GREENWOOD, Miss. -- Mississippi’s commissioner of agriculture is describing as “shocking to the conscience” the alleged fraud by a Greenwood-based grain company that has left hundreds of farmers unpaid for this year’s harvest.
“We want the farmers to be paid,” Andy Gipson said Tuesday in an interview with The Greenwood Commonwealth.
Gipson and representatives of the Mississippi Department of Agriculture and Commerce are scheduled to appear before the U.S. Bankruptcy Court for the Northern District of Mississippi on Jan. 6 to request a pause in Express Grain Terminal’s bankruptcy proceedings while the state agency pursues its investigation.
The department is alleging Express Grain filed fraudulent financial statements when it applied earlier this year to renew the licenses for the three grain warehouses it operates in Leflore County.
Gipson wants the opportunity to hold hearings to determine what happened.
“We have the right to find out the details of what brought this bankruptcy about, why the farmers aren’t being paid and whether in fact (Express Grain) complied with the requirements of the law,” he said. “Our investigation has uncovered some facts and documents which we believe will clearly demonstrate that they violated the law when they applied for these licenses by submitting inaccurate documents.”
Express Grain’s bankruptcy filing in late September caught the attention of Gipson and his department. He said that when the company submitted its license renewal paperwork in May and June, it reported that it was operating profitably.
“My question all along was what happened between June and September to go so bad so quickly,” he said.
Gipson said he called John Coleman, president of Express Grain, and was told the company was being cut off by its bank.
He then became aware of a lawsuit filed by UMB Bank, Express Grain’s largest creditor, alleging Express Grain had underreported commodities sold and that the Kansas City, Missouri-based bank was seeking to protect its collateral. The lawsuit, filed on Sept. 27 in Leflore County Chancery Court, asked that Express Grain be put in receivership and be liquidated. The lawsuit is believed to have prompted Express Grain to seek Chapter 11 bankruptcy protection the following day.
The lawsuit has since been dismissed.
Gipson said the state Department of Agriculture’s investigation, opened shortly after the bankruptcy filing, found that Express Grain submitted a false financial document as part of the warehouse license renewals that run through June 30, 2022.
Licenses are required for grain warehouses, which store the grain, and grain dealers, which purchase grain, to operate in Mississippi. Without the licenses, Express Grain would not have been able to operate its grain warehouses or purchase grain from farmers.
Applications for license renewal must be accompanied by a certified financial statement.
The department’s investigation alleges that the most recent financial statement prepared for Express Grain by an outside accounting firm, Ridgeland-based Horne LLP, had been doctored by Express Grain to make the company appear to be doing better financially than it was.
The department compared the document prepared by Horne to the one submitted to the state by Express Grain and found numerous alterations, according to the investigation.
“When it came to my attention, it was clear enough that there are significant differences between the two documents and these facts have to be brought to light,” he said, “and I think it will help explain a lot of what has happened here in this event.”
The department needs permission from the court to proceed with hearings into the alleged fraud.
Gipson said he has also referred the matter to the Attorney General’s Office.
Should it be confirmed that Express Grain did submit fraudulent documentation in its license renewal applications, its licenses could be revoked or suspended. Gipson said that Express Grain would have to cease processing grain if that happens.
He said he would rather have the grain sitting in the storage facility than continue to be processed with no certain benefit to the farmers who are owed an estimated $40 million by Express Grain.
Gipson said he has spoken with several farmers affected by the grain company’s financial troubles and the feelings he’s sensed have been anger, despair and hopelessness.
“They put their trust and their faith in this operation,” he said. “They delivered their harvest to this operation with the expectation of being paid, and as it stands today there is the prospect that they will not be paid for their yearly harvest. That is appalling and unacceptable.”
He said that the department will continue “fighting alongside farmers” to try to ensure that they are paid.
- Contact Kevin Edwards at 662-581-7233 or kedwards@gwcommonwealth.com.
