Fearless Grain Marketing and Jeremey Frost seek $8.5M in arbitration
Jeremy Frost is seeking $8.5 million in a National Grain and Feed Association arbitration against Indigo Ag of Memphis. Indigo Ag has asked a federal judge to deny Jeremey Frost’s request to dismiss their lawsuit against him and his Fearless Grain Marketing company. The South Dakota Public Utilities Commission so far has not sued Frost and Fearless in a state/county court for allegedly buying and selling grain without a license. Amanda Reiss, SDPUC attorney, says the agency hasn’t yet filed a case in a state court against Frost.
ONIDA, S.D. — Jeremey Frost, a grain marketing adviser near Pierre, S.D., is seeking $8.5 million in an arbitration action against Indigo Ag Inc., the company that is suing him in federal court for exceeding his authority in committing farmers to deliver grain.
Indigo Ag, with a headquarters at Nashville, Tenn., sued Frost and his Fearless Grain Marketing LLC in federal court in Memphis. Frost has asked the court to dismiss the case because he wanted the dispute settled in an arbitration through the National Grain and Feed Association.
The NGFA is a national non-profit group group representing more than 1,000 grain handlers, processors, exporters and other merchants. It includes country elevators, terminal elevators and feed mills, among others, including commission merchants and commodity futures brokers.
On April 9, 2021, the NGFA formally told Indigo Ag that Fearless Grain Marketing had submitted a dispute for NGFA arbitration .
Robert T. Konrad, a Pierre, S.D., attorney who is representing Frost in a related dispute with the South Dakota Public Utilities Commission , whose staff has accused Frost and Fearless of illegally trading grain without a license , said he is not involved directly in the federal case but thinks Indigo Ag will not sign the NGFA arbitration contract and likely would try to keep the issue in federal court.
Similarly, Harris Kay, Frost’s attorney in Chicago, said he didn’t know the status of the NGFA case or what Frost had described as a “whistleblower” report Frost had filed, involving Indigo Ag, with the Commodity Futures Trading Commission. Kay said the CFTC case report was filed prior to Kay’s involvement in the issue. Kay said he thought Indigo Ag would be “obligated to arbitrate this dispute” if there were “negative consequences” for members of the NGFA if they don’t agree to arbitration.
In court documents filed in their federal case, Indigo Ag said they thought the case belonged in court and not NGFA arbitration.
Fearless had filed a motion to have the federal case to be dismissed. Indigo Ag objected. The court has not yet ruled, Kay said.
In a letter dated April 30, 2021, the NGFA wrote to Lea Koonce, of Indigo Ag in Memphis, offering the opportunity to sign the Arbitration Services Contract, which would be signed and accompanied by a $20,000 check.
Mary Hitchcock, director of commercial and arbitration services at the NGFA, did not return messages to check on the status of the issue.
“The dispute concerns claims by Fearless Grain Marketing against Indigo Ag, Inc., involving brokerage fees,” according to the NGFA documents, labeled Case Number 2875. The contract was signed by Frost on April 26, 2021. Indigo hasn’t signed it, but it would require parties to advance “approximate expenses” when an oral hearing is requested. Frost had written a $20,000 check to the NGFA for the purpose.
The South Dakota Public Utilities Commission on May 13, 2021, announced a penalty settlement with Frost. The agreement, listed on the agency's website, requires a $20,000 fine and ongoing reporting by Frost, the sole owner of Fearless Grain Marketing.
According to the complaint, Fearless purchased at least 23 loads of grain over the past six months without a license and “continued to make such purchases after (PUC) Staff explained that Fearless need to obtain a grain buyer license to continue purchasing grain.”
Frost acknowledged he “operated as a grain buyer without a license” but the agreement indicated the agreement “does not reflect the confession of any single issue, but a negotiated global settlement.”
According to the SDPUC Frost agreed the civil penalty of $20,000 “should be paid” and would be paid within 30 days of the SDPUC order. He also agreed to provide the SDPUC staff with “a list of all grain purchase and delivery contacts between Frost or Fearless and any other entity.” Frost agreed to provide weekly updates on the status of “each outstanding contract” until “all such contracts are fulfilled, paid in full, or transferred.”
Amanda M. Reiss, a SDPUC staff attorney, said the agency is monitoring Frost and Fearless Grain Marketing activities.
Indigo, in its federal suit, alleged Fearless Grain Marketing falsely claimed Indigo had violated NGFA and other regulations, and was “fluffing” numbers via “misleading practices” and is “constantly taking implied positions” and “does not realize it most of the time.” Indigo said Fearless Grain Marketing falsely claimed Indigo was “altering contracts” and had “blackmailed” or “bribed” Fearless Grain Marketing.
In the suit, Indigo says Frost had improperly put “numerous” growers into “severe negative positions tied to their physical commodities based upon pricing strategies they have undertaken, as recommended by” Frost and Fearless Grain Marketing.
Indigo Ag said Frost on May 22, 2020, had entered into a Grain Transaction Commitment Agreement. Indigo said Fearless Grain Marketing committed to “source and sell to Indigo” a “minimum” of 30 million bushels of crops for delivery through the 2022 marketing year. In the case of a shortfall, Fearless Grain Marketing would pay a per-bushel fee of .75 of a penny per bushel.
They said that on June 1, 2020, they entered a second agreement allowing Frost to source and sell at least another 20 million bushels of crops through the 2022 marketing year.
Indigo said Frost and Fearless Grain Marketing “almost immediately” began “incorrectly describing” Indigo’s pricing programs as “options" or “futures.” In reality, they are “forward cash (physical) grain contracts,” requiring delivery.