Former director of Wheat groups stole $112,000, audit says
BISMARCK, N.D. (AP)--The former director of two prominent North Dakota Wheat groups may be prosecuted for stealing $112,685 from them during the last 18 months, Attorney General Wayne Stenehjem said.
Lance Hagen, the former administrator of the North Dakota Grain Growers Association and the U.S. Durum Growers Association, told auditors who documented the thefts that he took the money to play the commodities market. The Associated Press obtained the audit on June 4.
Two years ago, he took $3,000 and made $311,000 speculating on Wheat prices, Hagen said. However, his luck soon turned, and he lost about $250,000 last year alone, he said.
"If you've never traded these stupid commodities, it's like getting hooked on drugs," Hagen said in an interview with The Associated Press.
Richard Riha, the Burleigh County state's attorney, has jurisdiction over any criminal case against Hagen. He could not be reached for comment June 4. Stenehjem said he would speak to Riha the following week to discuss whether Hagen should be prosecuted.
The audit says Hagen repaid $11,631 to the two organizations. In an interview, Hagen said he has made full restitution to the Grain Growers and the Durum Growers. He declined to say where he obtained the money to repay them.
"I've done everything I can," Hagen said. "I made a mistake, and I've cooperated with them."
Al Wolf, a Bismarck attorney for the two farm groups, said Hagen has paid back the money he took from both. Greg Daws, a Michigan farmer who is president of the Grain Growers, confirmed that Hagen had made restitution.
Fairdale farmer Ed Loraas, who is president of the Durum Growers, could not be reached for comment June 4.
The audit says BankCenter First, the Bismarck bank where the acccounts are kept, told a Grain Growers board member in late March that "certain anomalies" were occurring in the bank accounts. It does not elaborate, or identify the board member.
Daws said Hagen told him of the thefts in late March, on the eve of a Grain Growers board meeting. He was stunned and disappointed, Daws said.
However, Hagen promised to repay the embezzled funds and followed through, Daws said. While listening to Hagen explain the scheme and express his regret, Daws said he felt "a huge amount of compassion for the guy."
"Certainly Lance did something he shouldn't have done, but he has corrected the situation," Daws said. "I've got a lot of respect for the guy. A lot of people in this kind of situation disappear. Lance didn't."
The Grain Growers commissioned the audit, which was done by Fraudwise, a unit of the Eide Bailly LLP accounting firm of Fargo. It was dated April 30, the same day Hagen left his job at both organizations.
Hagen was responsible for day-to-day bookkeeping for both the Grain Growers and the Durum Growers, and handled bank statements for both groups, the audit says.
He told accountants he covered up his thefts by providing duplicate checks to an auditor, which were made out to another person or company, and cashing checks he made out to himself. When the checks were returned in bank statements, he removed them and kept them in an envelope at his home, he said.
A listing of checks drawn on a Grain Growers account and two Durum Growers accounts--a general account and another for the International Durum Forum, an annual conference in Minot--each show a series of withdrawals, beginning in December 2002.
Hagen took $31,262 from the Durum Forum account, $51,869 from the Grain Growers account and $29,554 from the Durum Growers' general account, the audit says.
Last December, Hagen pocketed an $8,921 check and listed it as a payment to a Bismarck hotel for a conference, the audit says. In February, he kept two checks, totaling $20,000, and recorded them as payments to Prairie Grains, a magazine published by the Grain Growers Association and Wheat groups in Minnesota and South Dakota.
The Grain Growers, which represents Wheat and barley farmers, and the Durum Growers, which represents farmers who grow the Wheat variety, are both private organizations. Durum is milled to make semolina and durum flour, which are used to make pasta.
However, both groups have contracts with the North Dakota Wheat Commission to provide lobbying and other services. The commission is a state agency that promotes the Wheat industry; it collects a marketing assessment, often called a checkoff, of 1 cent for every bushel of Wheat sold.
The contracts require the groups to turn over audits of their organizations, which then become public records. The audit of Hagen's embezzlement was given to the Wheat Commission and the attorney general's office on June 4. The Associated Press first requested the records May 11.
During the 2003 Legislature, the Wheat Commission and the Grain Growers were at loggerheads over a proposal to raise the checkoff to 1.5 cents a bushel, and funnel most of the increased revenue to the Durum Growers and the Grain Growers for lobbying work on federal farm issues.
Hagen lobbied energetically for the bill, while the Wheat Commission fought it. It was sponsored by Rep. Gene Nicholas, R-Cando, the chairman of the House Agriculture Committee, and Rep. Merle Boucher, D-Rolette, the House minority leader.
The proposal to raise the marketing assessment was eventually dropped from the legislation.
Date: 6/24/04
Copyright 1995-2009. High Plains Publishers, Inc. All rights reserved. Any republishing of these pages, including electronic reproduction of the editorial archives or classified advertising, is strictly prohibited. If you have questions or comments you can reach us at High Plains Journal 1500 E. Wyatt Earp Blvd., P.O. Box 760, Dodge City, KS 67801 or call 1-800-452-7171. Email: webmaster@hpj.com
Market Snapshot
Inside Futures