DFA reveals second unauthorized payment

12:00AM Oct 14, 2008
( )
             In a telephone conference call this morning to dairy media, Dairy Farmers of America president and CEO Rick Smith says the coop has discovered a second unauthorized payment to a DFA member. This time, the amount was $185,500.
            The payment was made to Bucky Jones, a Mississippi dairy producer and former DFA Southeast Council Board member, in the form of 53 monthly checks of $3,500 per check from the spring of 2001 to the fall of 2005. The payments were made through an affiliated company of DFA under the guise of a monthly consulting fee. The money has not yet been repaid, but Smith says it will be with interest.
            "Gary Hanman (former DFA CEO) was aware of the payment and was CEO at the time,” says Smith, when asked if Hanman had approved the payment arrangement.
            Hanman was also involved in the first $1 million unauthorized payment made to Herman Brubaker, an Ohio dairy producer and long-time DFA member. DFA disclosed the discovery of that unauthorized payment last May. Go to: http://www.agweb.com/get_article.aspx?sigcat=dairytoday&pageid=142905&GN&specperm=kttk&at=
            Since that time, a special committee of the DFA Corporate Board was appointed to look for additional unauthorized payments. A St. Louis, MO, was also retained to aid in the investigation.
            The investigation reviewed more than 100 transactions. Dozens of employees have also been interviewed, some multiple times, says Smith. It is during that investigation that the Jones' payment scheme was unearthed.
            Smith believes safeguards are now in place to at least detect any more unauthorized payments, including auditing best practices. "We have a conflict of interest and confidentiality agreement that all board members sign, and we've since tightened that agreement,” he says.
            DFA Area Council Board members and Corporate Board members receive per diems and travel reimbursement. Area Council per diems are in the range of $200 per day; Corporate Board per diems are about $350.
            Information regarding the two unauthorized payments has been turned over to the U.S. Department of Justice. Whether criminal charges will be brought is unknown.