to Seth Nichols, the stockyard’s 29-year-old office manager and son of Donald Hugh Nichols, a cattle broker who had been friends with Parsons for decades.
Seth Nichols pleaded guilty to federal bank fraud in February and faces up to five years in prison. His father was indicted Aug. 22 as a co-conspirator in $1.6 million of fraudulent cattle sales at the stockyard’s auctions.
A federal prosecutor told the Arizona Daily Star the stockyard is operating “week to week” as it recovers from the fraud and Parsons has already spent $100,000 on audits and rebuilding the stockyard’s accounting system.
Seth Nichols admitted to manipulating the stockyard’s line of credit on behalf of Nichols Cattle Co., which then sold the cattle elsewhere without reimbursing the stockyard. He also admitted to sending the stockyard's money directly to the cattle company.
Seth Nichols agreed to pay restitution to the Parsons, which was capped at $3 million in his plea agreement, but those funds won't be available until after he is sentenced Sept. 24.