Grain Company Owner Pleads Guilty to Mail Fraud

5 years 8 months 5 days ago October 19, 2011 Oct 19, 2011 Wednesday, October 19 2011 Wednesday, October 19, 2011 2:38:00 PM CDT in News
By: Paige Hornor

GALLATIN - The owner of Gallatin Grain Company pleaded guilty Wednesday to a scheme that stole over $3 million from 100 northwest Missouri farmers.

66-year-old Daniel Froman of Gallatin pleaded guilty before U.S. District Judge Gary Fenner to the mail fraud charge contained in an April 2011 federal indictment. Froman admitted to defrauding 100 farmers whose grain was stored at his business by selling their grain in order to pay his debts.

On Feb. 6, 2009, Gallatin Grain Company's attorney reported that the company no longer had any grain, trucks or assets. Two days later, Froman emptied the storage space at Gallatin Grain. He loaded 1,200-1,300 bushels of soy beans and corn into four tractor trailers and transported the grain and some farm equipment to Falls City, Neb. He then sold the grain and tractor trailers for $100,000.

The mail fraud charge involves a fraudulent financial statement from Froman to the Mo. Department of Agriculture Grain Regulatory Services. The statement falsely reported a net worth of more than $662,000 in December 2007, when the company's net worth was actually negative $936. The false financial statement was used to borrow operating funds from BTC Bank. 

The Mo. Department of Agriculture collected $40,000 in assets from Froman. This money was distributed to the victim farmers. The remaining loss, according to the Mo. Grain Regulatory Services, is $2,903,610. Under today's plea agreement, Froman waives any interest he has in the $100,000 bond posted in the case filed by the state of Missouri in Daviess County for 22 counts of stealing grain and three counts of filing false reports. Those funds will be turned over to the state for distribution to victims. 

Under federal statutes, Froman faces a sentence of up to 20 years in federal prison without parole,a fine up to $250,000 and an order of restitution. A sentence hearing will be scheduled after the completion of a pre-sentence investigation by the U.S. Probation Office.

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