Thursday, June 2, 2022

More Express Grain Fraud

The Mississippi Development Authority asked a bankruptcy judge to bar the discharge of a $750,000 claim against Express Grain.  The former grain elevator operator failed last year as it hid over losses of over $20 million for several years.   The Express Grain bankruptcy was over $200 million. 

MDA's ACE Fund issued a  $750,000 unsecured grant  to Express Grain in 2020.  The funding was supposed to create 100 jobs. (Source: P.12 of MDA's 2021 Incentives  Report). The Greenwood-Leflore-Carroll Economic Foundation sponsored the grant.  

The funds were supposed to fund improvements at the Leflore County facility.  The agreement states: 

The  Company  commits that the Project shall make an  investment of at  least $18,017,250 and  create at least one-hundred  (100) new direct full-time jobs at the Mississippi Project Site, in addition to the seventy-nine (79) existing full-time jobs, for a total of one-hundred and seventy-nine (179) full-time jobs located at the Mississippi Project Site in Leflore County, within three (3) years of the date of this Agreement ("Job Creation Commitment") and must maintain those jobs for a two (2) year maintenance period ("Job Maintenance Commitment").

Express Grain would repay MDA for each job that was not created.  Express Grain had to maintain the employment for at least two years or else it would have to repay some or all of the grant. 

However, Express Grain also had to submit financial statements with the grant application.  Remember those phony financial statements the company submitted to MDAC for its license? The Greenwood company apparently engaged in the same bit of fraud as well. MDA stated in the motion: 

18.       After  reviewing  the  Commissioner’s  findings  and  the  evidence  and  testimony MDA  became  aware  that  Express  Grain  and  John  Coleman  similarly secured  the  Ace  Fund  grant  in  the  amount  of  $750,000.00  by  materially  altering  its  Audited Combined  Financial  Statements  and  the  original  Internal  Audit  Reports  of  Horne  that  were submitted with its grant application.
The complaint accused the company of committing crimes against the state: 

24.       The Debtor’s conduct in this regard may have violated 11 U.S.C. § 1141(d)(6)(A) and/or (B), which excepts from discharge money owed to a domestic governmental unit that was obtained by false pretenses, a false representation, or actual fraud. If so, the Debtor’s indebtedness to  MDA  in  connection  with  the  Ace  Fund  grant  in  the  amount  of  $750,000.00  constitutes  a nondischargeable debt.

The case is assigned to U.S. Bankruptcy Judge Selene Maddox. 

 

 

Synopsis 

 Express Grain Terminals opened in 2007 and is a major grain elevator in the Mississippi Delta. Dr. Michael Coleman and his son John Coleman own Express Grain Terminals although John's share is 1%.  Express Processing open in 2015 and Express Biodiesel opened in 2018. Express Grain owns the two companies.

Express Grain ran into some financial trouble a year ago. Several farmers complained to MDAC in December 2020 that checks for their harvest bounced. However, the company made good on the checks. However, the company owed over $70 million to UMB Bank. The company submitted phony financial statements to the state when it renewed its license in the spring of 2021. Word circulated among Delta farmers during the harvest season that the company was in trouble.  

Express Grain President John Coleman assured farmers everything was okay in a September 28 letter:


UMB Bank sued the company for fraud on the same day in Leflore County Chancery Court.  UMB had issued a $40 million revolving loan and a $35 million term loan to the defendants. The bank extended the loans several times. The bank allegedly caught the company submitting false financial statements. UMB declared Express Grain in default on loans of $71 million. The lawsuit sought repayment of the loans and asked the Chancellor to place the company into receivership. Earlier post. 

Express Grain filed a petition for Chapter 11 bankruptcy the next day. 

 The company reports total liabilities of $106 million in assets of $101 million. However, the company owes another $9 million to farmers. The secured claims are $70 million while unsecured claims are $36 million.  Total amount owed to farmers is $41 million.  The top twenty unsecured creditors report  claims of over $23 million. 

 The damage does not stop with farmers losing their crops. More than a few banks place liens on harvests when farmers borrowed against them. The bankruptcy means those banks could lose the collateral on those loans.

Some farmers have gone to court to get their harvests back. They accused the bank of keeping the broke borrower afloat just long enough to steal the harvests delivered to the grain elevator without paying for them Earlier post. 

 Commissioner Gipson said Express Grain submitted phony financial statements when it applied for the renewal of its license. He obtained copies of the audited financial statements for the last three years from the company's accountant, Horne LLP, and compared them to those filed with his agency. The Commissioner said the true audits show the company was suffering a $20 million loss while those filed with his office showed a thriving company. The auditors also stated in their notes that it was doubtful the company could continue "as a going concern." 

The Commissioner asked the Court's permission to investigate the company and made it clear he wants to revoke Express Grain's license. However, Express Grain and UMB Bank objected to any investigation of the grain elevator. 


A hearing was held on February and the Commissioner revoked the license on February 11. Bankruptcy court filings in March revealed Express Grain sold the same crops to multiple companies.  



21 comments:

Anonymous said...

So, they were guaranteed $18 million dollars to create 100 jobs. That represents each job is for $180,000.00 per job. Who are you telling me that this is not extremely unrealistic and fraudulent. I am not sure the state and federal government are not culpable in financial fraudulent scheme. LOOK AT THOSE INVOLVED FROM THE FED SIDE. THiS WOULD NOT HAVE HAPPENED WITHOUT THE FED CORRUPTION BEING INVOLVED? Why don’t you people who are getting screwed not handle this like reasonably educated people?

John Pittman Hey said...

7:14 pm - No, the grant was for $750,000 from MDA. Express Grain had to create 100 new jobs and commit to itself spending $18 million.

So the grant would have paid $7,500 per new job created.

Anonymous said...

Attn 7:14 P. M. If I were a newly recognized member of the Mississippi bar association., I would do everything I could to represent these farmers. P.S. How do you think those well recognized attys. Involved got started.

Anonymous said...

Two questions- why aren't the Colemans in jail, and where did $200 million go?

Anonymous said...

bankruptcy.....where deadbeat citizens and fraudulent corporation are protected and rewarded.
remember, here in bidens america, success is both unfair and racist.

Anonymous said...

Attn 7:45 - its a good thing that you are not a newly recognized member of the MS bar - association or not. Because you could do 'everything you could" but what would that result in? The farmers dealt with a crook, were prewarned by what the company did the year before, and 'sold' their crop without getting money for it.

You going to sue the farmers for falling for this shit? You going to sue the Coleman's who have little to nothing at this point? Who you gonna call - Ghostbusters can't help you?

Yes, it was a business deal gone bad. Happens every day throughout the state and the country. And with the bankruptcy laws that control us, you get screwed if you are the one holding unsecured debt - whether you have a newly recognized barrister or an old hat that is used to suing anybody and everybody (i.e. Don Barrett).

Still waiting to hear what basis there is for suing anybody - except hoping for a bleeding heart jury, that will get overturned shortly after the lawyer has billed for millions in expenses.

Anonymous said...

9:38 pm

What you don’t realize is banks are governed by some pretty serious regulations.

Lender liability is an actual lengthy course which is very complicated.

The actions by the bankers and the timing of those actions could / might trigger some liability.

They won’t know until they get into the nuts and bolts of it but if there is one guy who can it’s Don.

The banks may have done everything by the book and the suit may fail….but testing the banks to demonstrate compliance is part of our justice system.

Time will tell.

Anonymous said...

The good Dr Michael Coleman rarely if every is mentioned in the discussion, even though he owned 99% of Express Grain. Does ANYONE think that Mike not aware or not involved in this?

Anonymous said...

@7:14pm Your math isn't so good, but your sentiment is a bullseye.

Ya can't fix Mississippi...because you can't fix stupid.

Anonymous said...

@8:56. The money went in the pockets of Michael and John Coleman. And they should both be in jail. Nothing but crooks.

Anonymous said...

The last 2 stories, Express Grain, and the infamous Dr. Smith both center around the city of Greenwood, Ms. What is going on there?

Anonymous said...

People who claim to be smart move to an area desperate for smart innovative people to help the population.

Dr Smith could cure cancer (not really) so if you were dying why not go?

Coleman’s thought they could work magic with farm produce and they were horrible but the hope lead to loans and business and eventual demise.

It’s not geographic in as much as it’s a play on the psyche of the indigenous populace - look at me I’m smart and I can solve this problem you have.

Sound familiar? It should.

It happened I’m DC for 4 years and all you saw were grifters and folks out line their own pockets.

Anonymous said...

A dentist in the Delta has to supplement his income, as most of his patients are on Medicaid which pays pennies on the dollar.

Anonymous said...

Express Grain is 2 hours away from Jackson. As I stated earlier in the week. The Delta is a different world than where we come from. Good people for the most but there are bad people everywhere. The doctor is pretty much playing with fire. Those farmers will never forget what he did and basically, when he least expects something then something bad is going to happen. I know a family up there that got taken by this man and it won’t end well for him or his son. I don’t need to say more.

Anonymous said...

@7:14 - I've never known 'the feds' to have any role in tax abatements or other 'gifts' handed out by MDA.

Anonymous said...

When I went to one of the 2 largest colleges in Ms. years ago. I remember someone doing something extremely stupid. Someone asked why anyone would do that. The answer he got was “well, he’s from the delta!”, to which the guy answered “oh”, as if to say that explains it. Thus all of the Greenwood turmoil. William Faulkner certainly recognized this dilemma and reveled in it.

Anonymous said...

@6:09 you are correct about Dr. Michael Coleman who owns 99%. There are 2 scenarious:

SCENARIO ONE - Dr. Coleman knew exactly what was going on. He owns the friggin' business. He knew and was complicit and is a crook.

SCENARIO TWO - Dr. Coleman didn't know anything. He had a partner (John Coleman), and he allowed that partner to run everything. That partner screwed him and everyone else.

If number TWO is accurate, why has Dr. Michael Coleman not sued his business partner? That's what anyone else would do in business. They would be suing their business partner, pressing charges, pushing the authorities to investigate and arrest. If Dr. Coleman is just an honest victim of a bad partner, why isn't he doing those things>

Anonymous said...

The "ACE" fund is basically YOUR TAX DOLLARS in a GOVERNOR'S PET PROJECT SLUSH FUND that he basically has the final say. SO this one is on PHEEL and Colonel McGrevey. Very similar to MDA's LAND WATER AND TIMBER slush fund that has generally been under the Lester Spell and All Hat MS Ag Commish's purview. That is to say ALL YOUR TAX DOLLARS. No average joe snuffy MS tax payer ever hears or knows about these dealios except for the fat ass MS legislature politicians. Greenwood does suck because why is Milwaukee Tool expanding in Grenada??? HHMMM? probably because of the lack of labor pool among the folks that cant pass random drug tests. I would be curious as to what all the MDA LAND WATER AND TIMBER HAS FUNDED SINCE THE BEEF PLANT? Guess I'll never know.

John Pittman Hey said...

12:05 pm - it could be that Dr. Coleman thinks/knows his son can't make it right, and suing him just helps destroy the family even further. Also, it depends on how much financial damage this all ends up doing to Dr. Coleman. He won't know that until some time in the future.

Anonymous said...

@12:05. I understand. My son worked for me one time when he was in high school. I told him, "When we are at home, you are my son, not my employee. When we are at work, you are my employee, not my son. I will treat you accordingly."

If Dr. Coleman doesn't pursue action against his business partner, then he is complicit. You can't walk both sides of the fence.

Anonymous said...

7:44 AM That part of the state has always been a Mafia stronghold.


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