When choosing a company to do business with, it’s difficult to tell whether or not it’s a credible one; even after doing research and looking in to an organizations history, it’ still possible to get scathed by dishonest individuals. This is what happened to numerous Missouri farmers in the most detrimental grain fraud scheme in the state’s history.
New legislation, named SB356 and effective August 28th, now requires grain dealers within Missouri to set aside more money and also requires a surety bond double the present amount currently required to better protect against fraudulent acts. The new law came about as a result of 180 farmers losing roughly $27 million because of deceitful practices by T.J. Gieseker Farms and Trucking, a Missouri grain dealer. Cathy Gieseker was running the business at the time and is now serving a nine year sentence in federal prison for felony charges of theft and filing untrue statements with state officials
According to Prosecutors, Gieseker cheated farmers by telling them she had contracts with Archer Daniels Midland Co. that would generate returns of 50-100 percent above market even though there were no such contracts in place. In order to stay under the radar, she would occasionally pay inflated returns to farmers as false proof that she really had a deal with the company. When Gieseker started to neglect various farmers’ payments, it raised a flag and they went to regulators of the state Agriculture Department for some aid. An audit of T.J. Gieseker Farms and Trucking exposed financial abnormalities in the company that prosecutors claim go back to 2002, removing Gieseker’s smoke and mirrors.
Safeguards were already in place in Missouri, but they were not adequate to handle this kind of fraud. The new law doubles the surety bond amounts required of grain dealers from a minimum $20,000 and a maximum $300,000 to a minimum $50,000 and a maximum of $600,000 (based on the amount of grain). Grain dealers are now also required to preserve assets equivalent to their liabilities. With the larger surety bond being required of grain dealer’s, farmers have more financial protection. Surety bonds are required by the state or federal government and they guarantee that an individual or organization will follow rules and regulations. If they don’t abide by the rules, a claim can be filed against the company with the surety bond up to the full amount of the bond. The surety company who wrote the bond will pay the claim amount, but will then turn to the company who broke the rules in the first place for reimbursement. With the new legislation, farmers doing business with grain dealers are now protected up to $600,000.
“Overall it’s a move to modernize Missouri’s grain dealer statute, and it should enhance the protections that the (state agriculture) department provides to the farmers through its regulatory program”, said Richard Wahl, president of the Association of Grain Regulatory officials.
In the end surety bonds are there to protect the public. They help deter illegitimate businesses and will reimburse for damages done by any. Although this new bill came too late for the farmers involved here, it will better protect Missouri farmers in the future to come.