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South Dakota judge sentences grain elevator fraudsters to 5 years

Citing “criminal mentality” and “lack of remorse,” Circuit Judge Kent A. Shelton sentenced Jared and Tami Steffensen each to terms of five years in state prisons and made them liable for restitution of $4,966,491.80 to farmers, as well as other costs.

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The former H&I Grain Inc. site at Hetland, S.D., was the original location for a family business that ran into legal trouble when Jared Steffensen of Arlington, S.D., accelerated speculation in grain trades, costing about 32 farmers and companies an estimated $11 million. Photo taken May 6, 2019, at Hetland, S.D. Mikkel Pates / Agweek
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HURON, South Dakota — Four years after a multimillion dollar grain marketing scam and a coverup caused millions in losses to farmers in eastern South Dakota, a circuit judge in Beadle County, South Dakota, sentenced each of the co-owners of H&I Grain to five years in the state penitentiary for fraud in grain marketing.

Citing “criminal mentality” and “lack of remorse,” Circuit Judge Kent A. Shelton sentenced Jared and Tami Steffensen each to terms of five years in state prisons and made them liable for restitution of $4,966,491.80 to farmers, as well as other costs.

The Steffensens, former owners of H&I Grain, a private grain elevator, were immediately placed in handcuffs and led out of the Beadle County Courthouse in Huron, South Dakota, as a courtroom of victims looked on. Shelton denied their request to report to jail after making arrangements for their children at home.

The Steffensens have 30 days to appeal the sentences but will remain in jail.

Brent Kampema, an assistant South Dakota Attorney General, who had asked the court impose a “maximum” sentence, indicating that Jared had failed to take responsibility, had shown no remorse and instead blamed CHS Hedging. After the hearing, Kampema thanked the victims for their input and patience in completing the case over years interrupted by COVID-19.

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Documents relating to various lawsuits in H&I bankruptcy indicate a total loss of $15.3 million — with farmers owed around $8 million and Great Western Bank owed $7 million to $8 million.

Shelton sentenced Jared’s mother, JoAnn, an officer of the company, to two years in the state penitentiary, but suspended on condition she be immediately imprisoned in a county detention for 120 days. She claimed her late husband, Duane, and her son, had most control of the company.

Emotional hearing

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Jared Steffensen — front and center — served on the Arlington, S.D., city council from 2013 until withdrawing shortly after his legal matters began in 2016. Photo taken May 2013, Arlington, S.D. Submitted photo

The Steffensens had pleaded guilty in June 2021. The sentencing was emotional, with victims making statements, often repeating the impact of the deception on their farms. New bank debt, loss of working capital. Some pooh-poohed Jared’s statements of remorse and offers to help work off debt by donating trucking, from his H&I Trucking.

Prior to the sentence being pronounced, Jared, Tami and JoAnn all stood to face the victims and the judge.

Jared, a former city councilman, and youth sports coach, said he would spend “the rest of my life” trying to pay off creditors. He said he’d be more helpful out of jail, seeking a settlement from CHS Hedging, in a separate bankruptcy hearing in Minneapolis on Oct. 19, rather than being in jail.

Jared’s attorney said CHS Hedging had failed to control the hedging limit for Jared, as an inexperienced grain trader.

“This allowed Jared to not merely hedge grain, but speculate with large trades when he should never have been given that authority by CHS Hedging, causing substantial losses to H&I Grain of Hetland Inc.,” Linde said.

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But Shelton rejected all that.

“I haven’t seen the remorse until today, at sentencing,” he said, and speculated that victims would wonder if the statements were only to reduce their sentence.

One woman said Jared's statements about being a good father and volunteering time as a sports coach, or attendance at games, was ironic because she couldn’t afford that time — working late to try to recover from losses he had caused.

Shelton said the Steffensen's “criminal mentality” counted as an “aggravating circumstance.” He noted Steffensens continued to call in grain to their warehouse in 2016 and 2017, “despite knowing that it was most likely, if not guaranteed, that you were not going to be able to pay these producers for their grain.”

The judge wondered aloud if Jared simply thought his hedging would “turn around.”

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H&I Grain Inc., operated out of Hetland, S.D., and this De Smet, S.D., headquarters, where owners in the Steffensen family covered up financial problems that grew from Jared Steffensen's risky speculation in the grain business, and ended with unpaid bills to farmers for millions of dollars. Three members of the family pleaded guilty to felony charges for misleading farmers and regulators. Photo taken May 6, 2019, at De Smet, S.D. Mikkel Pates / Agweek

“But that’s gambling, and you were gambling with somebody else’s money, and — more importantly — their livelihoods,” Shelton said. “The day the elevator was closed down, you took grain, knowing you were not going to be able to pay it.”

Shelton told about 50 farmers and others in the courtroom that he doesn’t see them all receiving all of their money. That will depend on the outcome of a settlement with CHS Hedging as part of their bankruptcy case. An arbitration hearing on that is scheduled Oct. 19, 2021, in Minneapolis.

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“Truthfully, I don’t believe that CHS is the responsible party in this matter,” Shelton said.

Directly to jail

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Victims ponder the fact that former grain traders Jared and Tami Fae Steffensen continue to live in this home in Arlington, S.D., with possessions such as this camper-trailer, when they’ve taken six- and seven-figure hits. Photo taken July 2019, Arlington, S.D. (Mikkel Pates / Agweek)

Shelton told the Steffensens his sentence for them to go directly to jail, was based on several factors:

  • They had “failed to cooperate” with the South Dakota Public Utilities Commission in their financial investigation.

  • They perpetrated their fraud "over and over and over again.” It was not a mistake, he said. ”It was done not for days, not for weeks — but for months.” The Steffensens had a “fiduciary responsibility,” and lied when they were questioned.

  • Shelton agreed with the farmers who made victim statements, noting that “it doesn’t seem like the defendants had a lifestyle change at all,” although it wasn’t clear who owned equipment that the community seemed to see them using. The Steffensens “put their wants and needs above the producers, to maintain a certain lifestyle,” he said, continuing that into 2016 and 2017, and after that time.

  • Victims have been devastated, despite the fact that banks and relatives have stepped up. Some were forced to refinance at increased interest rates. Others said they had to sell off businesses to pay debt. “They’ll bounce back. South Dakota farmers are strong individuals,” Shelton said. “They count on their neighbors and friends, and Mr. and Mrs. Steffensen, you were their neighbors.” Some said they didn’t want Jared’s promise of trucking to help pay off his debt.

  • Jared, Tami and JoAnn all had “minimized” their responsibilities with their own “personal statements” — trying to shift blame to CHS Hedging or to Jared’s father, Duane, who has since died and is “not here to defend himself.”

Shelton said Jared shifted blame to CHS Hedging.
“If they just hadn’t given me that big line of credit, and over-extended me, this wouldn’t have happened,” he said, but Jared was responsible.

Shelton noted that on July 11, 2016, the company was $1.9 million over a $10 million line of credit with Great Western Bank. On Sept. 15, 2016, the bank filed a lawsuit against H&I Grain.

“It’s my opinion at that you set up deliberate, systematic scheme to defraud these producers of $4.9 million,” Shelton said.

The defense attorneys described their clients as “genuinely good people” who “recognize the harm their actions have caused” to others in their community. They declined to say if they will appeal the sentence.

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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