Public Safety

Thousands possibly defrauded in fake organic grain scheme

Missouri man ran purchases through northeast Iowa farm

(File photo) A combine drives though stalks of soft red winter wheat during the harvest on a farm in Dixon, Illinois, in this July 16, 2013 file photo. REUTERS/Jim Young/Files
(File photo) A combine drives though stalks of soft red winter wheat during the harvest on a farm in Dixon, Illinois, in this July 16, 2013 file photo. REUTERS/Jim Young/Files

CEDAR RAPIDS — Federal prosecutors say thousands of businesses and individuals across the country potentially fell victim to a large-scale scheme in which soybeans and corn were falsely sold nationwide as “organic.”

According to documents filed over the past week by the U.S. Attorney’s Office in Cedar Rapids, Missouri businessman Randy Constant and three associates defrauded “potentially tens of thousands of victims” when the victims “purchased a product for which they likely paid a premium, but received a product that was not what they thought it would be, namely an actually organic product.”

Constant, 61, of Chillicothe, Mo., pleaded guilty Thursday to one count of wire fraud in U.S. District Court and faces up to 20 years in prison and a $250,000 fine.

Also, Constant may be required to forfeit “any property, real or personal, which constitutes or is derived from proceeds traceable to the offense,” court documents stated.

Prosecutors estimated the value of those forfeited assets could exceed $128 million and include dozens of vehicles, trucks, tractors, and other types of farm machinery.

According the court filings, Constant owned and operated Organic Land Management and “held certifications as organic producers (primarily for corn and soybeans) on certified organic farms in Nebraska and Missouri.”

Constant also co-owned and operated Jericho Solutions, which operated primarily out of Ossian, in Winneshiek County in northeast Iowa, through which he allegedly made many of the fraudulent sales.

Both businesses, according to the filing, marketed and sold grain labeled as organic to customers nationwide.

However, court documents show that Constant admitted that between 2010 to 2017, he misled customers to believe they were buying certified organic grain when “at least 90 percent of the grain was either entirely non-organic or a mix of organic and non-organic grain that he either grew himself or purchased from other farmers.”

Additionally, he allegedly admitted to falsely telling customers the grain he sold was grown on his certified organic fields in Nebraska and Missouri when the grain was not organic.

During that seven-year period, prosecutors say, “the scheme’s fraudulent sales of falsely marketed organic grain exceeded $140 million in gross sales and involved at least 10 customers nationwide.”

Those customers, in turn, likely disseminated that grain to their customers, believing the products to be organic, documents state.

Constant’s plea came after three Nebraska farmers entered pleas to fraud charges in October in connection with organic grain sales.

In that case, Tom Brennan, 70, James Brennan, 40, and Mike Potter, 41, all from Overton, were each convicted of one count of wire fraud. Each man admitted to growing grain between 2010 and 2017 that was not organic and admitted they knew the grain was being marketed and sold as organic.

Court documents allege each of the three farmers received more than $2.5 million from fraudulently marketed grain.

l Comments: (319) 398-8238; kat.russell@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.