RUGBY, N.D. — The North Dakota Public Service Commission has collected full payment from three bonding companies associated with Hunter Hanson, making possible slightly higher payments to victims of the former grain trader convicted of fraud.
Randall Christmann, PSC commissioner in charge of the case, said it is both unusual and welcome that the bond companies have paid their full amount without objection, which could shorten the court case. An amended recommendation, if approved, would increase payment to 19 cents on the dollar, compared to 17 cents under earlier estimates.
Hanson, who prosecutors said ran his grain companies in 2018 and 2019 as Ponzi schemes, is in the federal prison in Duluth, Minn.
The PSC is the trustee in the case that is in Pierce County District Court in Rugby, with a hearing set from June 16-18. The PSC has collected about $1.4 million. When $30,137 in expenses are taken out, about $1.37 million are left to pay valid claims.
One of the sticky issues in completing the investigation was how Hanson ran the roving grain buyer and his facility-based enterprises as one. “From his records, you can’t distinguish them,” Christmann said.
It is likely farmers won’t receive payments until early September, Christmann said. First, after the hearing in mid-June, the judge may take a couple of weeks to make a decision on the payout deal. Then there is a mandatory 60-day appeal period. And finally, before the PSC can make payments, it must do a lien check.
In its amended recommendation filed April 3, the PSC continues to recommend the payments made jointly payable to the claimant and valid lien holders.
The North Dakota Legislature transferred regulation of the grain trade to the North Dakota Department Agriculture in July 2017, but PSC remains in charge of the holdover Hanson case through its conclusion.
The PSC started receiving complaints about Hanson’s enterprises in November 2018 and issued a cease-and-desist order on Nov. 21, 2018. Separate civil and criminal cases in state courts followed, until it became a federal case. Hanson on Nov. 12, 2019, at age 22, was sentenced to eight years in federal prison for wire fraud and money laundering.
Hanson had been doing business as NoDak Grain, based in Rugby, which is in Pierce County, and Midwest Grain Trading, based in Devils Lake, N.D.
Also, the Co-op Elevator of McClusky reduced its claim against the trust. Originally, the co-op had submitted a claim of $768,370. After studying the claim in detail, the PSC recommended it be valued at a net $744,593. Of that, the PSC recommended $287,669 be categorized as credit-sale contracts, recoverable at 80% ($230,13548) by a separate North Dakota Credit Sale Indemnity Fund.
That leaves $456,924 as cash/check claims. McClusky initially claimed 126,110 bushels of hard red spring wheat at $6.09 per bushel. The elevator had seven trade confirmations but two of them involved credit-sale contracts, priced at different portions and prices.
In a separate but related issue, on Dec. 27, 2019, the McClusky elevator advised the PSC that it had received $76,000 in partial payment in satisfaction of a judgment in South Central District Court. Minus other costs, the PSC recommended to reduce the McClusky trust payment to $395,293.36.