Missouri farmer charged in $140M organic grain fraud scheme

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This article was published 19/12/2018 (2819 days ago), so information in it may no longer be current.

IOWA CITY, Iowa – A Missouri farmer and businessman ripped off consumers nationwide by falsely marketing more than $140 million worth of corn, soybeans and wheat as certified organic grains, federal prosecutors said Wednesday.

The long-running fraud scheme outlined in court documents by prosecutors in Iowa is one of the largest uncovered in the fast-growing organic farming industry. The victims included food companies and their customers who paid higher prices because they thought they were buying grains that had been grown using environmentally sustainable practices.

The alleged leader of the scheme was identified as Randy Constant of Chillicothe, Missouri, who was charged with one count of wire fraud. He is expected to plead guilty during a hearing that is scheduled at the federal courthouse in Cedar Rapids, Iowa, on Thursday.

The charging document calls on Constant to forfeit $128 million to the government along with his interest in 70 pieces of farm machinery and equipment. His attorney, Mark Weinhardt, didn’t immediately return a phone message seeking comment.

Industry watchdog Mark Kastel called the scale of the fraud “jaw-dropping” and probably the largest ever documented involving U.S. farmers. He said the case points to weak oversight of the organic industry by the U.S. Department of Agriculture.

“The number of years they were able to operate at that scale is a betrayal to honest, ethical organic practitioners,” said Kastel, the co-founder of the Wisconsin-based Cornucopia Institute, a policy research group. “Not only do they have to compete against this unfairly, but it tarnishes the reputation of the organic label. It’s a gross betrayal of consumer trust.”

Three Nebraska farmers who sold their crops to Constant pleaded guilty in October to their roles in the scheme and are awaiting sentencing. One of their attorneys has said that Constant recruited them and that they turned a blind eye to his false marketing practices because they reaped higher profits by passing their grains off as organic.

Constant was the owner of Organic Land Management, which held USDA certifications to grow organic corn and soybeans on farms in Missouri and Nebraska. He was also the owner of Jericho Solutions, which operated in Ossian, Iowa, and sold and marketed grain labeled as organic to customers nationwide.

To be certified organic, grains must be grown without the use of synthetic fertilizers, sewage sludge and other substances that can be harmful to the environment. Organic farmers must go through a roughly three-year process to achieve certified status, which includes reviews by a USDA-accredited agent and on-site inspections.

Constant told customers his grain was certified organic because some of it had been grown on his farms in Missouri and Nebraska. But the charging document alleges that at least 90 per cent of the grain being sold was non-organic grain that he either grew himself elsewhere or bought from other farmers.

Constant was aware that farmers he purchased from used unapproved substances, including pesticides and nitrogen, to grow their crops, the document says.

Constant sold more than $142.4 million worth of falsely marketed organic grain to at least 10 customers nationwide between 2010 and mid-2017, when he voluntarily surrendered a certificate to operate in the USDA’s National Organic Program. The scheme allegedly dates back to at least 2004, but additional sales figures weren’t available.