Falling prey to Hunter Hanson: Victims of grain-marketing fraud still wonder where money went

GRENORA, N.D. - Wade and Breann Fischer likely won't go to Bismarck on Nov. 12, the day Hunter Hanson is scheduled to be sentenced in a federal court for generating losses for claimants up to $11.2 million.

If the court schedule holds, the date will be the one-year anniversary from when the Fischers realized the young grain trader from Leeds, N.D., had cheated them out of $144,000-roughly three years of their farm profits.

In a plea agreement, Hanson admitted he ran his Devils Lake-based companies - Midwest Grain Trading and NoDak Grain - like a Ponzi scheme, robbing Peter to pay Paul. Unpaid bills for grain total $8 million.

Authorities indicate some of the money went to salaries, business expenses and freight bills, some losses in keeping the Ponzi scheme going. Before he was finished, Hanson took a girlfriend on a trip to Paris. He bought old steam threshing equipment. He owned a used car dealership at Belcourt, N.D., and drove high-end vehicles, some bought and sold at a loss.

A judge is likely to sentence Hanson to spend six to eight years of prison, plus restitution.

But on that sentencing day, instead of watching in court, Wade, 36, and Breann, 34, expect to be back home that day, clawing out of the out of the deep hole that Hanson dug them into.

Wade wonders how someone so young could have gotten so big so fast without any visible means of support. He speculates that he has "something hidden" that he'll tap into after serving his time, even though the government would move to seize it.

Worse, he is concerned that Hanson will steal from someone else. "I don't see him stopping," he says and says the name Hunter Hanson will live in infamy:

"I'm sure my kids and grandkids will hear about that name, and that story - a lesson of business and what not to do."

Due diligence

For Fischer it started in January or February 2018.

A neighbor who was dealing with an East Central Grain Marketing in Minnetonka, Minn., called Wade and asked if they could pass along his phone number to their "introductory broker."

The ECGM broker called to say he had "a buyer" - later identified as Hunter Hanson - who could offer more than his local markets. Wade at first said no, but the ECGM broker kept calling.

Money was tight.

The Fischers had suffered a drought in 2017 and were trying to recover. Local markets had declined to unprofitable levels in late June and July 2018.

Wade thought again. Hanson's prices at least were profitable.

Wade did his "homework" on Hanson. He checked with a second neighbor who'd sold peas and durum to Hanson in 2017 and 2018. The neighbor said Hanson's Midwest Grain Trading, a roving grain buyer, had always paid up, but "a titch" late.

Wade called the North Dakota Public Service Commision to confirm that Midwest Grain Trading had a $400,000 bond.

He even asked his local elevator operator if they could match Hanson's price. They couldn't and wondered together how Hanson could be making money. Maybe they had overhead or a market on a different rail system.

Finally, Wade called his dad, Wayne, a lifelong farmer, to ask whether he'd ever dealt with a broker like ECGM. Wayne said he hadn't. The father and son agreed the price seemed too good to be true, but Wayne told him, "Do what you have to do. You know the numbers. I trust you."

Wade signed the first contract for 20,000 bushels of durum, for August pick-up.

A few weeks later he signed a second contract for 20,000 bushels, for September pick-up.

In mid-September he did third contract of 25,000 bushels for delivery for February or March of 2019, for $4.90.

As with the others, ECGM would earn a nickel a bushel on the deal, but only after Hanson paid.

The Midwest Grain Trading trucks didn't arrive as scheduled. When they finally started coming in early September, Fischer questioned truckers who said they'd always been paid, and that Hanson was "filthy rich, nothing to worry about."

November storm

Hanson's trucks took five loads - 5,000 bushels worth more than $30,000. But Midwest Grain Trading said they wouldn't pay until after all 20,000 bushels were shipped. Or, if shipments were interrupted, they would pay for the partial contract 30 days after the interruption.

Unhappy with the delayed pickups and payments, Wade finally got through to talk to Hanson. He quizzed Hanson how he could pay these premiums on grain. Hanson mysteriously explained he had "cut out the middleman."

In early November, the grain pick-ups accelerated. Suddenly trucks came daily, and fulfilled the first contract of 20,000 bushels, and picked up another 5,000 bushels against the second contract. Much of it came from storage bags.

Wade and Breann Fischer were vacationing over the Nov. 12 Veteran's Day holiday when they took a call from Chris Peters, who managed transactions for Hanson's Midwest Grain Trading. The company was being shut down for a week - something about an elevator flooding at Rohrville, northeast of Devils Lake, N.D.

Alarmed, Wade called the North Dakota Public Service Commission who said they'd received another call and were looking into it.

Trying to figure it all out, Wade made calls to the Osnabrock Farmers Elevator's big terminal at Nekoma, N.D., where some of the grain had been shipped. A grain merchandiser there said they'd paid Hanson "right away," paying Hanson a $1.50 per bushel less than the contract Hanson had made with Fischer. Throw in $1 per bushel for the trucking and Hanson had to have lost $2.50 per bushel on that load.

More troubling, Wade Fischer learned that Hanson had tried to sell Fisher's grain - at a loss - to the local elevator that had told Fischer that it couldn't match Hanson's prices. Meanwhile, in news stories, Wade was shocked to learn that Hanson was then 21 years of age, and not the 30 to 40 he'd imagined.

Suddenly, Wade's eyes were opened. He realized he might never see much or any of the money for the 25,000 bushels that had been shipped.

He immediately sat down with Breann and told her "straight up" about the loss. "I was just shocked into unbelief someone was doing this to us," she says. "I needed to remain focused on our child and just pray for justice, to be able to forgive, move on and to somehow recover from this huge financial loss."

Wade called his father. Wayne said he was sorry and would what he can do to help his son - cutting rent, delaying rent, to make sure the fifth generation on this farm won't go under.

"Family will keep the farm; the bank will take the farm," Wade says.

Ironically, East Central Grain, who has declined an interview request with Agweek, has contacted Wade more than once since the Hanson blow-up.

"He wanted me to sell peas," he says, of the broker.

The answer? No thanks.

Business degree

Wade had graduated high school in 2002. He went to North Dakota State University for two years. Farming was in his blood but Wade wanted more business training so he acquired a business degree from North Central University in Minneapolis, associated with the Assembly of God church.

Friends introduced him to Breann from Richmond, Minn., southwest of St. Cloud.

Wade and Breann married in 2007. They took over farm management in 2008-the fifth generation of Fischers since homesteading in 1905.

The couple's first year was a drought year-a $385,000 loss. Good crops and prices in 2009 and 2010 helped right the ship.

Since 2012, they had been slowly rebuilding, raising chickpeas, green peas, lentils and durum. In 2016, the durum had vomitoxin damage and lentil markets crashed because of tariffs with India. In 2017, they tried industrial hemp but suffered another drought.

In 2019, Wade has tried everything to offset the Hanson losses.

He canceled plans for a second employee. He canceled plans to buy a custom grain conveyor belt. Two years ago, he'd passed up buying a 2011 model Quadtrac tractor, thinking he wanted to preserve cash after drought conditions. Replacing that tractor would cost about $250,000 and now Hanson's transactions have cost him $144,000.

Breann doesn't know what she would say to Hunter Hanson if she saw him, only to not do it again. His business "vision" appears to have been only about himself, she says.

Wade feels bad that he's lost trust.

He won't ever take a chance on an "individual" grain buyer again. He asked a potential industrial hemp buyer if he'd heard the name Hunter Hanson. The buyer immediately understood and wired money for the transaction prior to acquiring the grain.

Wade said he thinks the government may need to require larger bonds, more commensurate with the volume and losses and keep closer tabs on new businesses.