The owners of a Gallatin grain company were indicted today (Thurs) in a scheme that allegedly defrauded more than 100 northwest Missouri farmers of more than $3 million. U.S. Attorney Beth Phillips says 66-year old Daniel Froman and his wife, 65-year old Pauline Froman, were charged in an indictment returned by a federal grand jury.
According to the indictment, the Fromans operated Gallatin Grain Company, which stored and bought grain (primarily corn and soybeans) from farmers in northwest Missouri. The indictment alleges that, from January 2008, to February 2009, the Fromans participated in a conspiracy to defraud 110 farmers, resulting in a total estimated loss of $3.1 million.
Information from the Office of Beth Phillips
Today’s indictment alleges that grain (primarily corn and soybeans), which was owned by various farmers who contracted with Gallatin Grain, was sold by the Fromans without the farmers’ permission and the proceeds of the sales were wrongfully withheld by the Fromans. The indictment specifically cites 10 farmers who were victims of the scheme when the Fromans allegedly sold approximately 140,000 bushels of grain.
In February 2009, Daniel Froman allegedly emptied the storage space at Gallatin Grain, loading 1,200-1,300 bushels of soybeans and corn into four tractor trailers. Daniel Froman allegedly transported the stolen grain as well as some farm equipment to Falls City, Neb., where the grain, farm equipment and tractor trailers were all sold for $100,000.
Today’s indictment also alleges that the Fromans submitted a false and fraudulent financial statement to the Missouri Department of Agriculture, Grain Regulatory Services which overstated their accounts receivable and understated their accounts payable. The financial statement submitted by the Fromans falsely reported a net worth of more than $662,000 in December 2007, the indictment says, when in reality they had a negative net worth of $936. The Fromans would have been ineligible to maintain their grain dealer or warehouse licenses with a negative net worth.
The false financial statement was allegedly used to obtain $500,000 in loans through a line of credit at BTC Bank.
In addition to the conspiracy, the Fromans are charged together with one count of mail fraud and one count of bank fraud. Daniel Froman is also charged with one count of wire fraud and one count of interstate transportation of stolen property.
Today’s indictment also contains a forfeiture allegation, which would require the Fromans to forfeit to the government $3,113,023, which represents the amount received from the fraud scheme.
Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the Federal Bureau of Investigation, the Missouri State Highway Patrol, the Missouri Department of Agriculture Grain Regulatory Services, the Missouri Attorney General’s Office, the Daviess County, Mo., Prosecutor’s Office and the Daviess County, Mo., Sheriff’s Department.