THE GENTLEMAN’S AGREEMENT IS OBSOLETE JASON THOMAS FROST, PLLC BEEF FINANCIAL MANAGEMENT CONFERENCE

2JASON THOMAS – INTRODUCTION

Introduction 3JASON THOMAS – 2010 BFMC ELC Crisis Begins 2011 BFMC

4JASON THOMAS – THE PAST

The Past 5JASON THOMAS – Bernie Ebbers, CEO, WorldCom

The Past 6JASON THOMAS – Ken Lay, CEO, Enron

The Past 7JASON THOMAS – Dennis Kozlowski, CEO, Tyco

The Past: US Govt’s Answer 8JASON THOMAS –

9 EASTERN LIVESTOCK CO., LLC

Eastern Livestock: Inflation of A/R 10JASON THOMAS – $32.5MM LOC AFFILIATED COS FICTIOUS CATTLE SALES

Eastern Livestock: Check Kiting 11 DRAWS ON $32.5MM LOC BASED ON DAILY BALANCES NON-FIFTH THIRD BANK ACCOUNT $20.0MM IN DAILY TRANSFERS NON-FIFTH THIRD BANK ACCOUNT CHECK KITING JASON THOMAS –

Eastern Livestock: 5 th 3 rd Freeze 12 5 th 3 rd FREEZES ELC ACCOUNTS AND RETURNS CHECKS DRAWN NON-FIFTH THIRD BANK ACCOUNT CATTLE PRODUCERS CHECKS RETURNED FOR INSUFFICIENT FUNDS JASON THOMAS –

Eastern Livestock: Scope 13JASON THOMAS –

Madoff 14JASON THOMAS – Bernie Madoff, Madoff Investment Securities

Eastern Livestock: v Madoff 15JASON THOMAS –

16 PREVENTION JASON THOMAS –

Situational Elements of Fraud 17 MOTIVE/PRESSURE RATIONALIZATIONOPPORTUNITY JASON THOMAS –

An Integrated Approach 18 Personal Objectives Business Objectives Managing risk requires an integrated approach to balance conflicting objectives. PERSONAL GOALS RELATIONSHIPS TRUST HISTORY BUSINESS GOALS PROFIT SECURITY LONGEVITY JASON THOMAS –

An Integrated Approach 19JASON THOMAS – LETTER OF CREDIT IN WRITING PARTNER INFO RECORD RETENTION BINDING CONTRACTS CATTLE PRODUCER STATE GOVT OKLAHOMA KENTUCKY FEDERAL GOVT USDA/GIPSA

20JASON THOMAS – JASON THOMAS FROST, PLLC