OMAHA (DTN) -- The man accused of stealing millions of dollars from the Ashby Farmers Cooperative in Ashby, Minnesota, pleaded guilty to one count of mail fraud and one count of income tax evasion after surrendering himself to federal authorities in December.
Jerome Hennessey, 56, of Dalton, Minnesota, reached a plea agreement filed on Tuesday in the U.S. District Court for the District of Minnesota in Minneapolis.
The former manager of the Ashby cooperative allegedly stole millions of dollars from the elevator from 2003 to 2018, before disappearing in September 2018.
According to the plea agreement, Hennessey pleaded guilty to knowingly and intentionally devising and executing a scheme to defraud and to obtain money and property from the Ashby Farmers Cooperative Elevator Company and its member farmers by means of materially false and fraudulent pretenses, representations, and promises, and concealment of material facts.
Over a 15-year period, the plea agreement said, Hennessey obtained a line of credit for the co-op that exceeded $7 million "in order to make sure that the co-op's bank accounts had sufficient funds to cover its legitimate expenses and to cover the millions of dollars that the defendant had used for his own personal purposes."
In all, between 2011 and 2017, Hennessey realized about $3.5 million in income through fraud and didn't report it to the Internal Revenue Service or state agencies, totaling a tax loss of about $1.6 million, according to court documents.
Hennessey could face a maximum total of 25 years on both counts as well as a maximum fine of $250,000 on each count.
The total restitution to the victims of the crime is set at about $5.3 million. In addition, Hennessey has agreed to forfeit all of his personal property toward making restitution. Additionally, he owes the IRS $1.2 million.
In October 2018, the members of the cooperative voted to dissolve and sell the cooperative's assets. The cooperative identified $4.9 million in unauthorized checks.
Hennessey allegedly racked up millions of dollars in spending on hunting safaris and taxidermy work. He had managed the 307,000-bushel-capacity grain elevator since 1989.
According to an affidavit filed in the case, Hennessey allegedly caused the cooperative to make more than $1.1 million in payments to himself and more than $1.1 million in payments to a personal Cabela's Visa card in Hennessey's name. In addition, co-op funds allegedly were spent by Hennessey on hundreds of thousands of dollars in payments for "various expensive hunting trips and taxidermy services," the affidavit said.
In addition, the affidavit said, Hennessey "caused payments from the co-op's account to be sent for Hennessey's benefit to third parties." For example, a check was mailed to someone as a down payment on the purchase of a hunting property, the affidavit said.
The affidavit also detailed photos and details of hunting trips allegedly taken by Hennessey using hundreds of thousands of dollars in co-op funds.
After the co-op identified the suspicious transactions, the company's board of directors requested a meeting with Hennessey on Sept. 10, 2018, according to the affidavit. Hennessey did not show up for the meeting.
Beyond what is owed to farmers, the co-op 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 during the past year.
Todd Neeley can be reached at firstname.lastname@example.org
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