LINCOLN, Neb. (DTN) -- Attorneys for Steve A. McBee and his sons have argued the transfer of assets to his sons was part of the normal course of business for a family trust, but U.S. Department of Justice attorneys countered in a court brief the transfer was fraudulent and the case against the family should continue.

The star of reality television series "The McBee Dynasty: Real American Cowboys," pleaded guilty to crop insurance fraud and is serving a two-year prison sentence in South Dakota.

The government later filed a lawsuit in the U.S. District Court for the District of Western Missouri, alleging the Gallatin, Missouri, farmer transferred assets to two of his sons, Cole and Jesse, to avoid surrendering the businesses as part of paying a still-outstanding $4 million judgment in the crop insurance fraud case.

McBee's attorneys argued in a motion to dismiss in February 2026 that the trusts for the two sons were created more than a decade before a transfer of assets was made in 2024 and were part of established practice of the trusts.

In response to the motion to dismiss, the DOJ said the McBee claim about the trust is irrelevant to the case.

"Fraudulent conveyance law looks at substance, not form," the DOJ told the court.

"In other words, in what form McBee made his fraudulent transfer does not matter. What matters instead is whether the transfers were actually or constructively fraudulent as of the time of the transfer."

In its lawsuit, the government offered a timeline of events to make its case.

In June 2023, Steve A. McBee was notified about the federal investigation. In December 2023, McBee's attorney met with prosecutors and on Jan. 7, 2024, McBee transferred ownership interests in three family LLCs to his sons. Then in November 2024, McBee pleaded guilty.

Aside from proving actual intent to commit a fraudulent transfer, the government argues fraud is established because the transfers were made without consideration and McBee could not pay his debts.

The DOJ said the essence of its case against McBee is he made the transfer "without receiving a reasonably equivalent value in exchange when the transfer would reasonably be expected to cause the debtor to incur debts beyond his ability to pay them as they become due."

RESTITUTION STILL UNPAID

The government said although it has been months since McBee's sentencing, he has yet to pay any of the restitution.

"The judgment ordered McBee's $4 million restitution debt be paid immediately," the DOJ said in its filing.

"Yet, in the four months since his sentencing on Oct. 16, 2025, McBee has paid his victim nothing, leading to the reasonable conclusion that the restitution debt exceeded his ability to pay."

Though the government asked the court to deny the McBee motion to dismiss entirely, it did request the court to allow for an amended complaint to be filed.

The DOJ argues its complaint satisfies the heightened standards for fraud claims.

"Specifically, the United States alleges that (1) the transfers to the trusts were made in anticipation of a criminal conviction against McBee that resulted in the imposition of a multi-million dollar restitution debt; (2) the trusts were used to shield McBee's assets from the collection efforts of the United States; (3) McBee made the transfers to the trusts with actual intent to hinder, delay and defraud creditors; (4) the transfers were made without receiving reasonably equivalent value; and (5) the transfers were made to insiders (i.e., his children and co-owners of the defendant companies)," the government said in its motion.

MCBEE ARGUES KEY FACTS MISSING

McBee's attorneys have argued key facts needed to establish fraud are missing from the complaint. That includes that he was insolvent at the time of the transfers, believed he could not pay his debts, received notice of any specific amount owed, attempted to conceal assets and the asset transfers departed from his established estate planning pattern.

"These were gifts to inheritance trusts for the debtor's children -- trusts established in December 2012, over a decade before the transfers," the McBee motion to dismiss said.

"The absence of consideration is inherent in a gift; it does not, standing alone, establish fraud. When the government's unsupported and conclusory allegations are stripped from the complaint, all that's left is the 'mere possibility' that the transfers were fraudulent. That does not satisfy the rigorous demands for pleading fraud under (federal law). It's tilting at windmills."

McBee transferred his ownership interests in three companies to his sons Jesse and Cole. That includes 39% interest in McBee Properties L.C.; 99% interest in Rock Bluff Development LLC; and 99% interest in S&K Enterprises LLC. According to the lawsuit, Steve McBee split those interests evenly between Jesse and Cole.

The federal government alleges the transfers occurred while McBee was under federal investigation and he received no payment in exchange.

The federal government's lawsuit includes six claims for fraudulent conveyance under both federal and Missouri state law. The U.S. argues the transfers were made with actual intent to defraud the federal government, and the transfers were made without equivalent value when McBee knew he would face debts he couldn't pay.

In addition, the government asked the court to file an injunction preventing anyone from selling, mortgaging or disposing of the business assets. The U.S. also is seeking money judgements against Jesse McBee and Cole McBee, for the value of the transferred interests.

As part of Steve McBee's plea agreement, the U.S. government agreed to not charge anyone in his family with crop insurance fraud.

Read more on DTN:

"McBee Moves to Dismiss Fraud Lawsuit," https://www.dtnpf.com/….

Todd Neeley can be reached at todd.neeley@dtn.com

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