This post is reprinted with permission of The Taxpayers Channel.
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.
20 comments:
A question for The Taxpayers Channel. Not knowing a thing about you, it appears that TTC has done a far better job of reporting on this fiasco than any other source; my question is where is the money? I got off my ass and drove up to Greenwood one day to “take a look around”. The EG facilities pale in comparison to what appears to be a legitimate grain storage facility located on the highway behind a monument company and a vet’s office. The money was obviously not spent on the physical plant.
Unbelievable.
Yes, where did the money go? Hookers? Nose candy? Cayman Islands? All of the above?
4:17, the nice facility is in Sidon. Greenwood facility is a dump.
Attn 5:35 PM, are you talking about express grain or the city of Jackson Ms.?
4:17 - EG also had large warehouses in Sidon and Minter City, so you have to take them into account when trying to eyeball how much the whole operation was worth.
Nobody has made any public accusations of any money being stolen (except for a couple hundred thousand in fishy personal credit card charges.)
It appears that the money being raised from the financing companies, which was supposed to be used to finance the purchase of farmer products from the farmers, had mostly been spent before the September harvest season came around.
Perhaps the money was spent for capital improvements and operating expenses. The crushing and biodiesel operations never either came fully on-line, or broke even. So there's a lot of capital investment that couldn't service the debt with profits.
In my opinion, only if the FBI does a forensic audit will we ever find out just where all the money went.
John Pittman Hey
The Taxpayers Channel
Does the owner really live on “Robert E Lee” avenue in Greenwood, Ms.?
4:17 - The Taxpayer Channel 'author' is located in Greenwood; does a good job on focusing on local Greenwood issues as he has here.
The money is not all located in Greenwood according to these articles - there are evidently a few locations around that area of the delta, along with the recently constructed soybean crushing facility.
Of course it isn't that hard to have a couple hundred millions of facilities when you are in the business of multiple security agreements on the same products.
The EG president, who has 1% of the stock, has a “Robert E. Lee Drive” address. The owner of the other 99% of the stock, I.e. the owner, has a Money, MS address.
Where did the farmers get their money? The banks loaned it to them. Where did EG get there money? The banks loaned it to them. Who’s suing EG? The banks. Looks like this really is about a bunch of banks fighting. My thoughts are for for the workers at the plant. Screw the banks…
@6:39 the president lives in a house that’s over 4000 square feet and valued at over $600,000. It was built in the last few years. He built it while the company was losing money hand over fist. So basically he stole money in my eyes.
Sincerely
Former business owner of over 20 years
Will someone please tell me what 'The Taxpayers Channel' is?
6:56 - Never ask a question unless you know what you'll do with the answer.
Attn 10:10 The fact that this man built a house in “GREENWOOD MISSISSIPPI” for over $150.00 per square foot speaks volumes. I recently saw where an old 5000 square ft. home in downtown Greenwood needing a lot of work was listed for $200,000.00, that is $40.00 a square foot. Some people need to open their eyes.
Seems to me that Express Grain screwed the farmers and the banks.
Attn: 11:55 am. Downtown Greenwood and Northeast Greenwood (the new houses on Robert E. Lee) are two different worlds. You don’t know what you’re talking about.
Why are the owners not in jail and have not even been arrested?
Attn 8:13 I recently rode through various sections of Greenwood. What did I not see? It appears to be the perfect setting for a movie about the Great Depression.
8:13 here. I was in Greenwood yesterday and actually drove through the new development on or just off the east end of Robert E. Lee. Nothing depressed about that area-nice, big houses with nice, expensive cars in the driveways. If you think a house in downtown Greenwood in disrepair and a new house in northeast Greenwood are in any way comparable, you either did not drive through those areas or you know nothing about real estate values. This was my point in the earlier post. Nowhere did I claim that Greenwood as a whole is a thriving metropolis. Try to stay on point.
How does the owner of a company that is losing money afford such a nice house?
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