LINCOLN, Neb. (DTN) -- An Iowa livestock company and four managers were sentenced in federal court for their roles in a scheme that led to at least $3 million in losses for hog farmers, caused by downgrading animal weights and quality classifications at buying stations across the Midwest.
Lynch Family Companies, Inc., Waucoma, Iowa, pled guilty last summer to one count of failing to comply with an order of the secretary of agriculture.
Last week the U.S. District Court for the District of Northern Iowa sentenced the company to a five-year probation period, fined $196,000 and was ordered to pay more than $3 million in restitution to livestock producers and farmers.
Four company managers also were sentenced in the scheme that spanned nearly two decades, after they pled guilty to conspiracy charges.
Billie Joe Wickham, 51, Waucoma, was sentenced to six months in prison and fined $3,000 on one count of conspiracy to defraud the U.S. Wickham also received a three-year term of supervised release after the prison term.
Charlie Lynch, 65, Fort Atkinson, Iowa, was sentenced to five years' probation and fined $3,000 on one count of conspiracy to defraud the U.S.
Leland Blue, 60, Fredericksburg, Iowa, received five years' probation and fined $1,000 on one count of conspiracy to defraud the U.S.
Tyler Thoms, 31, Fayette, Iowa, was sentenced to one year probation on one count of causing a livestock dealer to keep inaccurate accounts and records.
According to a news release from the U.S. attorney's office for the northern district of Iowa, the scheme began in the early 2000s and continued through at least March 2017.
Lynch Livestock's second-ranking official directed other managers and employees to "falsely reduce and downgrade the numbers" on quality classifications and weights of swine delivered to Lynch's buying stations.
"These practices largely concerned large, corporate swine producers who brought their swine for sale to Lynch Livestock," the U.S. attorney said in a news release.
"To effectuate the fraud, managers at Lynch Livestock's headquarters created false and fraudulent scale tickets bearing the initials of the managers at the buying stations. By falsifying the producers' accounts of purchase, Lynch Livestock and its managers created false and fraudulent invoices to pay less than what was due and owing to those producers. Lynch Livestock managers and employees then routinely shredded and burned evidence of the fraud and document destruction was a routine practice of the company and a specific response when it was anticipated that USDA officials were investigating the company's practices."
In a statement to DTN, Lynch Family Companies Chairman Gary Lynch said the company has taken responsibility and is ready to close a "painful" chapter in the company's history.
"Our company is built on a strong foundation of integrity and trust, which is essential to our relationship with our customers," Lynch said.
In 2017, Lynch Livestock and the USDA entered an administrative consent decision in which the company agreed to pay nearly $800,000 in restitution to two of its corporate customers because of fraud committed at two Iowa buying stations.
In its plea agreement, Lynch Livestock agreed the amount of loss from the fraud prior to 2018 was not isolated to the two corporate customers or two buying stations, the U.S. attorney said.
"Between about 2018 and March 2021, Lynch Livestock's managers and employees used a crowbar or other similar object to manipulate the scales on which livestock producers' swine was weighed at its buying stations," the U.S. attorney said.
"As a result, Lynch Livestock created, kept and provided to livestock producers scale tickets that contained false information because they understated the actual weight of the swine."
As a result, Lynch Livestock paid producers less than what was owed to them and violated the 2017 consent decision with the USDA. In 2021, Lynch Livestock and the USDA entered a second administrative consent decision that Lynch Livestock agreed to pay more than $400,000 in restitution to various farmers and producers.
According to the U.S. attorney, Wickham reported directly to the company's second-ranking official and participated in the fraud for more than 15 years.
"Wickham also had a leadership role in the conspiracy, directing other employees to stamp fraudulent scale tickets and to manipulate the sorting of swine to lower the values for producers," the U.S. attorney said.
"Charlie Lynch was involved in sow procurement and marketing for Lynch Livestock and from no later than 2013 until about 2017, reduced classifications on sows that producers sold to Lynch Livestock."
The U.S. attorney said Blue managed Lynch Livestock's sow inventory and joined the scheme in 2012. Thoms initially worked as a bookkeeper in Lynch Livestock's headquarters with Wickham, Lynch and Blue. From 2018 to 2021, Thoms managed Lynch Livestock's buying station in Waucoma.
"While working in the headquarters building as a bookkeeper, Thoms participated in forging scale tickets and then as a manager used a crowbar to lift up on a scale to cheat producers," the U.S. attorney said in a news release.
Todd Neeley can be reached at email@example.com
Follow him on Twitter @DTNeeley
(c) Copyright 2023 DTN, LLC. All rights reserved.