|
18 Dec 08 - SpicaBooks.Com/Farms.html
| ||
|
by Michael Liedtke, June 4, 2000 San Francisco - AP - After one of its business customers went bankrupt last year, Wells Fargo & Co. picked up an unexpected liability - criminal charges depicting the giant bank as a thief. Colusa County District Attorney John Poyner filed the unusual case against Wells based on an obscure state law that puts farmers first in line to collect on debts owed by food processors. The misdemeanor criminal charges allege that Wells broke the law between September 1998 and January 1999 as it continued to collect on an outstanding debt owed by Churchill Nut Co., a Hollister processor that went bankrupt last year. The case's foundation is built on this premise: Wells helped keep Churchill afloat so it could collect as much money on its debt before the processor filed bankruptcy. In the process of protecting its own financial interests, Wells is accused of collecting money that should have gone to Colusa-based Boeger Family Farms, which had turned its walnut crop over to Churchill to be packaged and sold. San Francisco-based Wells denies the charges. The bank tried to effectively kill the case in a May 31 hearing, but its motion was denied. "The case is wholly inappropriate," said Wells spokeswoman Mary Rodrigues. "We plan to vigorously defend our position and are confident that we will be vindicated." Farmers of many nuts and fruits routinely turn over their crops to food processors and aren't paid until the products are sold. To protect the farmers' financial interest, the state's Depression-era law gives growers the "first lien" on a processor's assets. In theory, this law means that, after a processor pays its workers, growers are supposed to be paid before anyone else, including the banks that lend millions to keep processors in business. In practice, though, banks usually ensure that they are paid before the growers, said Bill Thomas, a Sacramento attorney who has helped the agricultural industry amend the lien laws in recent years. "This is a subject of long-running tension between growers and banks," Thomas said. "In this kind of situation, the banks are usually telling a processor, 'Don't pay those growers, pay us first.' Banks are very adept at this because they are in a position to know what is happening in a business." Banks and processors routinely ask growers to sign contract waivers to give up first lien rights. The California Department of Food and Agriculture contends that growers can't relinquish this right, no matter what they sign. In Matt Boeger's case, he crossed out the lien waiver in his Churchill contract. Banks routinely review the income statements of their business borrowers. Poyner alleges that this inside knowledge tipped off Wells about Churchill's financial trouble long before Boeger and other growers who provided goods to the processor. Boeger, who says Churchill owes him $380,000, believes the food processor and the bank leveraged his walnut crop to keep the business alive a little longer. State agricultural officials said the charges appear to be the first of their type to be brought against a bank under the 1932 law. The case, which is being fought in one of California's smallest counties, could have broad ramifications in the state's $26 billion agricultural industry. "This is going to get people's attention, from everyone in the bank industry all the way down to growers and packers in the agricultural industry," said Don Henry, chief of enforcement for the California Department of Food and Agriculture. The legal showdown shapes up as a David vs. Goliath battle. Wells is one of the nation's biggest banks with $222 billion in assets. Colusa County, located about one hour north of Sacramento, is a largely rural area with a population of less 20,000. Nearly 40 percent of the county's acreage is farmland and about the same percentage of Colusa's employed residents work in the county's $300 million agricultural industry. The community's agrarian culture is one of the main reasons Poyner, midway through his fourth term as Colusa County's DA, decided to press criminal charges against Wells. "I just felt that farmers have been getting screwed here and somebody ought to be called on the carpet for it," Poyner said. If Wells is convicted, it faces fines as high as $2,000 per violation and could be ordered to pay Boeger the amount owed by Churchill. Poyner plans to use the case as a primer in the state's agricultural laws. "I have talked to about 20 or 30 farmers around here and none of them know about their rights under this statute," he said. "If nothing else, I hope this case teaches farmers to be more careful or the same thing could happen to them." | ||
|
|
Wells Fargo Faces Criminal Charges 
