Official Newspaper of Eddy County since 1883
Official Newspaper of Eddy County since 1883
U.S. District Court Judge Daniel Hovland sentenced Hunter Hanson to eight years in a federal prison, plus three years of probation, in a grain trading scheme gone bad.
Hovland handed down his order on Tuesday, Nov. 12 in Bismarck.
The judge also ordered $1.27 million in a money judgment, roughly the amount Hanson took from the grain business to invest in a used auto business he started in Belcourt. Hanson said he opened the auto business to make money to repay his grain debts. In reality, records show he often sold vehicles at a loss, much like he did with grain.
Hanson requested to serve his time at FPC Duluth, a minimum security federal prison camp in Duluth, Minn. Hovland said although he would make the recommendation, he reserved that decision for the U.S. Bureau of Prisons.
Also as part of his plea agreement, Hanson has agreed to pay $11.1 million in restitution, a feat that will likely take decades to accomplish. Farmers and businesses defrauded by Hanson, meanwhile, continue to wait for a resolution of their claims by the PSC to recuperate some of their losses. That process will take several months to play out, however.
At a special meeting on Oct. 31, the Public Service Commission (PSC) unanimously recommended paying 45 cash sale claims of $7,247,469, according to Ag Week. The trust fund holds $1,371,837, or 19% of those claims. Therefore, the claimants will receive just 19 cents on the dollar from the trust fund, per the PSC recommendation.
The PSC proposed that only seven claims qualify as valid credit sale contracts. Those $836,913 in claims are eligible for payment at an 80% indemnity rate, for another $669,530, plus PSC costs.
The first opportunity for those claims to be heard is next summer. The PSC set a court date for June 16-18, 2020, in Pierce County Court at Rugby. Payments are expected to come some time after that.
A $500,000 claim made by East Central Grain Marketing of Minnetonka, Minn., – the broker who lined up almost all of Hanson's questionable deals – was denied by the PSC.
The claim represents the commission, or brokerage fees, of 5 cents to 10 cents a bushel ECGM would charge. Commissioner Randy Christmann said that the PSC doesn’t pay brokerage claims.
During their deliberations, Commissioner Julie Fedorchak disputed accounts that Hanson was simply a young guy who got in over his head. Instead, she deduced that "there clearly is a pattern of intentional harm."
Responding to concerns that the Public Service Commission and state government didn’t regulate enough to rein in activity like Hanson’s, Fedorchak noted that the North Dakota Legislature previously rejected attempts to bolster the grain regulation system during the 2015, 2017, and 2019 sessions. Namely, one Senate bill in the 2019 Legislature would have expanded the indemnity fund to include cash sale contract losses in the event of an insolvency, but it was ultimately rejected by the House.
Rather, the Legislature decided to move the authority for grain regulation away from the PSC to the North Dakota Agriculture Department. The Ag Department and a legislative interim committee are working on longer-term changes in the system to prevent something like Hanson's fraud from happening again.
