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URGENT: Express Grain president John Coleman arrested by the FBI, indicted on multiple federal counts of wire fraud

Tuesday, December 6, 2022, 7:01 pm News Flash Archive

John Coleman was indicted by the Federal Grand Jury in the Northern District of Mississippi on November 15, 2022 for his alleged actions in the Express Grain collapse and bankruptcy.

Coleman was arrested by an FBI special agent this afternoon, arraigned in Greenville at the federal courthouse, and entered a plea of not guilty.

Bond was set at $50,000, which Mr. Coleman posted.

This follows news earlier today that Mr. Coleman had also been indicted and charged with similar crimes by the State of Mississippi. See our previous reporting here: John Coleman arrested, indicted by Leflore County Grand Jury in Express Grain collapse

The federal charges largely track the state court charges relating to Mr. Coleman's falsification of audit reports submitted to the Mississippi Department of Agriculture and Commerce and to the Mississippi Development Authority.

But the federal indictment adds some other elements to the story. The indictment states:

From on or about June 2018 until on or about October 2022 [sic], in the Northern District of Mississippi, and elsewhere, JOHN R. COLEMAN, defendant, did devise and intend to devise a scheme to defraud the Farmer Victims, UMB Bank, and the Mississippi State Board of Agriculture, and to obtain money by means of false and fraudulent pretenses, representations and promises; that is, JOHN R. COLEMAN intentionally misled farmers, lenders and the Mississippi State Board of Agriculture to induce them to deliver grain to Express Grain, lend money to Express Grain and provide Express Grain with warehouse licenses despite COLEMAN'S direct knowledge that Express Grain was in severe financial distress. COLEMAN'S fraud caused widespread financial hardship and suffering throughout the Mississippi Delta and elsewhere.

The federal indictment then recites how, in 2018, 2019, 2020, and 2021, Coleman altered the audit reports prepared by Horne LLP, and then emailed them to the Mississippi Department of Agriculture and Commerce, in order to renew EG's grain licenses.

But the indictment confirms what UMB Bank has also been claiming:

On or about January 1, 2020, JOHN R. COLEMAN emailed the fraudulently altered financial statements for 2019 to UMB Bank without the "Emphasis of Matter Regarding Going Concern" paragraph.

...

On or about February 5, 2021, JOHN R. COLEMAN emailed the fraudulently altered financial statements for 2020 to UMB Bank without the "Emphasis of Matter Regarding Going Concern" paragraph.

...

On or about September 4, 2021, JOHN R. COLEMAN emailed the fraudulently altered financial statements for 2020 to UMB Bank without the "Emphasis of Matter Regarding Going Concern" paragraph.

But the indictment goes further:

Throughout the harvest season of 2021, Farmer Victims delivered grain to Express Grain but did not receive payment for the grain. As a result, in September 2021, Express Grain had not paid the Farmer Victims for much of the grain physically stored at Express Grain. JOHN R. COLEMAN sold large amounts of grain to third parties such as FC Stone Merchant Services, LLC and never actually paid the Farmer Victims for the grain they had delivered to Express Grain.

On September 22, 2021, UMB Bank requested that JOHN R. COLEMAN provide a "warehouse receipt report" showing the amount of the grain physically held by Express Grain that had been pledged as collateral to UMB Bank as well as amounts that had been pledged or sold to third parties other than UMB Bank.

On September 22, 2021, JOHN R. COLEMAN responded to UMB Bank and grossly underreported the amount of grain that had been pledged or sold to entities other than UMB Bank. For example, JOHN R. COLEMAN claimed that 100,000 bushels had been sold to FC Stone Merchant Services, LLC in a purchase and sale agreement, when in reality, 2,780,000 bushels had been sold to FC Stone Merchant Services, LLC, a difference of over $30 Million. This same grain that had been sold to FC Stone Merchant Services, LLC was also pledged as collateral to UMB Bank; furthermore, the Farmer Victims that had harvested this grain had not been paid by Express Grain for that same grain.

According to the indictment, John Coleman next admitted the deceptions to UMB Bank:

On September 23, 2021, JOHN R. COLEMAN admitted via email to UMB Bank that he had grossly underreported the warehouse receipt report and that he had sold or pledged as collateral millions of bushels of grain and not reported those bushels to UMB Bank.

In spite of knowing that UMB Bank had called the $70 million in loans to EG, and that UMB Bank would shortly file suit against EG to recover the money, the indictment states:

Despite the Notice of Default and Notice of lntent to File a Verified Complaint, on or about September 28, 2021, JOHN R. COLEMAN directed Express Grain to send a widely distributed email to potential customers stating that Express Grain was financially stable. JOHN R. COLEMAN approved the following paragraph of the email:

"We are steadily crushing beans, and will start shipping trains of beans so we have ample space for everyone. I also wanted to let you know that we are in good shape financially. We have funding in place from multiple sources to make sure everyone gets paid on time. Stay safe out there and keep those combines rolling!"

On September 29, 2021, Express Grain filed for Chapter 11 Bankruptcy.

The indictment lays out some more of the scheme:

In addition to the amounts owed to UMB Bank and other creditors, Express Grain owed approximately $31 Million in "grain payable," that is, Express Grain physically held the grain but had not paid for the grain. Express Grain never paid the Farmer Victims for much of the grain that was physically stored at Express Grain in September 2021 while simultaneously pledging that same grain to creditors such as UMB Bank and selling the same grain to third parties such as FC Stone Merchant Services, LLC without the knowledge of the Farmer Victims or UMB Bank.

JOHN R. COLEMAN'S fraud and the subsequent Express Grain bankruptcy caused widespread financial hardship for hundreds of Farmer Victims throughout the Mississippi Delta who had not been paid for the grain they had physically delivered to Express Grain.

Coleman is thus charged with a count of Wire Fraud:

On or about September 28, 2021, in the Northern District of Mississippi, JOHN R. COLEMAN, defendant, for the purpose of executing and attempting to execute part of the aforesaid scheme to defraud, knowingly caused to be transmitted by means of wire communication in interstate commerce, a writing, sign, and signal; to wit, despite his knowledge of Express Grain's imminent financial collapse, JOHN R. COLEMAN directed Express Grain to send a widely distributed email to potential customers stating that Express Grain was financially stable.

The indictment charges Coleman with three additional counts of Wire Fraud for submitting falsified audit reports to MDAC.

Another count of Wire Fraud involves Coleman's submitting false documents to UMB Bank:

On or about September 4, 2021, in the Northern District of Mississippi, JOHN R. COLEMAN, defendant, for the purpose of executing and attempting to execute part of the aforesaid scheme to defraud, knowingly caused to be transmitted by means of wire communication in interstate commerce, a writing, sign, and signal; to wit, JOHN R. COLEMAN, without the knowledge of Horne, LLP, made material changes to the Express Grain audited financial statements for the year 2020, including the removal of the "Emphasis of Matter Regarding Going Concern" paragraph and emailed the fraudulently altered financial statements for 2020 to UMB Bank claiming that they were the legitimate audited financial statements for Express Grain.

Another count of Wire Fraud involves Coleman's submission of false documents and statements to UMB Bank about the grain inventory:

On or about September 22, 2021, in the Northern District of Mississippi, JOHN R. COLEMAN, defendant, for the purpose of executing and attempting to execute part of the aforesaid scheme to defraud, knowingly caused to be transmitted by means of wire communication in interstate commerce a writing, sign, and signal; to wit, JOHN R. COLEMAN claimed in an email to UMB Bank that Express Grain had sold 100,000 bushels of grain in a purchase and sale agreement with FC Stone Merchant Services, LLC, when in truth and in fact, as COLEMAN knew at the time, Express Grain had sold 2,780,000 bushels of grain to FC Stone Merchant Services, LLC, a difference of approximately $30 Million. This same grain that was sold to FC Stone Merchant Services, LLC was also pledged as collateral to UMB Bank.

These charges in the federal indictment appear to support UMB Bank from some of the accusations leveled against it by Lexington attorney Don Barrett. Mr. Barrett has sued UMB Bank, Express Grain's largest creditor, on behalf of numerous farmers who were cheated by EG for somewhere close to $48 million in unpaid grain deliveries. Barrett has claimed that UMB Bank was somehow in cahoots with EG to keep it propped up until harvest season in September 2021, so that it could claim the farmers' grain to pay off the $70 million that EG owed UMB Bank. See our previous reporting here: Farmers' Attorney Don Barrett continues to pursue UMB Bank in Express Grain debacle

Coleman was represented at his arraignment this morning by criminal defense attorney John Colette of Jackson. Express Grain paid Mr. Colette's firm a $50,000 retainer around the time it filed for bankruptcy. Colette represented Mr. Coleman at his personal bankruptcy Creditors Meeting when Coleman pled his Fifth Amendment right against self-incrimination. See our previous reporting here: Express Grain president John Coleman pleads the Fifth Amendment at his creditors meeting today

The indictment, arrest warrant, appearance minutes, bond, and conditions of release may be seen here:

Federal Indictment of John Coleman

Arrest Warrant

Arraignment Minutes

Appearance Bond

Conditions of Release


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

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