CEDAR RAPIDS, Iowa — Federal bankruptcy officials in Iowa were bailed out of the llama business Monday, two weeks after they unwittingly got into it.
In a highly unusual proceeding, U.S. Bankruptcy Judge Paul Kilburg approved the "fire sale" of 18 llamas seized Jan. 16 from Ryan Patrick Scott, a self-proclaimed priest who accumulated a litany of financial problems and aliases as he bounced from Wisconsin to North Dakota to Illinois to Iowa in the last two decades.
The herd was immediately auctioned off for $7,500, and will go to the Iowa llama farmers who have been caring for them under federal supervision.
Authorities took control of the animals after Scott filed for bankruptcy in Iowa, where he led a religious community housed in a former county mental health institution in Independence. His group, which consists of a handful of followers and is disavowed by the Catholic Church, raised llamas and sold wool on the side before abandoning the property. Scott left behind a similar operation last year in Galesburg, Ill., where a judge ordered his business to pay a former follower $161,000 for failing to pay back loans.
Kilburg said in a perfect world, bankruptcy officials would have been able to more broadly market the animals and get a higher price. He said he was sensitive to the "concept of a fire sale," but he said there were no other options. Bankruptcy officials had no money to care for the llamas, he said, and "you can't just leave the animals there to starve to death."
Assistant U.S. Trustee Janet Reasoner said officials "made exactly the right call" by rescuing and quickly moving to sell the rare pack animals known for their friendly nature, manure that can be turned into fertilizer and wool that can be sold and used in clothing.
Steve and Sandy Auld of Van Horne, who show llamas and have a herd of their own, were the highest bidders. They said they planned to give some of the llamas to partners who wish to remain anonymous, and keep five, which they will consider reselling. Under the sale terms approved Monday, the Aulds will also be paid $100 a day for watching the herd for federal officials for one month, and can keep a young llama named Carmelita.
The Aulds' bidding competitor, llama farmer Gary McCright of Geneseo, Ill., said he only wanted the five female Argentine llamas, which are known for their wool and can go for $3,000 to $4,000 apiece. He said he withdrew his $7,000 bid after bankruptcy officials could not vouch for their lineage, which would make them less valuable. While each has a microchip containing unique serial numbers in their ears, there were too many questions, he said.
After their seizure, bankruptcy trustee Renee Hanrahan and her assistant traveled to Independence in a snowstorm give the llamas water. Hanrahan called the Aulds and asked them to assess the herd's health, which turned out to be good. The Aulds offered to house the animals during the case, and eventually, to buy them for $4,750, a figure they raised to $7,500 during Monday's bidding.
Last week, Scott argued the animals were owned by his nonprofit corporation and could not be sold. If the llamas were to be sold, he argued that their price should be higher and they should be auctioned off publicly.
Kilburg said the proceeds of the sale of the herd would be held until officials sort out the ownership of the herd and where to direct the money.
Scott had been represented by Brian Pondenis, who withdrew as Scott's lawyer Monday. Pondenis said Scott had mislead him about "the entire nature of the case," was not cooperating and had conflicting names on legal documents.
Kilburg has given Scott three weeks to find a new lawyer; otherwise, the bankruptcy case will be dismissed.