By TIM ALEXANDER
Illinois Correspondent

PEORIA, Ill. — A federal jury in Peoria indicted the former president of an Iroquois County grain company and his wife for conspiracy to defraud more than $5 million from stockholders, two banks and the Illinois Grain Insurance Fund.

Mikel Freeman, president of A-Way Grain, Inc., which operated elevators in Onarga and Crescent City, and his wife, Dianne, a former bookkeeping manager of a Watseka bank, are accused of conspiring and carrying out the scheme from 2003 to 2007 by diverting checks received for payment of A-Way grain sales, mailed by grain facilities, from the A-Way account to other accounts held at the bank that employed Dianne Freeman.

Mikel Freeman, 57, served as president of A-Way Grain and directly managed the company’s grain operations, while Dianne Freeman, 57, was employed at First Trust and Savings Bank from 1982 to 2006.

The indictment alleges that Dianne Freeman used her position at the bank to divert A-Way checks into a personal account and into an account held under the name Freeman Trucking.

A-Way loans at First Trust were secured, in part, on the basis of false warehouse receipts filed by Mikel Freeman, according to the indictment. “(Mikel Freeman) didn’t have the grain to issue those warehouse receipts,” said Stuart Selinger, Bureau of Warehouses chief for the Illinois Department of Agriculture (IDOA).

The indictment also alleges that Dianne Freeman diverted funds belonging to the bank into personal accounts.

Mikel Freeman also initiated a banking relationship with Commerce Bank and gave false statements regarding the circumstances behind transferring the A-Way account from First Trust. Commerce Bank extended a $5 million line of credit to A-Way, and Freeman used a portion of the money to pay off an operating loan to First Trust.

However, the loan was under-collateralized because Freeman had allegedly provided First Trust with false warehouse receipts representing the amount of A-Way grain available as collateral.
The indictment alleges the credit obtained from Commerce Bank was granted due to Freeman providing the bank with warehouse receipts and other documents which falsely represented the amount of grain available as collateral, according to a news release provided by the IDOA. Selinger said the operation first came under scrutiny by the IDOA in August of 2007, when the bureau suspended A-Way’s grain dealer and grain warehouse licenses.
“As a result of a routine examination performed by the Bureau of Warehouses, it came to our attention that the financial resources of A-Way were woefully insufficient to cover their outstanding grain obligations. Subsequent to our suspension (A-Way) chose to surrender their licenses to the department, and the department liquidated the company’s grain assets to satisfy producers not yet paid for grain or who had grain in storage,” said Selinger.

“Through those processes, and reconciliation and reconstruction of the grain and financial records of A-Way, these other situations came to light.”

The IDOA’s Bureau of Warehouses worked hand in hand with the IRS, U.S. Postal Inspection Service, the FBI, the Illinois Attorney General’s Office and the Iroqouis County State’s Attorney Office by providing financial statements, past examination information and other paperwork related to A-Way.

A total of 24 counts, including conspiracy to commit mail and bank fraud, bank fraud, mail fraud, conspiracy to commit money laundering, money laundering, and embezzlement by a bank employee were brought against the couple.

“The consequences of this alleged fraud are far-reaching and sobering for all involved, including those who have lost significant amounts of money as a result,” said U.S. Attorney Rodger A. Heaton, Central District of Illinois, in a prepared statement.
“It is paramount that those responsible be held accountable.”

Selinger said that if the $2.8 million taken from the grain insurance fund to cover losses suffered by grain depositors can be recovered through a conviction, prosecutors will pursue reimbursement. “Assuming there would be a conviction, there is always the potential for restitution being ordered as part of the sentencing,” he said.

Selinger called the case “not unique, but certainly a rarity” and said that farmers shouldn’t be skittish about depositing their grain with a state-licensed dealer.

“If the farmers are doing business with a licensed grain dealer and warehouse in the state of Illinois, there’s no reason for them to be nervous as long as they are paying attention to the coverages afforded them by the Illinois Grain Insurance Fund,” said Selinger.
A-Way’s two elevators held a capacity of 2,224,000 combined bushels.

The public should be reminded that an indictment is not an indication of guilt, but rather an accusation, Selinger cautioned.
The couple is expected to be arraigned in Peoria soon, according to Selinger.