Thursday, January 20, 2022

Express Grain = Worldcom?

Express Grain submitted phony audits to state. 

Express Grain Terminals, LLC continued Mississippi's grand literary history of creative writing as it submitted rather creative financial statements to the Mississippi Department of Agriculture & Commerce when it renewed its grain warehouse licenses.  Phony logos were used, losses were understated by $20 million, and warnings of impending doom were just plain erased.  Both the accurate and fraudulent audits are posted below.  

Mississippi requires grain elevator operators to obtain an annual warehouse license. The grain elevators must pay a fee and submit audited financial statements. Horne LLP audited the company and submitted the audits to Express Grain.  Unfortuantely, Express Grain in turn submitted a different set of financial statements to the MDAC (The real audits will be called the "Horne Audits" while the phony audits will be labeled the "MDAC audits" in this post.). 

The Horne audits show a company that is in serious trouble as it tries to stave off impending collapse.  The losses substantially increase every year while debt soars.  Meanwhile, the MDAC audits paint a rather different picture.  Express Grain is losing some money but is in no danger of failure. 

Horne warned at the beginning of each and every audit the company face the serious prospect of failure. Horne stated on page 4 of each Audit: 

The  accompanying  combined  financial  statements  for  the  year  ended  June  30,  2020,  have  been prepared assuming that the Companies will continue as a going concern. As discussed in Note 1 to the  combined  financial  statements,  the  Companies  have  accumulated  losses  of  approximately $21,600,000  since  its  inception  and  their  total  current  liabilities  exceed  total  current  assets  at June 30, 2020. The biodiesel facility was placed into service during fiscal 2019 but has not operated at   full   capacity.   The   Companies   have   a   line-of-credit   with   a  balance   at   June   30,   2020   of approximately  $24.6  million  that  matures  within  the  next  twelve  months.  These  conditions  raise substantial doubt about the Companies' ability to continue as a going concern. Management's plans concerning these matters are also discussed in Note 1 to the combined financial statements. The combined financial statements do not include any adjustments that might result from the outcome this uncertainty. Our opinion is not modified with respect to this matter.
Every Horne audit continued this dire warning although the amount of the losses changed. The audits show Express Grain's implosion accelerated over the last four years. The annual losses are stated below.

December 2020 (Semi-annual audit): $19.4 million

2020 audit: $21.6 million

2019 audit:  $14 million

2018 audit: $9 million

2017 audit: $2.4 million

None of these warnings appeared in the audits submitted to the state for licensure requirements.  They were simply omitted.  Out of sight, out of mind.  It is not hard to see why they disappeared as they would have stood out as a giant red flag to anyone who even looked at the first two pages of the audits. With no such red flag warnings present, MDAC renewed the license, unaware the company was collapsing.


The phony 2020 audit overstated total assets by $13 million and understated inventories by $3 million.  The total liabilities were understated by $10 million and included a $20 million understatement of long-term debt. 

However, the real chicanery took place on the income statement.  The phony audit understated the the net loss by $19 million.  The Colemans reported a loss but it was a much smaller $1.9 million.  The actual loss was $21.2 million.  

The fraud even extended to logos.  Express Grain copied and pasted old logos onto the phony audits. 

Express Grain submitted the 2020 audit with this logo on the letterhead. 

The only problem is Horne began using a different logo on the 2020 audit. It's always the mistakes that expose the cheaters and this case is no exception.  Here is the proper Horne logo. 

 Horne used the red logo in the 2019 and previous audits.

Agriculture Commissioner Andrew Gipson will hold a hearing to revoke the Express Grain warehouse license Monday.


 Audits Submitted to MDAC

2020: p.1

2019: p.21

2018: p.40



Legitimate Audits (not submitted to MDAC)

December 2020 (Semi-annual audit): p.1

2020 audit:  p. 26

2019 audit: p. 49

2018 audit: p. 72


 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. 

 The bankruptcy judge will hold a hearing on the matter on January 25.  However, Commissioner Gipson is holding a revocation hearing on January 24. 



Anonymous said...

My advice to express grain “terminals”. Try to move all legal issues to Hinds County Ms. That is your best shot at survival.

Anonymous said...

Interesting that the "Delta Farm Press", the bible of delta farmers, has not published 1 word on this disaster.

Anonymous said...

Remember when I commented that it was going to be a federal case?

UMB is based in Kansas City.

Anonymous said...

They Phooled Phildo Bryant in 2016:

"Jackson, Mississippi — October 25, 2016 — Express Grain Terminals has expanded agricultural product processing operations in Greenwood, Mississippi, creating 10 new jobs and investing $2 million. Earlier this year, the company created 55 jobs and invested $13 million in Mississippi.

“Agribusiness is a significant economic driver in Mississippi. I am glad Express Grain Terminals found the resources and skilled workers needed to grow. This project will help boost the economy in Leflore County and the entire Mississippi Delta region,” Governor Phil Bryant said."

Anonymous said...

Is it illegal to overstate asset values?

If insurers and banks rely on the overstated value will
The liars face jail time?

That seems to be the case here…..

Is that the law everywhere?

Anonymous said...

You are correct but as someone who used to work for the feds, federal courts move at the speed of a herd of racing turtles.

Anonymous said...

Does anyone still think the proposed deal for UMB to loan another $30 million to keep the company operating, in return for a super-priority lien against $100 million in assets, passes the smell test?

Note: These guys are bush league compared to Texas, where $1 billion went missing from the Department of Transportation, and they chalked it up to an "accounting error."

Anonymous said...

Yes, it’s called fraud.

Anonymous said...

§ 97-7-10. Fraudulent statements and representations
• (1) Whoever, with intent to defraud the state or any department, agency, office, board, commission, county, municipality or other subdivision of state or local government, knowingly and willfully falsifies, conceals or covers up by trick, scheme or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall, upon conviction, be punished by a fine of not more than Ten Thousand Dollars ($ 10,000.00) or by imprisonment for not more than five (5) years, or by both such fine and imprisonment.
• (2) This section shall not prohibit the prosecution under any other criminal statute of the state. SOURCES: Laws, 1988, ch. 511, § 2, eff from and after July 1, 1988.

Anonymous said...

It would be interesting to know whether their bank was getting the HORNE audit or the Fraudulent Financials. I would think surely the got the HORNE audit because they would know the amount of debt the company had with the bank. I guess that will probably all come out in the lawsuit between the farmers and the Bank.

Krusatyr said...

Thx KF for these stories of malfeasance. I believe each episode that escapes prosecution creates a dark, fertile bed for more worms to be inspired to feed their greed. EG: Ex governor Barbour appeared freewheeling in some of his promotions.

Anonymous said...

@12:18, if not, the Bankruptcy Court will not approve it.

Anonymous said...

IN all seriousness KF thank you for the coverage of this. Haven't heard a peep from any other metro area publication, while this seems to be big enough to make national news when it's all said and done. You'd think "$100M+ Fraud screws rural MS farmers" would catch some eyes

pretend_cpa said...

Auditing 101 lesson:

There are various types of opinions that an auditor, like Horne, can issue. Two of them are as follows:

- "Clean" opinion: The financial statements are what they are, and there are no issues or problems.

- "Going concern" opinion: Based on the financial statements, the financial condition of the company raises questions about its ability to continue operating. There is very specific language that the AICPA requires an auditor to use in it's opinion. Here is that language (quoting from the excerpt above):

"These conditions raise substantial doubt about the Companies' ability to continue as a going concern. Management's plans concerning these matters are also discussed in Note 1 to the combined financial statements. The combined financial statements do not include any adjustments that might result from the outcome this uncertainty. Our opinion is not modified with respect to this matter."

If the owners of EG removed this language and/or in any other way materially altered the financial report prepared by Horne, this is outright fraud. And it is criminal.

Anonymous said...

Lost in all these new revelations is what was the opening shot in this and other reporting sites - Shyster Don Barrett's attempt to make the bank the bad guy and reaping large legal fees by suing them for the farmer's losses.

Clearly the bad guys here are the ones that were running the elevator, issuing rubber checks, and producing fake audited statements. Clearly the Coleman's faked financial statements to retain their elevator license; it would be a logical conclusion that they submitted similarly false financial statements to the bank. Seems to shoot large holes in Barrett's claim that the bank kept the business operating knowing of their financial condition.

Anonymous said...

It will (sort of) be like WorldCom, unless Andy pulls their license. Then it will be like Sears, Stein Mart, and Toys-R-Us.

Atticus Finch said...

@12:33 The penalties referenced in your post are literally crumbs when compared with the amount of monies involved. Whatever individual that submitted the doctored audits to the State had better hope that is all the punishment he faces, and it is pretty much a given that this minor event was somehow forgotten when hiring his lawyers. They probably are as pleased as the farmers.

Anonymous said...

@ 1:37: I'm glad that they bank has hired your as their spokesperson. Congratulations.

I'm sure the bank got the real audits since even a casual reading of the fake ones by the bankers would have revealed something was up. The reason why the banks are going to pay for this is that they intentionally schemed to time their calling of the loan to coincide with when the elevator would have the farmers assets in custody. They intentionally delayed that process in order to maximize their ability to seize other peoples' assets.

I know you know this, but I'm trying to just make sure no one else loses sight of the reason the bank is involved.

Anonymous said...

Did the Bank actually seize any of the grain on site? Did the Bank have a security interest in that grain?

Anonymous said...

@3:06pm. I am not a lawyer, nor did I stay in a Holiday Inn Express last night, but I think we can all agree that the actions of UMB appear to be morally wrong. That being said, morally wrong and illegal are two different things. Please share with the rest of us the specific laws that have been broken by the bank, Asking for many friends.

Anonymous said...

Where did all of the money actually go?
Grain elevators are highly profitable and do not "lose" that much money each year.

Anonymous said...

4:52: Common law, statutory law, administrative law, and the Golden Rule.

-not 3:06

Anonymous said...

To 6:44, the elevator was floating the Biodiesel operations. That business segment was the downfall of this company.

Anonymous said...

$20 million went to 15 lifted golf carts. Can’t you read? Dang. EZ-Go will not issue a refund as the buyer signed the interstate bill of sale to avoid paying sales tax.

Anonymous said...

(The real audits will be called the "Horne Audits" while the phony audits will be labeled the "MDAC audits" in this post.)

To be more accurate, let's call them the 'Accurate Audits' and the 'Revised Audits'.

And please stop with the nonsense of 'the figures were omitted'. Literally they were *redacted*. There's a difference. Omitted means 'left out of'. Redacted means 'cut from as if to conceal'. You can expect to hear this explanation at trial.

Anonymous said...

Thanks Kingfish. You are the only one who has dug into this story to bring the facts. Keep up the good work.

Anonymous said...

If those audits were indeed fabricated, they don’t need a trial, they.simply need a conviction.

Anonymous said...

The bankruptcy court record now includes the real Horne audit reports and the falsified reports submitted by Express to the State and to the lenders.

Anonymous said...

They won't be riding lifted golf carts where these losers will be went after they are sentenced.

Orca Intelligence said...

Nice Post!!
Please look here at Freight Auditing Companies

Anonymous said...

4:52, you can’t be serious that you aren’t aware of a law against providing falsified reports to a state regulating agency and to a lender.

Hookah said...

I thought ole Cowboy Andy was supposed to protect us from fraud like this and marijuana?

Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel


Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS