Richard Ghilarducci, the former chief executive officer of Humboldt Creamery in Humboldt County, was sentenced to 30 months in prison for loan fraud and ordered to pay $7 million in restitution, the U.S. Attorney's Office announced today.
The creamery, formed in 1929, was 75 percent owned by a co-op of local dairy farmers. Shortly after the fraud was discovered, Humboldt Creamery declared bankruptcy. Mr. Ghilarducci pleaded guilty to fraud on May 5, according to U.S. Attorney Melinda Haag.
"The unraveling of the creamery has has a profound impact on the community," Ms. Haag said. "This prosecution holds Mr. Ghilarducci accountable for defrauding the bank and the damage his actions caused."
From 2005 to 2008, he falsified numbers in yearly financial statements, according to the indictment. In 2005, the creamery entered into loan agreements with CoBank, a Denver-based agriculture lender, but ultimately defaulted on that loan after Mr. Ghilarducci inflated the value of the creamery's accounts receivable and inventory.
That prevented "lenders from learning the true financial condition of the creamery," according to a statement from the U.S. Attorney's Office.
The creamery had a loss of between $7 million and $20 million because of the loan default.