Printable Page US Ag News   Return to Menu - Page 1 2 3 4 5 6
 
 
Minnesota Grain Co-op Fraud   09/20 15:15

   Elevator Manager Under Investigation After Millions Go Missing From Grain 
Cooperative

   The Ashby Farmers Cooperative Elevator closed earlier his month after it 
became clear the cooperative was missing at least $2 million in funds and the 
former elevator manager has disappeared. 

By Chris Clayton
DTN Ag Policy Editor

   OMAHA (DTN) -- Roughly 150 farmers attended a meeting Tuesday night in 
Ashby, Minnesota, looking for answers about the closed Ashby Farmers 
Cooperative Elevator and its former manager, who allegedly stole at least $2 
million from the elevator before disappearing earlier this month. 

   An audit of the grain cooperative's books is continuing to detail actual 
losses, and investigators are looking into the alleged fraud by former elevator 
manager Jerry Hennessey. He had managed the elevator since 1989, but has not 
been seen in Ashby since it became clear the elevator was missing funds. 

   Erik Ahlgren, an attorney hired to sort through the losses and find a 
possible buyer for the 307,000-bushel-capacity grain elevator, said roughly 
half the people in the crowd raised their hands when he asked how many farmers 
were still owed money from the cooperative.

   Minnesota requires bonding, but the bond for the cooperative is valued at 
$125,000. Farmers can file claims with the state, but officials won't know the 
exact total of claims filed and possible payout per farmer until at least six 
months from now. The pool of claims is determined, then divided pro rata among 
all of those who file, Ahlgren said. 

   Insurance on the elevator for crimes is $100,000 per loss. That raises 
questions of how single losses are defined and whether that will cover a larger 
amount. In a statement to farmers announcing the closure, Ahlgren stated the 
co-op board did not expect to have funds to pay the co-op's outstanding 
obligations. 

   Beyond what is owed to farmers, the Ashby Farmers Cooperative also owes $8 
million to the Farm Credit lender CoBank. 

   The cooperative has about 300 members who are defined as having at least 
$500 in transactions with the elevator over the last year. 

   The elevator stopped taking deliveries on Sept. 10 and effectively shut down 
Sept. 14. 

   Ahlgren, whose office is in Fergus Falls, Minnesota, was brought in to deal 
with the aftermath and find a new owner. He said the cooperative board began 
immediately looking for new owners and told DTN on Thursday at least one 
company would submit a bid before the end of the day. At least two other grain 
businesses were also weighing bids for the elevator. 

   "I hope to at least get a deal structured where we could get the elevator up 
and running, possibly in the next week or two weeks," Ahlgren said. "That would 
require us to do an interim lease, but we are open to doing an interim lease. I 
understand the bank would be supportive of us doing an interim lease. That 
would be a way for us to get it up and running while we are completing a sale." 

   The initial investigation showed at least $2 million in unauthorized checks 
signed by Hennessey, which included more than $1 million paid on a personal 
Cabela's Visa card, more than $500,000 for taxidermy services and $375,000 for 
safari hunting trips. Hennessey is a big-game hunter and was out of the country 
most of August on a safari trip. 

   DTN could not reach Hennessey for comment.

   Ahlgren said that once the full reckoning of lost assets is known, as well 
as how much is owed to farmers, civil cases will likely be brought to go after 
Hennessey's personal assets. 

   Since the situation with missing money became clear, Hennessey has 
disappeared from the Ashby area. A criminal investigation has been opened by 
the Grant County (Minnesota) Sheriff's Office, and the Minnesota Bureau of 
Criminal Apprehension has been brought in as well. 

   Last April, when the co-op held its annual meeting, sales for the prior year 
were reported $14,565,516. The grain bushel handle was reported at $2,852,553, 
local profits were $238,977 and total net profits after regional patronage 
refunds were $335,812, according to the report in the Battle Lake, (Minnesota) 
Review. All of those numbers are now suspect.

   Chris Clayton can be reached at Chris.Clayton@dtn.com 

   Follow Chris on Twitter @ChrisClaytonDTN 


(AG/GH)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.

For more free DTN information sent right to your email each morning - click here to sign up for DTN Snapshot.
 
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN