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Closed MN Co-op Claims Urged  09/25 13:51

   Minnesota's Bond Program Shows Mixed Results in Elevator Failures

   The state of Minnesota is asking farmers who had grain stored at Ashby 
Farmers Cooperative or were owed money by the co-op to file claims.

By Todd Neeley
DTN Staff Reporter

   OMAHA (DTN) -- The Minnesota Department of Agriculture is urging farmers who 
conducted business with the now-closed Ashby Farmers Cooperative in Ashby, 
Minnesota, to collect any evidence they have to prove they are owed money by 
the co-op or had grain stored at the facility in order to file a bond claim 
with the department.

   The MDA issued an advisory to farmers on Tuesday to begin the process of 
trying to recover at least some of the losses. 

   The 307,000-bushel-capacity grain elevator closed earlier this month after 
it was discovered the elevator's former manager had allegedly stole about $2 
million from the business before disappearing.

   Bob Zelenka, executive director of the Minnesota Grain and Feed Association, 
said the Ashby case is like no other in the state.

   "It is certainly unfortunate when something like this happens because it 
reflects poorly on the whole industry," he said. "In my 38 years with this 
industry, I have never witnessed anything as unusual as the situation in Ashby."

   According to the MDA, farmers with claims against the elevator should start 
by completing a grain bond proof of claim form. The form can be accessed at: 
http://www.mda.state.mn.us/sites/default/files/2018-06/Bond%20Claim%20Form.pdf 

   Along with the form, farmers need to provide supporting evidence, which can 
include scale tickets, purchase agreements, purchase receipts, 
non-sufficient-funds checks, contracts, warehouse receipts and assembly sheets. 

   The MDA asks that the forms and supporting evidence be sent by email to 
Christine Mader at christine.mader@state.mn.us; by fax to 651-201-6108; or by 
mail to the Minnesota Department of Agriculture, Fruit, Vegetable and Grain 
Unit, 625 North Robert St., St. Paul, Minnesota, 55155.

   In the notice to farmers on Tuesday, the MDA said it would begin a review of 
claims once all claims are received, along with paperwork, internal documents 
and records from state inspector visits. This is done to determine which claims 
are valid.

   If the state receives multiple valid claims, a prorated share of funds will 
be calculated and dispersed.

   For questions, contact Christine Mader at 651-201-6620, or Nick Milanowski 
at 651-201-6076 or nicholas.milanowski@state.mn.us 

   According to the Minnesota Grain and Feed Association, results have been 
mixed in the success of bonds covering losses at elevators.

   There have been 10 grain buyers in Minnesota forced to close since 2011 in 
which farmer customers filed bond claims. Four of those firms were specialty 
grain buyers, primarily non-GMOs for export, with an average of 32% of claims 
covered by the bond. The other six firms were more typical grain elevators, 
with two covering 100% of farmer bond claims, one covering 98% of the bond 
claims, another covering 73% of claims and two with only 11% and 7% of farmer 
claims covered by the bond.

   An audit of the Ashby Farmers Cooperative's books is ongoing in order 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.

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

   The elevator held a bond with the MDA valued at $125,000. It also holds 
insurance for crimes at $100,000 per loss. Beyond what is owed to farmers, the 
co-op also owes $8 million to the Farm Credit lender CoBank.

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

   An 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.

   A criminal investigation has been opened by the Grant County (Minnesota) 
Sheriff's Office, and the Minnesota Bureau of Criminal Apprehension is 
assisting.

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

   Follow him on Twitter @toddneeleyDTN


(BAS/AG)

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