Co-op's lawsuit claims over $480,000 in bribes
Thursday, February 9, 2012
West Central Cooperative is based in Ralston and is one of the largest grain cooperatives in the country. Daily Times Herald photo by Jared Strong
The state Division of Criminal Investigation is looking into the alleged crime. West Central Cooperative claims that a Lake View farmer owes more than $2.3 million for improper discounts.
Local bank intervenes
Carroll County State Bank has claimed first rights to the Wollesens’ assets if West Central Cooperative’s lawsuit against the Wollesens is successful, according to court documents filed in January.
West Central claims that the Wollesens and their business, Iowa Plains Farms, owe it more than $2.3 million.
The bank says the Wollesens owe it more than $3.7 million.
The bank asked a judge in January to intervene in the matter after West Central claimed in October that it is entitled to a lien on Iowa Plains Farms’ crop proceeds.
A judge has not ruled on the matter.
A Sac County farmer allegedly gave bribes of more than $480,000 to a former West Central Cooperative manager over the course of five years in exchange for steep, unauthorized discounts of the company’s crop seed and other products, according to new court documents filed this week in a lawsuit that dates back to May 2011.
The Ralston-based farmers’ cooperative claims that the farmer, Bill Wollesen, of Lake View, and his partners — wife Kristi Wollesen and John Wollesen — owe the company at least $2.3 million.
The former employee who allegedly facilitated the fraudulent theft scheme, Chad Hartzler, who was manager of West Central’s agronomy division, resigned in April and allegedly confessed to the scheme amid an investigation into the division’s finances.
Court records show that all three Wollesens wrote nearly 40 checks to Hartzler from December 2005 to March 2011 that ranged from $3,000 to $46,000.
But the Wollesens argue that Hartzler was a rogue employee and that they had no idea the payments were improper — that they thought the payments to Hartzler were for free or deeply discounted promotional products West Central received and allowed Hartzler to sell for his own gain.
The Wollesens further claim that West Central has confiscated more than $2 million that the farmers paid in advance for last year’s crop seed and other products that were not delivered. However, West Central asserts that the payment paid an outstanding balance on the Wollesens’ account, and that the Wollesens owe more.
The state’s Division of Criminal Investigation launched an investigation last year into the matter but has yet to charge Hartzler or the Wollesens with a crime.
Bill Wollesen has declined to comment for the Daily Times Herald’s stories on the lawsuit. Hartzler could not be reached for comment.
The Wollesens say in court documents that they first purchased seed, chemicals and fertilizer from West Central in 2006, after Hartzler promised great prices if they bought from West Central.
Hartzler said West Central needed the Wollesens’ business to “allow it to open a new facility in Carroll or Ralston,” court documents show.
As part of the deal, the Wollesens claim, that the chemical supply company they owned would no longer advertise in the area in which West Central did business to give West Central a competitive advantage in the area, and that the Wollesens scrapped a plan to start a fertilizer business that would directly compete with West Central.
The Wollesens say they paid millions to West Central over the next several years for its products, and they claim their private payments to Hartzler should have been evident to West Central.
At least one of the checks to Hartzler, the Wollesens claim, was delivered to his office at West Central.
However, an analysis of the payments shows that the Wollesens typically made a few lump-sum payments to West Central for their products and services, whereas their payments to Hartzler were made in varying amounts six to nine times each year.
The Wollesens further claim that the prices they paid were not out-of-line compared with the discounts other seed and fertilizer sellers offer for large farm operations, such as the Wollesens.
But West Central disagrees and points to the significant discounts Hartzler allegedly gave the Wollesens for their alleged advanced payments on products such as seed corn for 2011: A contract the Wollesens signed with Hartzler — which West Central claims was never filed with their accountants but a copy of which is contained in court documents — shows that the Wollesens bought the seed corn for $135 per bag — less than half of what West Central itself pays for the product.
“The alleged contract was determined invalid based upon the significant and unreasonable difference,” wrote Timothy Weigel, West Central’s agronomy controller to whom Hartzler allegedly confessed the bribery scheme.
Hartzler allegedly told Weigel that he hid the most recent contracts to cover up the scheme.
“Hartzler stated to me in person that he received substantial payments to him personally from Bill Wollesen in exchange for prices for the sale of seed, chemicals and fertilizer that Hartzler knew were improper,” Weigel said. “He said Bill Wollesen understood he was getting special discount prices in exchange for his side payments to Hartzler, personally, and how Hartzler was applying payments made by Iowa Plains (the Wollesens’ farming company) late in the year to pay for that year’s (products), not as prepay for the next year’s.”
The case is set to go to trial on Nov. 6. It is expected to last 10 days.
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