MINNEAPOLIS-The U.S. attorney for Minnesota is charging former Ashby (Minn.) Farmers Cooperative Elevator Co. general manager Jerome Robert "Jerry" Hennessey with two counts of mail fraud, and a newly alleged federal income tax evasion charge as authorities investigate allegations that Hennessey used co-op funds to bankroll big-game hunting trips and other personal expenses.
Hennessey "used his position as the manager of the Co-op to obtain a line of credit for the Co-op in the amount of approximately $8 million," said John Kokkinen, assistant U.S. attorney prosecuting the case, in a filing on Dec. 18.
In the new charges, Kokkinen says the CoBank credit line was transferred to the co-op's bank account but 'instead of using these funds only to pay the co-op's expenses" Hennessey used them to cover the fraudulent payments.
Hennessey "made numerous misrepresentations to the lender (CoBank) regarding the Co-op's assets that were to serve as collateral for the line of credit, including the amount of grain the Co-op had in storage," Kokkinen said, representing the office headed by U.S. Attorney Erica MacDonald. The filing doesn't specify what the misrepresentations were, or in what amount.
Hennessey left for Iowa in September and later turned himself in to federal authorities on Dec. 4 in the Twin Cities. Federal charges were filed Dec. 3. He is out on bond, confined to the state of Minnesota pending further action.
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Among the details of the new charges:
• Mail fraud. In Count 1, Kokkinen repeats earlier allegations that Hennessey fraudulently had paid $34,166.67 of the co-op's money for a piece of hunting land he was buying on a contract-for-deed, at Brook Park, Minn. They expect that if convicted, he would forfeit all buildings and improvement on that property, all of his property at Dalton, Minn., and at Otter Tail, Minn., as well as a Bobcat skid-steer loader he'd purchased in June 2011.
• Income tax evasion. In Count 2, Kokkinen details that on April 4, 2014, Hennessey had filed a false 1040 individual tax form, reporting that he and his wife, Rebecca, had a joint taxable income in 2013 of $97,329 and that their total tax due was $16,189. "In fact, as the defendant knew," their income was greater than that and that in fact there was "at least $270,000 in additional tax due."
The co-op earlier filed civil fraud complaints regarding some of the same transactions. Co-op attorney Erik Ahlgren of Fergus Falls, Minn., on Dec. 27 told Agweek that, upon reading Kokkinen's charges, he initially was concerned about the co-op's interest in some of the property value "But, I am told that the U.S. attorney will allow us to take the lead on collecting assets," Ahlgren said, noting he was planning on getting that assurance in writing.
The co-op was a grain elevator involving some 200 members in west-central Minnesota. Starting in 2003, Hennessey is accused of knowingly defrauding the co-op of millions of dollars over 15 years by writing checks to himself and others for his own benefit. The checks falsely indicated the money was related to legitimate operations, such as for the purchase of corn and soybeans or other expenses and supplies.
Kokkinen says that "well over 100 checks" were to pay Hennessey's personal credit cards, or to make personal purchases for home improvement, taxidermy, furniture, "freight for the shipment back to Minnesota of numerous animals he had killed during overseas hunting trips, jewelry, expenses related to all-terrain vehicles, clothing, entertainment, personal travel, domestic and international hunting trips and attachments for a skid steer loader."
As earlier reported, some of the payments were construction work and improvements to Hennessey's residence, taxidermy services, the purchases of real estate, as well as hunting blinds, as well as two skid steer loaders and attachments for the skid steer loaders.
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