GIPSA Uncovers String of False Invoices at Livestock Auction Markets

Investigations lead to several violations of the Packers and Stockyards Act.

Published on: Dec 18, 2012

The U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration continues an 18- month investigation into schemes to falsify the selling price of livestock at livestock auction markets across the country in violation of the Packers and Stockyards Act. Through Dec. 12, 2012, GIPSA has found evidence in 12 separate cases of fraud including seven livestock auctions and five dealers, and assessed over $200,000 in civil penalties.

"Federal regulations require that livestock auction markets, and individuals who buy on commission for someone else, keep and provide true written accounts of the transaction to the sellers and buyers," said GIPSA Administrator Larry Mitchell.  "We continue to investigate evidence of fraud and any allegations of anti-competitive behavior in the livestock, meat and poultry industries, and aggressively enforce the P&S Act when we find them."

Investigations lead to several violations of the Packers and Stockyards Act.
Investigations lead to several violations of the Packers and Stockyards Act.

Summary of GIPSA activities over the last 18 months follows:

GIPSA recently assessed a $75,000 civil penalty assessed against the New Holland Sales Stables, Inc., in New Holland, Pa.  GIPSA filed a complaint on Aug. 24, 2012, alleging that New Holland manipulated the price of livestock it purchased for its customers by producing false market invoices showing inflated prices.  In its complaint, GIPSA alleged that during a 3-month period, New Holland issued 109 false invoices to approximately 21 different buyers.  As described in the complaint, New Holland bought livestock for its customers during the auction and recorded those livestock as sold to a dealer, Frank Fillipo. Consignors were paid according to the actual selling price.  New Holland presented its customers with the false invoices and charged them the marked up prices.  During the 3-month period examined by GIPSA, New Holland's false invoices allegedly resulted in increased profits of $15,345.  Fillipo, who was also named in GIPSA's complaint, was alleged to have received $50 per week from New Holland for the use of his account in order to generate the false invoices. Failure by New Holland to comply with the consent decision's order to cease and desist from violating the P&S Act could result in suspension of its operations for 180 days.

On Nov. 8, 2012, United Producers Inc., agreed in a consent decision to pay a civil penalty of $110,000 to resolve a complaint GIPSA filed against it on Sept. 14, 2012.  GIPSA's complaint alleged that UPI created false invoices for livestock sold to two dealers.  Those dealers, Thomas Witt and Louis "Corky" Holle, requested that UPI create invoices with inflated prices, and in turn presented those false invoices to their customers who purchased the livestock.  According to the complaint, and a letter from UPI's Corporate Controller and Assistant Treasurer, personnel at UPI's Marysville, Mo., facility complied with the dealers' requests to create the false invoices.

On April 27, 2012, GIPSA filed a complaint against the Milan Livestock Auction, Inc., Brookfield, Mo., for creating false invoices.

Separately, four livestock auctions have settled with GIPS through Stipulation agreements and payment of fines.  Those auctions are Lolli Brothers Livestock Market, Macon, Mo.; Kingsville Livestock Auction, Kingsville, Mo.; Appanoose County Livestock, Inc., Centerville, Iowa; and the Russell Livestock Market, Russell, Iowa.

Additionally, three dealers found to be involved in false invoice schemes have been fined; Ronald Wayne Kitchen of Huntsville, Mo., was ordered to pay a $7,975 civil penalty and restitution to Laura's Lean Beef in the amount of $2,025; and Chad Duncan, Brunswick, Mo., was ordered to pay a $7,250 civil penalty and $3,265 in restitution. Chris Arnaman of Cameron, Mo., paid $2,425 pursuant to a stipulation agreement.

Complaints have also been filed against T&M Cattle, Inc. and Travis Witt, Falls City, Neb., and Monty Witt, also of Falls City, Neb.

Additional complaints will follow in the weeks ahead. The P&S Act is a fair trade practice and payment protection law that promotes fair and competitive marketing environments for the livestock, meat, and poultry industries.