RAPID CITY, S.D. — A South Dakota man has been indicted in federal court on allegations that he was marketing conventional agricultural products as organic for at least five years and using the proceeds to propel him to an extravagant lifestyle of yachts, jewelry and fancy vehicles in a Florida mansion. But public records in North Dakota and South Dakota show that Kent Duane Anderson may have been skirting grain trading regulations and failing to pay farmers and grain elevators since at least 2006.
A federal grand jury on Feb. 4 indicted Anderson on 42 counts for the alleged scheme — one of conspiracy to commit wire fraud, 12 of wire fraud, 12 of monetary transactions to promote unlawful activity and 17 of monetary transactions in criminally derived property.
Anderson on Feb. 14 pleaded not guilty to the charges. If convicted, Anderson could face prison time and could be forced to forfeit any property related to the offenses, as well as more than $27 million.
U.S. Magistrate Judge Daneta Wollmann ordered Anderson released from jail pending future court proceedings, with mostly standard conditions of release. Anderson is not allowed contact with people who may be witnesses, co-defendants or victims in the case, but Wollmann ordered Anderson can have “non-case related contact with his wife,” Aimee.
From Oct. 1, 2012, to March 14, 2018, Anderson is accused of purchasing $47 million in grain from his business accounts, of which $46 million was for non-organic products. In the same time frame, the businesses sold $75 million in products. Of that $75 million, 95%, or $71 million, was for sales of non-organic products falsely labeled “organic,” federal prosecutors allege.
“Less than 5% of the deposited monies were from legitimate sales of ‘organic’ products,” the indictment against Anderson alleges.
Buying conventional, selling organic
The Andersons, documents say, registered a variety of businesses since 2005, including Bar Two Bar Ranch LLC, Green Leaf Resources Inc., Green Leaf Industries LLC, Green Leaf Commodities LLC, Green Leaf Trading LLC and Green Leaf Oils LLC. The Green Leaf entities were involved in organic grain marketing. Regulators in South Dakota said during a hearing in 2019 that they may have been involved in more entities than that, but all of them seemed to have been operating as the same business.
During that hearing, South Dakota grain inspectors said Anderson had been processing canola, flax and sunflowers in oil and meal and selling them into the feed industry.
The federal indictment against Anderson was unsealed Feb. 13 and explains how Anderson had been operating since about 2012. Anderson employed his sister-in-law, identified as “M.G.” and a college friend, identified as “J.M.,” as figurehead executives. He had them apply for U.S. Department of Agriculture certification as “handlers” organic products. The products Anderson’s businesses purchased primarily were shipped to a storage and loading facility in Tappen, N.D., where he had an employee, identified as “B.M.” Anderson primarily contracted with one trucking company, referred to as “U.F.,” paying the company more than $5 million from October 2012 to December 2017.
According to the indictment, the scheme would function as such:
Anderson’s companies would purchase mostly non-organic grain from elevators in the region.
Products purchased by Anderson's companies mostly were shipped to the Tappen facility, though a small portion also went to a processing facility in Rapid City. B.M. would unload the products into storage bins.
The products shipped to Tappen were accompanied by bills of lading that reported the products were not organic and were shipped from non-organic suppliers.
M.G. would receive purchase orders from customers at an office in Florida.
Another employee in Florida, identified as “R.M., would arrange shipments of products, including bills of lading and invoices, falsely reporting the products as organic. R.M. would tell B.M. what products and quantities to load for and ship to Anderson’s customers. R.M. would prepare and email to B.M. bills of lading and invoices that reported the products were organic to accompany the outgoing shipments.
From October 2012 to December 2017, the indictment says, approximately $11 million was transferred to Anderson’s personal bank accounts. The money went toward purchases, including an $8 million yacht, a $250,000 sports boat, a $2.4 million home in Florida, more than $400,000 in jewelry and multiple expensive personal vehicles, including a Maserati Gran Turismo, Range Rover Autobiography, Range Rover Sports and a Jaguar F-Pace SUV.
Federal public defenders Jason Tupman and Thomas Diggins were appointed to represent Anderson. However, Wollmann, the magistrate judge, found during the Feb. 14 court hearing that Anderson “has the financial ability to make partial payment for the representation provided by court-appointed counsel, including costs and expenses incident thereto” and ordered him to pay $500 each month toward legal services rendered by court-appointed counsel.
No other court proceedings have been scheduled.
A long history of bad dealings
Court documents say Anderson formed Bar Two Ranch in 2005 to raise beef cattle and hay along the Belle Fourche River. Within a couple years, it became more lucrative to market feedstuff to other ranchers and feedlots.
While the federal indictment deals only with Anderson’s dealings with the USDA organic program since 2012, public records in North Dakota and South Dakota since 2006 indicate Anderson has gained a reputation with regulators in the region for not paying producers, not complying with requests for information from authorities and being hard to pin down.
In 2006, the North Dakota Public Service Commission issued a cease and desist order against Anderson, then doing business as Aspen Leaf Organic Farms. Aspen Leaf Organic Farms was not a registered entity in North Dakota or South Dakota, but documents list the same Spearfish, S.D., address that Anderson’s Green Leaf entities have used.
In the 2006 case, farmers and companies in North Dakota and Montana complained to the state PSC that Anderson had purchased grain from them or had processing done by them and failed to pay, with total outstanding payments of approximately $28,000. The Public Service Commission determined Anderson was not licensed and bonded as a roving grain buyer as required by law and had not paid the complaining parties. The cease and desist order remains in effect.
Also in 2006, Anderson and Aspen Leaf were sued by Specialty Export Productions Inc. in Grand Forks County, N.D., and ordered to pay $8,592.63. Court documents show the judgment was satisfied in 2013.
Then in 2018, the North Dakota Public Service Commission learned Anderson had again been purchasing grain in North Dakota in violation of the 2006 order, Konrad Crockford, North Dakota PSC director of compliance, told the South Dakota Public Utilities Commission. Crockford told his South Dakota counterparts in a March 19, 2019, meeting that the PSC had forwarded information about Anderson violating a cease and desist order and purchasing without the required license and bond to state’s attorneys offices in North Dakota. However, court documents do not show that Anderson was charged criminally in North Dakota.
In March 2019, the South Dakota Public Utilities Commission, acting on public complaints from farmers and grain elevators, filed a motion to show cause to try to compel Anderson to appear and make his business records available to them, as required by law. During two March 2019 hearings, PUC staff said inspectors believe Anderson may have been violating state law by purchasing at least $300,000 in grain without the necessary licenses, but without access to his business records they could not say for sure. Neither Anderson nor any of his business representatives showed up at a March 27 hearing, so the PUC dismissed the motion to show cause and forwarded information to the Pennington County State’s Attorney's Office for possible charges. That office on Feb. 17 confirmed no charges had been filed in Pennington County against Anderson.