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The 300-member Ashby Farmers Cooperative Elevator in an April 2018 annual meeting reported $14.5 million in sales in the previous year. That included $2.8 million for grain handling and total local profits of $238,977.Photo taken Sept. 14 at Elbow Lake, Minn. (Trevor Peterson/Agweek)

Embattled Minnesota elevator reaches lease deal to reopen; alleged manager misspending now totals $4.9M

Jerry Hennessey

ASHBY, Minn. — With still more reports of inappropriate spending by its former general manager, the elevator at Ashby will reopen its doors Wednesday, Oct. 3, under a lease to the Wheaton Dumont Elevator Co., based in Wheaton, Minn.

The Ashby Farmers Cooperative Elevator announced the lease in a news release after a board meeting late Oct. 2.

The elevator closed Sept. 14 after learning its general manager had diverted funds for use in safaris, taxidermy and other related expenses. The company now believes former manager Jerry Hennessey stole at least $4.9 million since 2003, up from an estimate of more than $2 million since 2008.

Erik Ahlgren, the company’s lawyer, said that of the total, about $3 million in checks were written in the past six years. “We may be able to recover” those, funds, Ahlgren said.

“The closing of the elevator was a real kick in the teeth to the Ashby community,” said Russell Dewey, president of the Ashby co-op board, who has been designated to handle day-to-day decisions. “We are proud to be able to reopen the company so quickly and under the new management of a great team,” Dewey said in a release.

Meanwhile, the co-op sent members postcards on Oct. 1, informing them of a special

meeting, Oct. 15, where they may consider options for leasing or selling assets and dissolving the cooperative in the wake of an embezzlement scandal involving their long-time general manager.

The special meeting will be at 7 p.m. at the American Legion Hall in Ashby. “The membership will be asked to approve the sale of real estate, equipment and other assets and the dissolution of the co-op,” says a postcard, which reached members on Tuesday.

Ahlgren, of Fergus Falls, earlier told members that the company had discovered more than $2 million in unauthorized transfers dating to 2008. As of Oct. 2, he and a Fargo accounting firm now believe they’ve found at least $4.9 million in bad transfers studied back to 2003.

Some of those involved transfers to construction companies, coded as “corn or soybeans.” Some appear to be for projects “on Hennessey’s home and land purchases.”

Some of the unauthorized checks were for big-game hunting trips worldwide. About $500,000 went to pay for taxidermy, Ahlgren said.

Still waiting

Grant County Sheriff Troy C. Langlie said he is waiting for data from "a variety of places" before he can say whether or what charges may be filed against Hennessey.

"A few people approach us from time to time to ask why he's not in custody," Langlie said. "We can't arrest people on an allegation." He repeated the department doesn't know Hennessey's whereabouts and isn't looking for him.

As of Sept. 14, Ahlgren had believed the cooperative didn't have any farmer-owned grain. The co-op's license was as a grain buyer and not a warehouse, so any grain the co-op would have received should have been owned by the co-op or under a valid deferred-price contract. If those price-later contracts are signed in print by both parties, the title is transferred to the elevator.

"There are issues out there with people who believed they were storing grain," Ahlgren said. "Jerry may have been acting outside of his licensed status."

From the start of the investigation, Ahlgren and the co-op had alerted the Minnesota attorney general. Ahlgren said the attorney general's investigators told Ahlgren that they are alleging a potential violation of its license.

Ahlgren said the license issue is a problem but noted the co-op immediately surrendered its license and closed its doors when they discovered the fraud. He said the main issue is fraud against the co-op and its members.

Ahlgren noted that there have been offers to purchase the elevator assets, including 300,000 bushels of permanent storage bins. He declined to say who is involved or offer any details about likely timing or price of such a sale.

The co-op appears not to ever have had an outside annual financial audit.

"There isn't, to the best of my knowledge, any legal requirement," Ahlgren said.