Express Grain was born in fraud, lived in fraud, and died in fraud yesterday. Agriculture Commissioner Andrew Gipson revoked the warehouse licenses to Express Grain Terminals yesterday for repeatedly submitting phony financial statements to obtain the licenses.
The Commissioner held a hearing on February 4. Express Grain owners Dr. Michael Coleman and his son, John, did not appear at the hearing.
State law requires grain elevators to submit financial statements to the Mississippi Department of Agriculture and Commerce as part of their license application and each year thereafter.
Express Grain lost over $21 million but hid the losses as well as other damning information from MDAC. Instead of submitting the audits prepared by Horne LLP, President John Coleman submitted fraudulent audits that lacked most damaging information. The Commissioner stated:
1. Express Grain redacted the Auditor's opinion the business could not survive. The legitimate audit stated in an "Emphasis of Matter Regarding Going Concern:
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.
2. Altered assets from $102 million to $115 million
3. Changed operating loss of $20 million to operating income of $162,000
4. Marked down liabilities from $99 million to $90 million.
5. Altered net loss from $21 million to $1.8 million
6. Altered members' equity from $2 million to $24 million.
7. Substituted Horne's letterhead with an older one.
An earlier post reported other alterations that took place.
The Commissioner said Express Grain deliberately made "material alterations" to the legitimate Horne audits and submitted the "false" Horne audits. Express Grain committed multiple violations of the law. The licenses were both "fraudulently sought and obtained on the basis of material representations contained in the applications and accompanying documents."
He said the Express Grain licenses held since July 1, 2021 are null and void.
The company is currently in Chapter 11 bankruptcy. The bankruptcy court is holding an auction of the company's assets on the morning of February 25. It will hold a hearing to approve the winning bids that afternoon.
So endeth the Worldcom of the Mississippi Delta.
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Commissioner wants to revoke Express Grain license for fraud.
Senate Committee holds Express Grain hearing.
This week on the podcast: Express Grain
Shucking & jiving to bankruptcy.
Express Grain Prez threatened.
Express Grain collapse over $100 million.
27 comments:
It looks like there is a grain of truth to the allegations.
8:58 AM
The truth doesn’t arrive in a “grain.” The truth speaks volumes.
@8:58 AM - It was a play on words, and don't reply that you knew that...you didn't get it and thus you posted your ignorance.
@9:44 AM
See, this is why ignorance continues to breed more ignorance on God’s green earth.
When it comes to the truth, you can’t play on words! You waltz onto a blog trying to sound like what you think intelligent people sound like when in reality you sound like someone who waltzes onto a blog not knowing what intelligent people sound like.
The words that come out of your mouth doesn’t make you intelligent. Anyone can repeat someone’s words. It’s the thought process that makes you “intellectually inclined.”
“You didn’t get it.”
Sigh. Do you not understand why you’re ignorant? Cause I promise I can’t understand why you’re ignorant. You sound like someone who just now understands what was understood a long time ago.
Lmao @ 2 comments
LMAO @ 4 comments.
@10:05 AM
“Rent free.”
This is an easy fix. Mandate the accountants report directly to the Ag commission as part of keeping a license current.
Revoking their license was the correct thing to do. Now the Colemans need jail time. Lengthy jail time.
KF, despite your continual comparison of this to Worldcom, there is no similarity. Evidently you didn't follow the Worldcom process nearly as close as you want to claim - but just because there was a large loss ($100M +/-) here to some folks who did business with this operation, the Worldcom issues were loses to the investors due to entirely different reasons.
This company was not profitable, at least for the last few years. Worldcom was profitable but the failure of the Sprint merger along with a NY prosecutor led to its demise. And the total losses of EG are meager compared to WC.
I know you like to try to be cute sometimes with your comments, but this one just doesn't work.
I suspect that whoever received and reviewed the bogus CPA report and claimed to think it was legitimate was in on the scheme.
@11:06 Of course it's not exactly like Worldcom. But KF is correct in the comparison that both were issues of "cooking the books" to paint a different picture from reality. Both companies altered the financials which resulted in losses to folks who made decisions based upon the those financials (investors of Worldcom and farmers with EG). Both were deliberate financial frauds
@11:13 - Why? What would you expect anyone whose job includes many things other than just recommending approval of renewals of a license to think that a financial audit, submitted on letterhead (purporting to be) of a reputable CPA firm to do? Question its legitimacy, just because?
What would be the benefit to that person in MDAC to recommend renewal of a license - something they do routinely for hundreds of different operations throughout the state every year.
I suspect you have no idea what the process is, or how it is conducted. In fact, I suspect you know little or nothing about the entire concept of a grain elevator. Further, I suspect you just like to put your tin-foil hat on every morning and read blog sites and make stupid comments.
@10:02 AM - you have issues. Seek help, soon.
About time!
Rest assured folks @10:02 can ferret out real intelligence without even looking.
@11:34 - Kinda, but still not the same.
EG took financial statements properly prepared and altered them (can we all spell 'forgery' here, class). The WC issue was a question of valuations and 'opinions'. Don't believe that WC folks were accused of taking actual financials and modifying them.
Maybe a question of semantics; might be one of whether you are defending or prosecuting. In the WC case, both sides had reasonable arguments. In EG, I'm not quite sure how to go about defending.
1:58, WC reversed accounting entries from expenses to capital. So both were accounting frauds that had significant impacts. It's close enough to compare the two as similar. Hopefully, the Colemans will get sentences as long as Ebbers was.
At this point, purely symbolic. the cow is out of the barn
158, WorldCom's accounting entries were not reversals, but a differing opinion as to the proper reporting. And the entries were those made by its accountants, not changed by WorldCom after the audit was presented. If WorldCom had been tried in Mississippi (federal court, still) as it should have been rather than New York City, Ebbers might never have seen the inside of the Yazoo City facility. Also, if you continue to believe that this was criminal, the next question you should ask yourself is whether it was Ebbers that should have been tried and convicted or the CFO that made the decisions as to the proper recording of those charges.
I'm not enough of an accountant to know whether WorldCom or the Prosecutor was correct, but I am trained enough to know that there can be a reasonable argument as to expenditures in a business - especially one like WorldCom and at the time - as to whether it should be expensed or capitalized
Also enough of an accountant to know that what was done in Greenwood doesn't fit into the same comparison.
Whether WorldCom was correct in its accounting could be argued for days among people that really understand that kind of shit. But there is no argument to be made for Express Grain's erasing and replacing of numbers in their financial statements.
I suspect that whoever received and reviewed the bogus CPA report and claimed to think it was legitimate was in on the scheme.
Hanlons Razor!
"Never attribute to malice that which is adequately explained by incompetence."
Also ask yourself why the Express Grain crew in Greenwood might have chosen to be regulated by the MDAC rather than by the USDA.
The issue with world com was non recurring journal entries rather than having the loss be an expense. So say for example your company made $10 this quarter but you had to buy a widget that costs $8 then your total income would be $2 but the GAAP accounting rules allow you can make a listed journal entry for said widget so your stated income would be $10 not withstanding onetime non recurring journal entries. So from a Wall Street and investor point of view your income was $10 except for this one widget purchase. For 5 quarters WC put there loss in a non recurring journal entry rather than showing that they were losing money. This is in fact fraud as investors made decisions on stock purchases and sales based on inflated earnings reports. At the time the internal controls in accounting firms were not setup in order to discover this fraud as non recurring journal entries are a normal part of large publicly traded (SEC regulated) companies. Bernie was not educated enough in public accounting to understand what was truly occurring in my humble opinion.
Where is John Coleman today. Anyone have a clue?
I have no idea where John Coleman is.
I wonder where the UMB loan officer that had the Express Grain Baby Ruth Bar in their portfolio is?
. . . "to think that a financial audit, submitted on letterhead (purporting to be) of a reputable CPA firm to do?"
Very true. See the Milgram Experiment.
@10:02AM
Brilliant reply. ✅
Speaking of 'intelligence', what's wrong with the following sentence?
"The words that come out of your mouth doesn’t make you intelligent."
Go.
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