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Nebraska Farmers to Plead Guilty to Organic Fraud

10/29/2018

Tom Brennan, his son James and Michael Potter have agreed to each plead guilty to one count of wire fraud following an investigation disclosing widespread mislabeling of organic grains.

 

The defendants operated a farm in Overton, NE certified under the National Organic Program.  From 2010 through 2017 non-organic grain was knowingly sold to distributors harvested from non-certified fields or from acreage which received an application of nitrogen fertilizer and pesticides in violation of USDA certified organic rules.  It is understood that the Federal Government will require the defendants to forfeit $11 million and face sentencing on wire fraud charges.

 

The differential in price between conventional and organic grain creates an incentive for fraud, which in this specific case continued for approximately seven years.

 

Most domestic and imported certified organic grain is used for animal feed.  The problem of deceptive representation of commodities as organic could in large measure be reduced by applying blockchain technology.  The duration of the fraud perpetrated by the three defendants clearly indicates deficiencies in auditing as a requirement for continued organic certification.  In the absence of laboratory assay and reconciling sales volume with certified acreage, deficiencies in auditing will allow unscrupulous producers to fraudulently claim organic status.