Swine Company Forced Into Receivership

LINCOLN, Neb. (DTN) -- An Alberta, Canada-based company that operates three swine companies in South Dakota and Iowa is facing insolvency and allegations that it ran a check-kiting scheme to keep the swine facilities afloat.

Alberta-based Sunterra Group filed for federal bankruptcy protection in Canada last month in an attempt to restructure its business, as the family that owns and operates the company also has had three swine facilities in the U.S. placed into receivership.

Court records show the operator of Sunwold Farms Inc. in Beresford, South Dakota, Lariagra Farms South Inc. in Parkston, South Dakota and Sunterra Farms Iowa Inc. in Rock Valley is no longer able to cover operating expenses and owes more than $36 million to its financier Compeer Financial based in Minnesota.

Sunterra Group is owned and operated by brothers Ray, Art and Glen Price, as Ray serves as CEO.

The U.S. District Court for the District of South Dakota on March 28, 2025, appointed receiver Pipestone Management II, LLC, to operate the three facilities.

A lawsuit filed by Compeer alleges several counts, including fraud and breach of loan agreements, as well as unjust enrichment, among others.

On Thursday, the district court granted a motion to extend a deadline until Friday before a protective order may be issued to preserve the Sunterra assets.

Sunterra Farms Ltd., Sunterra Food Corp., Sunterra Quality Food Markets Inc., Sunwold Farms Ltd. and Trochu Meat Processors filed bankruptcy notices to creditors in Canada, according to a March 31, 2025, story in the Western Producer. In all, the companies listed about $140 million in liabilities.

An attorney representing the Prices did not respond to DTN's request for comment.

Compeer Financial outlined an alleged check-kiting scheme perpetuated by Sunterra during which billions of dollars were "fraudulently transferred" to mask that the three U.S. facilities didn't have enough money to operate, in a complaint filed in the district court in South Dakota on March 24, 2025.

The South Dakota companies raise about 110,000 swine in 54 barns in and around Yankton County.

The Sunterra facility in Iowa is owned by Canadian parent company Sunterra Enterprises Inc. Sunterra Enterprises is owned and controlled by the Price family.

Sunterra manages about 500,000 pig spaces for Sunwold, Lariagra and other entities.

Check-kiting is a form of bank fraud punishable by up to a $1 million fine and/or 30 years in prison.

CHECK-KITING ALLEGATIONS

Check-kiting is the practice of opening one or more accounts in several banks. Checks are drawn on one account and deposited in the other when neither account has substantial funds.

To take advantage of the delay in the check collection process, checks are exchanged daily between these accounts, which continually shows credits of uncollected funds. The kite collapses when one of the banks refuses to honor a check drawn on uncollected funds.

The complaint said the Prices established revolving credit lines with Compeer Financial that allowed them to borrow up to a combined $11.5 million across all three U.S. facilities. The revolving lines of credit were combined with financial products called farm cash management accounts.

"The revolving lines and FCM accounts worked together seamlessly, allowing the defendants to write checks in amounts equal to the combined total of their credit limit of $11.5 million and their positive balance at any given time," the complaint said.

Compeer told the court that on or about Feb. 10, 2025, Compeer's accounts showed the swine operators had a combined positive balance of around $21 million.

The overall positive balances included a positive farm cash management balance of about $14 million for Sunterra, around $10 million for Sunwold and a draw on the Lariagra operating line of about $3 million, according to the lawsuit.

USE OF CHECK-WRITING FEATURES

The three U.S. facilities were using the check-writing features on their lines of credit and farm cash management accounts to write multiple checks each day, the lawsuit alleges.

Those checks were being sent via next-day mail to be deposited into an account with National Bank of Canada.

The complaint said the companies simultaneously were sending Compeer Financial multiple checks each day drawn against that Canadian Western Back account to pay down its lines of credit and/or to increase the balance in its farm cash management accounts with Compeer.

"In other words, the defendants seemed to be sending nearly identical amounts and numbers of checks back and forth between CWB (Canadian Western Bank) and Compeer each and every day," the lawsuit said.

Each check was issued in denominations generally ranging between $800,000 and $900,000 and no single check exceeded $1 million, according to court records.

"While Compeer's investigation into the defendants' accounts and their related activity is ongoing, early findings suggest the defendants engaged in substantial and sustained activity consistent with a sophisticated check-kiting scheme," the complaint said.

HUNDREDS OF CHECKS ISSUED

Between Jan. 1, 2025, and Feb. 10, 2025, alone, the swine operators issued 474 checks out of their Compeer accounts for a total of about $431.3 million. During the same time, they deposited 472 checks into their Compeer accounts for a total of $432.4 million.

Compeer told the court the "simultaneous transfers" occurred nearly daily throughout that period and averaged out to about 18 checks for a total of $16.6 million coming out of the Compeer accounts each day.

"Accordingly, defendants and their principals used the float to falsely create the illusion of positive cash balances at both financial institutions," the lawsuit said.

Compeer said in its complaint that it spoke to Sunterra CEO Ray Price by video conference in "an effort to better understand the situation."

During that conversation, Compeer said Price stated that he was not sure of the reason for the "significant activity" other than to say that it was a "timing" issue.

Shortly after that conversation, Compeer decided to terminate check-writing privileges out of the Compeer accounts for any intercompany transfers. The complaint said the financier would consider permitting checks written for necessary operational expenses, such as feed for animals.

On Feb. 11, 2025, Compeer Financial required checks written by the farm to be manually approved so check-writing activity could be monitored.

That same day, the complaint said, Compeer was notified that 18 checks had been drawn on the Compeer accounts for intercompany transfers to Canadian Western Bank, totaling about $16.3 million. Compeer dishonored all 18 checks.

On the morning of Feb. 12, 2025, Compeer received another batch of about $9 million in checks drawn on the Canadian Western Bank account for deposit into the defendants' Compeer account, according to the lawsuit.

SECOND VIDEO CONFERENCE

On that same day, according to the complaint, Compeer held another video conference with Ray Price.

Price admitted his company was moving funds back and forth between Compeer and Canadian Western Bank to make sure the swine operators had "sufficient money flow" so they would not be overdrawn on Compeer accounts, the lawsuit said.

Price told Compeer officials, according to the lawsuit, that "they shouldn't have done what they did" and that it was "wrong."

Price told Compeer had the financier not allowed his company to move money in that way they would "not have enough money to cover their operational expenses."

In a Feb. 13, 2025, call with Compeer, Price said the Canadian Western Bank accounts were overdrawn by about $21 million and that they needed money sent back from Compeer to cover the overdrafts, according to court documents.

During the week of Feb. 24, 2025, Compeer said it determined that Canadian Western Bank dishonored 65 checks totaling $59.9 million that had previously been credited by Compeer to the swine operators' account.

As a result, the complaint said the swine operators owed more than $30 million to Compeer Financial.

Compeer continued to provide the funds necessary to care for about 110,000 pigs located in South Dakota.

"Compeer is the only source of available funds for the care and feeding of the pigs and a receiver is urgently needed to facilitate the continued care of these animals and remove the principals who have engaged in sophisticated fraudulent activity to Compeer's severe detriment," the lawsuit said.

In a March 28, 2025, order the district court in South Dakota determined that all three swine operations were insolvent or in "imminent danger" of insolvency.

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

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