Salesman Took $480,000 in Bribes from Iowa Farmer

October 17, 2013 04:02 AM

A former manager at one of the nation's largest grain cooperatives has reached a plea agreement on charges that he accepted $480,000 in bribes from an Iowa farmer in exchange for deep discounts on products, his attorney said Wednesday.

Chad Hartzler, former sales manager and director of seed and crop protection at West Central Co-Op in Ralston, is scheduled to appear Thursday in federal court in Sioux City for a plea hearing. Hartzler, 45, was charged last week with one count of wire fraud under a document called an information, which signals that he has been cooperating with prosecutors and has waived his right to be indicted by a grand jury.

Hartzler's attorney, Chris Cooklin of Ames, confirmed Wednesday that his client has reached a plea agreement with the U.S. Attorney's Office under which he will "admit what he did." The details have been filed under seal. Cooklin said the deal recommends a prison term that he would not specify, and he wrote in an email that he was "personally conflicted" because he did not like the result.

The charging document says that Hartzler for years had a bribery arrangement with Lake View farmer Bill Wollesen. It alleges that both men benefited financially at the expense of West Central, among the 20 biggest grain companies in North America.

"We appreciate the efforts of the U.S. Attorney's office in seeking justice against Chad Hartzler," West Central spokeswoman Alicia Clancy said.

Wollesen, who has not been charged, said Wednesday his payments were not bribes and he has done nothing wrong. He said he believed he was buying products directly from the sales agent under contracts with the cooperative.

"He certainly denies the allegations contained in the document filed by the U.S. Attorney's Office," said one of Wollesen's attorneys, Steve Locher.

After Wollesen received soybeans he had ordered from Hartzler in 2005, Hartzler met with him to collect the payment owed and solicit additional business, the document says. Wollesen offered to pay him a $2,000 cash bribe if Hartzler would reduce Wollesen's debt for the beans from $16,000 to $10,000, it says. Hartzler accepted the payment and "subsequently engaged in altering West Central's records to conceal the debt reduction."

Over the next five years, Hartzler accepted 38 bribes from Wollesen for instances in which he secretly provided deep discounts on products such as corn seed and farm chemicals, the document says. Hartzler deposited the checks in his bank account, making false notations in the memo lines to avoid suspicion that they were bribes.

He gave Wollesen the products at "prices far below market value, and even below West Central Co-op's cost" and manipulated company records to conceal the financial losses, it says.

The document said the scheme amounted to wire fraud because the checks Hartzler deposited were processed through interstate wire, transmitted electronically from one Iowa bank to the Chicago office of the Federal Reserve and back to another Iowa bank.

Hartzler confessed that he had received bribes from Wollesen to superiors at West Central in 2011, and the cooperative contacted the Iowa Division of Criminal Investigation, according to court documents.

Wollesen suggested that West Central was advocating for Hartzler's prosecution to strengthen its position in complex civil litigation in which Wollesen and the cooperative have each accused each other of wrongdoing and are seeking monetary damages.

The cooperative is suing Wollesen, a Wollesen family farming partnership and Hartzler in Story County, alleging the bribery scheme amounted to ongoing criminal conduct, breach of contract and breach of fiduciary duty. Clancy said the cooperative is "eager to present its evidence" at trial, scheduled for July.

Wollesen said that he has filed counterclaims seeking a refund from the co-op of more than $1 million that he had prepaid for products that weren't delivered.

The U.S. Attorney's Office said it could not answer questions due to the government shutdown.

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