(Cedar Rapids, IA) — An Iowa corporation and four of it’s managers are being ordered to pay millions of dollars in restitution to farmers. Investigators say Lynch Livestock of Waucoma defrauded more than three-million dollars out of Midwest livestock producers over two decades. Those involved pleaded guilty to fraud charges last year. An investigation found managers created false invoices and shredded or burned evidence of fraud.
The company has released a statement to the media regarding this case and you can view that, in full, below:
MEDIA STATEMENT & BACKGROUND DOCUMENT
Thank you for your inquiry.
“The company has taken full responsibility for all past sorting and weighing issues and we are ready to close this painful chapter,” said Gary Lynch, Chairman of Lynch Family Companies. “Our company is built on a strong foundation of integrity and trust, which is essential to our relationship with our customers.”
Gary Lynch, on behalf of the Lynch Family Companies, entered into a plea agreement with the US Attorney’s Office for one count of failing to comply with an order of the United States Secretary of Agriculture. The settlement agreement was accepted by the court on February 10, 2023. As part of the agreement, the company has paid over $3 M in restitution and fines.
Listed below are key facts related to this case:
Initial Notice in 2017
In April 2017, Lynch Livestock was made aware of potential violations regarding the weighing and sorting of hogs that resulted in the company underpaying some customers. In response to these concerns, Gary Lynch self-reported violations to the Grain Inspection, Packers and Stockyards Administration (GIPSA), requested an audit, and cooperated with the GIPSA investigation.
After the investigation was completed, GIPSA determined three customers were affected. These irregularities were reported to the United States Department of Agriculture (USDA), which ordered Lynch Livestock to cease and desist from these practices and to pay a $15,000 fine, along with $794,378 in restitution to the three affected companies. As a result of this matter, Lynch Livestock took immediate action, including personnel changes, retraining all employees, and requiring all employees to sign new compliance forms.
Enhanced Measures in 2021
The USDA received an additional complaint in January 2021 regarding similar weighing violations at one of the company’s hog buying stations. As a result, some producers received artificially low payments for their hogs. Lynch Livestock took action upon receiving the report, including:
- fully cooperating during the agency’s investigation
- terminating employees who manipulated the scales and issued false tickets
- implementing additional employee training and an internal whistleblower process
- installing cameras at facilities as a safeguard so employees and customers can see how animals are sorted and weighed
Under a settlement with the USDA, the company entered a consent decree, paid a civil penalty and restitution of $445,626, which has been distributed to producers who were underpaid. New leadership was hired, and the company developed an industry leading, robust compliance plan that included enhanced processes and the installation of cameras.