Minnesota Co-op Manager Sentenced

OMAHA (DTN) -- The Ashby, Minnesota, grain elevator manager who embezzled funds and used the money for wildlife safaris and other personal items, essentially driving Ashby Farmers Cooperative Elevator Company out of business, was sentenced to eight years in prison and ordered to pay $5.3 million in restitution to the cooperative.

Chief Judge John R. Tunheim of the U.S. District Court for the District of Minnesota in Fergus Falls sentenced Jerome R. Hennessey, 56, on Friday following a Feb. 14, 2019, plea agreement. Hennessey pled guilty to mail fraud and income tax evasion.

Hennessey had managed the 307,000-bushel-capacity grain elevator since 1989. He stole millions of dollars from the elevator from 2003 to 2018, before disappearing in September 2018.

During a 15-year period, Hennessey obtained a line of credit for the co-op that exceeded $7 million in order to cover the co-op's legitimate expenses and his own personal expenses.

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 wrote hundreds of checks to himself and to third parties for renovations and improvements to his residence and a cabin; the purchase of real estate, furniture, jewelry and all-terrain vehicles; to pay for outstanding credit card balances, property taxes, hunting trips and taxidermy services; and for shipping costs for animals he had killed during the hunting trips. Hennessey racked up millions of dollars in spending on hunting safaris and taxidermy work.

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.

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 that meeting.

"As a manager, Hennessey held a position of trust over the Co-op's members and their financial interests," U.S. Attorney Erica MacDonald said in a statement. "Unfortunately, he chose to violate that trust by committing an egregious fraud, stealing from his own colleagues, friends, and neighbors. This case has had a significant impact on the Ashby community and its industry."

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

Follow him on Twitter @toddneeleyDTN

(AG/CZ)

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