Missouri farmer led organic fraud scheme

CEDAR RAPIDS, Iowa -- Three farmers who pleaded guilty Friday in a large-scale organic grain fraud scheme were lured into participation by a Missouri businessman who was its mastermind, a defense lawyer said.

The farmers "convinced themselves to look the other way" while Randy Constant marketed the non-organic corn and soybeans they grew in Overton, Nebraska, as certified organic, attorney Clarence Mock said. They received significantly higher prices for their grain than they would have on the open market, and improperly rationalized their involvement because they weren't personally making misrepresentations to customers, he said.

"It's an old story. These are good, otherwise law-abiding people who were lured into one of these situations where if it's too good to be true, you know it can't be true," Mock told The Associated Press. "Obviously there were serious misjudgments here on the part of the defendants. But their conduct could be characterized as going along for a ride in a vehicle that was driven by Mr. Constant."

Mock spoke before his client Michael Potter, 41; Potter's childhood friend and neighbor James Brennan, 40; and Brennan's father, Tom, 70, pleaded guilty to felony wire fraud charges Friday afternoon in federal court in Cedar Rapids. They were released pending later sentencing hearings, where they are expected to face potential prison sentences and orders to forefeit potentially millions of dollars.

The case is getting attention in the fast-growing organic agriculture industry, which usually handles violations of federal standards through regulatory action instead of criminal prosecution.

The three admitted they knew the grain being marketed as organic was mostly non-organic because it came from non-certified fields or from certified fields where they applied pesticides and nitrogen in violation of USDA standards.

Prosecutors have said that the three conspired with the owner of a company with the initials "J.S." operating out of Ossian, Iowa to dupe customers nationwide who thought they were buying grains grown using environmentally sustainable practices. Prosecutors say the scheme lasted from 2010 to 2017 and generated at least $10.9 million.

Constant, of Chillicothe, Missouri, is the president of Jericho Solutions, which has a presence in Ossian, a town of 800 people in northeastern Iowa.

Constant didn't return phone messages Friday. He hasn't been charged, but the investigation is ongoing. Records show Constant voluntarily surrendered a certificate to operate in the USDA's National Organic Program last year, when prosecutors say the fraud scheme was discovered.

Mock said Constant purchased grain from several other farmers throughout the Midwest marketed as organic.

A spokesman for the U.S. Attorney's Office declined comment on Constant. Attorneys for the Brennans also declined comment.

Any cheating in the system is unfair to actual organic farmers, who go through a "very arduous" three-year process to achieve certified status through USDA, said Rosalyn Lehman, executive director of the Iowa Organic Association.

"It is good that the fraud has been uncovered, and that these dishonest farmers were caught, to protect both organic farmers and consumers," she said, adding that enforcement and oversight should be increased as demand for organic food grows.