Farmer swapped prime producers with 'junk' cattle, suit claims

Kelly Holleran Sep. 13, 2010, 2:00am

An alleged scheme involving cattle swapping netted a St. Clair County dairy farmer tens of thousands of dollars in profits, but will also force the farmer to defend himself in court, according to a recently filed complaint.

Greenville Livestock Corporation is a defendant in a lawsuit filed by Kevin Kessler, Kessler Dairy and National Milk Producers Federation on Sept. 1 in St. Clair County Circuit Court.

According to the complaint, Greenville Livestock Corporation began its conspiracy against the plaintiffs when it agreed to buy 328 cows from Kessler Dairy for $735 per head. Once purchased, the cattle were to be directly shipped to a slaughterhouse, the suit states.

However, instead of sending Kessler Dairy's livestock to be slaughtered, Greenville swapped 90 of its own cows that had stopped producing milk to the butchery, the complaint says. The 90 Kessler cattle Greenville kept, it sold for $1,200 apiece, the plaintiffs claim.

Greenville's alleged actions violated the program under which it purchased the cattle, the Herd Retirement Program, according to the complaint. Under the provisions of the program, dairy farmers are eligible to receive payments if they agree to retire their whole dairy herd and to send them to slaughter.

The herd goes to auction, and the dairy farmers, such as Kessler Dairy, are paid for their animals and receive a program payment equal to the auction price times the herd's production over the prior 12-month period, the suit states.

Kessler Dairy decided to participate in the Herd Retirement Program and sold its animals to Greenville Livestock, which offered the best price of any livestock markets, the complaint says.

Upon the sale of the animals, Kessler Dairy claims it mandated the animals be delivered to the slaughterhouse per Herd Retirement Program requirements.

But Kessler Dairy became suspicious of Greenville Livestock's intentions when it came to pick up the animals to deliver them to the slaughterhouse. For instance, Greenville Livestock requested breeding records so it could identify which cows were pregnant and could properly load the cattle, according to the complaint. Confused and suspicious, Kessler Dairy representative Eugene Strohl provided old data of little value, the suit states.

Greenville Livestock also told Strohl that it intended to truck the livestock to its farm 64 miles south of Kessler Dairy to sort the animals, then to deliver them to slaughter at facilities far to the north and east of Kessler Dairy, the complaint says.

On July 23, Greenville Livestock sent a fax to the Herd Retirement Program, representing that it had sent the Kessler Dairy animals to various slaughterhouses on July 16, the plaintiffs claim. It provided ear tags the Herd Retirement Program had placed on the cattle during an audit to prove the validity of its claims, according to the complaint.

Kessler Dairy, however, decided to investigate Greenville Livestock's representations when rumors began circulating that Greenville had actually sold some of Kessler Dairy's livestock, the suit states.

"On information and belief, after picking up the Kessler cows on Friday, July 16, 2010, Greenville Livestock auction wrongfully removed the CWT ear tags from 90 of the prime producing cattle and placed ear tags on 'junk cattle' -- i.e., cattle that was being culled because their capacity to produce milk had diminished significantly so that they were no longer economically viable as dairy cows," the complaint says.

After hearing the rumors, Kessler claims he decided to drive down to Henss Dairy Farm -- the farm that allegedly purchased 90 of the Kessler Dairy cattle from Greenville Livestock -- to confirm the truth or falsity of the claims.

"Ultimately, Kessler was able to look at some of the cows on the Henss Farm and was able to identify at least five that still had ear tags that he, Kessler, had used to identify his cattle at Kessler Dairy," the suit states. "The eartags used by Kessler to identify his cows all had sequential numbers and were primarily orange. Most of the ear tags on the rest of the cows on the Henss Dairy Farm were red."

After his discovery, Kessler drove to Greenville Livestock and attempted to speak to its president, Danny Hugo, who refused to talk to him, the complaint says. Remaining staff at the farm denied Kessler's allegations that they had switched ear tags, the complaint says.

The National Milk Producers Corporation, which runs the Herd Retirement Program, and Kessler still insist the rumors are true.

Because of Greenville Livestock's actions, NMPC lost more than $252,000 it paid to Kessler under the program, according to the complaint.

"As a result of the actions of Greenville Livestock Auction, NMPF and its program, CWT, have been denied the benefit of their bargain and 90 head of producing dairy cattle continue to produce milk," the suit states.

In their complaint, the plaintiffs claim common law fraud, violations of the Illinois Consumer Fraud and Deceptive Business Practice Act, breach of contract, conversion and unjust enrichment.

They seek an unspecified judgment sufficient to compensate them for their loss, plus costs.

Russell K. Scott of Greensfelder, Hemker and Gale in Belleville and James A. McGurk of The Law Offices of James A. McGurk in Chicago will be representing them.

Kevin J. Brosch and Lauren Becker of DTB Associates in Washington, D.C., will serve of counsel.

St. Clair County Circuit Court case number: 10-L-449.

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