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Filings show Express Grain repeatedly stole soybeans it had sold to others for almost two years

Thursday, March 17, 2022, 5:09 pm News Flash Archive

Court filings this week in the Express Grain bankruptcy case show that EG repeatedly sold soybeans to three finance companies, and then stole the soybeans, in multi-million bushel quantities, over a 20 month time frame.

This fraud has been documented to have begun at least back in January 2020, and continued all the way to the day before EG filed bankruptcy on September 29, 2021.

The filings by attorneys representing unpaid farmers provide historical inventory warehouse figures that were recently disclosed to the parties, but not the public, by EG's new management during the last several months of the bankruptcy case.

Thus, tens of millions of dollars was swindled from the finance companies, long before EG took grain in from farmers in September 2021 without paying them for it. In all, farmers are owed at least $41 million for grain they delivered and were never paid for. Two of the finance companies are owed $45 million for their beans, and UMB Bank is owed around $70 million in money it loaned to EG.

In effect, the farmers were the last of the EG victims in a multi-year swindle exceeding $80 million of fraud.

The three key filings, wherein attorney Jim Spencer laid out the figures of the fraud, may be seen here:

Farmers Objection to Macquarie Claim
Farmers Objection to UMB Bank Claim
Farmers Objection to StoneX Claim

EG sold large tonnages of soybeans to UMB Bank, StoneX, and Macquarie, and issued them Warehouse Receipts indicating their ownership of the soybeans. The receipts were negotiable, that is, they could be bought and sold to third parties as desired. However, UMB Bank, Macquarie, and StoneX left the grain in storage at Sidon under EG's care.

Meanwhile, EG sold the grain to other customers, and processed the soybeans at its oil mill in Greenwood.

But the records now available show that in most cases, EG did not actually possess the beans at the time that it sold them, and was in effect raising tens of millions of dollars on soybeans that didn't actually exist.

The majority of the instances described in these filings took place at the Sidon warehouse facility. These four instances stand out from the filings linked above:

January 15, 2020: 1.95 million bushels in the warehouse; 2.35 million bushels sold by EG to the finance companies; shortfall, 396,000 bushels.

July 16, 2021: 594,000 bushels in the warehouse; 2.985 million bushels sold by EG to the finance companies; shortfall, 2.391 million bushels.

August 31, 2021: 380,000 bushels in the warehouse; 3.535 million bushels sold by EG to the finance companies; shortfall, 3.155 million bushels.

September 28, 2021: 1.485 million bushels in the warehouse; 3.435 million bushels sold by EG to the finance companies; shortfall, 1.95 million bushels.

As first reported by The Taxpayers Channel, on September 29, 2021 when EG filed for bankruptcy protection, EG actually held 3,264,857 bushels of soybeans in all its warehouses, but was supposedly storing 4.815 million bushels sold to the three companies. This left an overall shortfall of 1.55 million bushels. See our reporting here: Express Grain sold soybeans it didn't possess, records show

UMB Bank has informed the bankruptcy court that it first learned about this swindle on September 22, 2021, when an EG insider informed the bank that the borrower base certificate figures were inaccurate. UMB called its loans 2 days later, sued EG for collection 4 days after that, and EG filed for bankruptcy one day after that.

To read about UMB Bank's disclosure, see here: UMB Bank levels new fraud accusations against John Coleman and Express Grain

Today, some of the parties are participating in court-ordered mediation, but as of this time, the status of that process is unknown.

 


To read all our coverage of the Express Grain bankruptcy case, see here: Index of Express Grain articles

 

John Pittman Hey
The Taxpayers Channel

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