Hardly Chicken Feed

Full paper bag of different health food on rustic wooden background. Top view. Flat lay

Consumers pay a premium for organic food to avoid exposure to chemical residues and support farming methods that are healthier for the soil, water, and environment. Over at least seven years, countless consumers bought what they believed to be organic beef, chicken, dairy products, and eggs, but were not. (Thanks to a fraudulent organic grain fraud scheme perpetrated by a Missouri farmer and three Nebraska accomplices.)

In August 2019, a judge sentenced Missouri farmer Randy Constant to 10 years in federal prison and ordered the forfeiture of more than $128 million in proceeds after he pleaded guilty to wire fraud. His accomplices were sentenced to prison terms from three to 24 months for the same crime.

Constant sold massive volumes of grain he claimed to grow on his certified organic fields, primarily for use as chicken and cattle feed. Instead, he purchased non-organic grain from other sources, used chemicals on his certified fields, and mixed organic and non-organic grain together, selling them all at certified organic prices. (In the organic food production world, those are serious infractions.)

The resulting meat and food products were then erroneously sold as certified organic. The judge called the scheme a “massive fraud” that caused “incalculable damage” to consumers and the organic industry. Constant’s 2016 sales were estimated to account for about 7% of all organic corn and 8% of all organic soybeans grown in the U.S. (That’s a whole lot of chicken feed right there.)

Despite a reputation as a dedicated family man, Constant squandered his profits on gambling and a sordid double life in Las Vegas. He took his own life a few days following sentencing. (That’s a very sad ending to an already sad fraud tale.)

Today’s Fraud of the Day comes from the Northern District of Iowa U.S. Attorney’s media release, “Field of Schemes Fraud Results in Over a Decade in Federal Prison for Leader of Largest Organic Fraud Case in U.S. History,” published Aug. 19, 2019.

Randy Constant and Three Others Sentenced to Federal Prison for Their Roles in Fraud Involving More Than $120,000,000 in Grain Falsely Marketed as Organic

A Missouri man who fraudulently sold millions of dollars’ worth of non-organic grain as though it was organic was sentenced on August 16, 2019, to more than ten years in prison in federal court in Cedar Rapids.  Three farmers from Nebraska who supplied him with non-organic grain were also sentenced to federal prison for their roles in a scheme to defraud customers across the United States.

Randy Constant, age 61, from Chillicothe, Missouri, received the prison term after a December 20, 2018, guilty plea to one count of wire fraud.  Constant admitted the fraudulent scheme involved at least $142,433,475 in grain sales, and the vast majority of those sales were fraudulent.  At his plea hearing, he admitted that, from 2010 to 2017, he misled customers into thinking they were buying certified organic grain when the grain he was selling was not organic.  Constant admitted falsely telling customers the grain he sold was grown on his certified organic fields in Nebraska and Missouri when the grain was not organic either because he purchased the grain from other growers, the certified organic fields were sprayed with unauthorized chemicals, or organic grain was mixed with non-organic grain.  Constant made many of the sales through a brokerage he owned that operated in Ossian, Iowa, known as Jericho Solutions.  As part of the plea, Constant also agreed to forfeit $128,190,128 in proceeds from the fraudulent scheme.

Additional information is reported in a Kansas City Star article, “Missouri charmer led double life, masterminded one of the biggest frauds in farm history” published Jan. 12, 2020.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.