Monday, March 7, 2022, 3:25 pm
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According to inventory reports and warehouse receipts examined by The Taxpayers Channel, Express Grain sold soybeans to at least one financing company that it didn't actually possess.
This particular aspect of EG's fraudulent conduct has not been discussed publicly to this point, though it has been discussed briefly in at least one court hearing.
At the time of its bankruptcy filing on September 29, 2021, EG had in its possession 3,264,857 bushels of soybeans. See page 3 of the "Amended Grain Report" filed with the bankruptcy court on January 17, 2022: Amended Grain Report
But the problem was, as of that date, EG had already sold all the beans it possessed to UMB Bank and StoneX.
In fact, as of September 29, 2021, UMB Bank and StoneX actually owned more soybeans than EG possessed in its warehouses. StoneX actually owned 2.78 million bushels of EG's soybeans, and UMB Bank owned 1.285 million bushels, totaling 4.065 million bushels of soybeans, or 800,000 bushels more than EG actually then possessed.
On top of that, the day before EG filed for bankruptcy, it sold an additional 750,000 bushels of soybeans that it didn't possess to Macquarie.
Macquarie set forth the timeline of its bean purchases from EG in its filing detailing its interests in the bankrupt estate. See Macquarie's court filing here: Macquarie Statement of Interest in Soybeans held by Express Grain
At the time of its bankruptcy filing, UMB Bank, StoneX, and Macquarie actually owned 4.815 million bushels of EG's soybeans, or 1.55 million bushels more than EG actually possessed.
All three companies had purchased beans from EG but had not actually taken delivery, leaving them at EG's warehouses in storage.
EG had issued Warehouse Receipts to the three companies showing their ownership in the stored beans. See page 2 of the "557 Report Supplement" here: 557 Report Supplement
It is possible that previously, EG had sold beans in its possession to the three companies, and then stole the beans to sell to other customers, or to crush at the EG crushing plant, resulting eventually in EG possessing fewer beans than were owned by UMB Bank, StoneX, and Macquarie.
But the final sale of 750,000 bushels to Macquarie was of beans that EG simply did not possess.
UMB Bank called its loans to EG three days after it discovered that EG had been selling inventory to StoneX and Macquarie that the bank had been told were still owned and held by EG as partial collateral for loans to EG approaching $70 million. EG filed for bankruptcy 5 days later.
To read our previous reporting of UMB Bank's most detailed description of how it was defrauded by EG, see here: UMB Bank levels new fraud accusations against John Coleman and Express Grain
It appears that UMB Bank is now worried that its $70 million loans were not adequately backed by collateral. The physical assets sold for around $25 million. Most of UMB Bank's additional collateral was based upon EG inventory.
At time of filing bankruptcy, EG had a non-soybean inventory of $13 million, with soybeans valued at $41.3 million. But all those soybeans were actually already owned by StoneX, Macquarie, and UMB Bank.
Even if UMB Bank is able to claim successfully its 1.285 million bushels of soybeans (valued at around $16.7 million), that would leave the UMB Bank's $70 million loans backed by only $54.7 million ($25 million + $13 million + $16.7 million).
That would mean that the balance of the $70 million debt, around $15.3 million, is actually unsecured debt.
The unsecured portion of the UMB Bank debt would then be added to the $41 million owed the farmers, and the tens of millions owed to others, as unsecured debt, which is paid back only after the secured debtors are made whole.
John Pittman Hey
The Taxpayers Channel
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