OMAHA (DTN) -- Roughly 150 farmers attended a meeting Tuesday night in Ashby, Minnesota, looking for answers about the closed Ashby Farmers Cooperative Elevator and its former manager, who allegedly stole at least $2 million from the elevator before disappearing earlier this month.
An audit of the grain cooperative's books is continuing to detail actual losses, and investigators are looking into the alleged fraud by former elevator manager Jerry Hennessey. He had managed the elevator since 1989, but has not been seen in Ashby since it became clear the elevator was missing funds.
Erik Ahlgren, an attorney hired to sort through the losses and find a possible buyer for the 307,000-bushel-capacity grain elevator, said roughly half the people in the crowd raised their hands when he asked how many farmers were still owed money from the cooperative.
"I wanted to know how many of the folks there were still owed money by the co-op, and my guess would be somewhat less than half of the folks raised their hand," Ahlgren said.
Minnesota requires bonding, but the bond for the cooperative is valued at $125,000. Farmers can file claims with the state, but officials won't know the exact total of claims filed and possible payout per farmer until at least six months from now. The pool of claims is determined, then divided pro rata among all of those who file, Ahlgren said.
Insurance on the elevator for crimes is $100,000 per loss. That raises questions of how single losses are defined and whether that will cover a larger amount. In a statement to farmers announcing the closure, Ahlgren stated the co-op board did not expect to have funds to pay the co-op's outstanding obligations.
Beyond what is owed to farmers, the Ashby Farmers Cooperative 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 over the last year.
The elevator stopped taking deliveries on Sept. 10 and effectively shut down Sept. 14.
Ahlgren, whose office is in Fergus Falls, Minnesota, was brought in to deal with the aftermath and find a new owner. He said the cooperative board began immediately looking for new owners and told DTN on Thursday at least one company would submit a bid before the end of the day. At least two other grain businesses were also weighing bids for the elevator.
"I hope to at least get a deal structured where we could get the elevator up and running, possibly in the next week or two weeks," Ahlgren said. "That would require us to do an interim lease, but we are open to doing an interim lease. I understand the bank would be supportive of us doing an interim lease. That would be a way for us to get it up and running while we are completing a sale."
The initial investigation showed at least $2 million in unauthorized checks signed by Hennessey, which included more than $1 million paid on a personal Cabela's Visa card, more than $500,000 for taxidermy services and $375,000 for safari hunting trips. Hennessey is a big-game hunter and was out of the country most of August on a safari trip.
DTN could not reach Hennessey for comment.
Ahlgren said that once the full reckoning of lost assets is known, as well as how much is owed to farmers, civil cases will likely be brought to go after Hennessey's personal assets.
Since the situation with missing money became clear, Hennessey has disappeared from the Ashby area. A criminal investigation has been opened by the Grant County (Minnesota) Sheriff's Office, and the Minnesota Bureau of Criminal Apprehension has been brought in as well.
Last April, when the co-op held its annual meeting, sales for the prior year were reported $14,565,516. The grain bushel handle was reported at $2,852,553, local profits were $238,977 and total net profits after regional patronage refunds were $335,812, according to the report in the Battle Lake, (Minnesota) Review. All of those numbers are now suspect.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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