Federal prosecutors have charged a Rapid City businessman in what they say was a $71 million scheme to sell fake organic grain and seeds to fuel his extravagant lifestyle including a yacht, a multimillion dollar home and luxury cars.
The U.S. Attorney’s Office filed an indictment for wire fraud and money laundering last week against Kent Duane Anderson, alleging he used a network of South Dakota businesses to sell non-organic grain and seed products as organic. Anderson made a profit of about $25 million from the fake organic sales from October 2012 to December 2017, according to court documents.
Anderson was booked into the Pennington County jail on Thursday. He is scheduled to make an initial appearance in federal court in Rapid City on Friday afternoon.
According to court documents, Anderson operated a business called Green Leaf Resources that markets “certified organic” flax and canola seeds, meal and oils. But prosecutors allege he employed his sister-in-law and a college friend as “figurehead executives,” who were certified as authorized organics handlers with the Department of Agriculture. He then used these certifications as “cover” to purchase non-organic products and resell them as organic.
A lawyer assigned to represent Anderson was not available for comment. No one answered phone calls to a number listed on the website of Green Leaf Resources.
Prosecutors allege that Anderson transferred nearly $11 million from the fraudulent sales over five years into his personal accounts. He purchased a $2.5 million home in Florida, an $8 million yacht, and $400,000 in jewelry, according to court documents.
Questions about Anderson’s operation began arising last year. The state’s Public Utilities Commission investigated a business owned by Anderson after receiving complaints that it was not making payments and had purchased grain without the required license. Anderson’s company did not respond to inquiries and requests to conduct an inspection, according to a March statement from the Public Utilities Commission.
Federal prosecutors allege that Anderson purchased non-organic products from two suppliers in Illinois and Minnesota. He had most of those products shipped to a warehouse in Tappen, North Dakota, where an employee would replace the legal documents that said they were non-organic with new documents certifying they were organic. The products would then be shipped to wholesale distributors, brokers, and other buyers who believed they had bought organic products.
Court documents say Anderson included a business profile with his records that described how he and his wife Aimee in 2005 started a business called Bar Two Bar Ranch in Belle Fourche to raise cattle and produce alfalfa hay. They began selling excess hay to ranches in Montana and Wyoming, then expanded to small grains and oilseed byproducts. In 2008, they decided to create Green Leaf Resources to focus on their feed production business.