Equity Cooperative Livestock Sales Association

The U.S. Department of Agriculture (USDA) entered into a stipulation agreement with Equity Cooperative Livestock Sales Association (Equity) of Baraboo, Wisconsin, on Nov. 17, 2022, for alleged violations of the Packers and Stockyards (P&S) Act. Under the terms of the stipulation agreement, Equity waived its rights to a hearing and paid a penalty of $7,800.

An investigation by USDA’s Agricultural Marketing Service (AMS) revealed that from May 2021 through July 2021 and June 2022, Equity created false and misleading records in connection with its livestock selling activities.

The P&S Act requires subject entities to keep and maintain records that accurately disclose the full nature of the transaction. Failure to represent and properly account for the sale of livestock is a violation of the P&S Act.

The P&S Act authorizes the secretary of agriculture to assess civil penalties up to $31,459 per violation against any person after notice and opportunity for a hearing on the record. USDA may offer alleged violators the option of waiving their right to a hearing and entering into a stipulation agreement to resolve alleged violations quickly.

Robert Lenz, d.b.a. Lenz Livestock

The USDA reached a consent decision with Robert Lenz, doing business as Lenz Livestock (Lenz) of Carroll, Iowa, on Sept. 13, 2022, for alleged violations of the Packers and Stockyards (P&S) Act.

An investigation by USDA’s Agricultural Marketing Service revealed that Lenz failed to pay timely for 118 head of livestock purchased for $98,368 between Jan. 19, 2022, and Feb. 1, 2022. Lenz’s payments were between 26 and 93 days late.

In addition, on Jan. 19, 2022, Lenz issued a check in payment for 30 head of livestock for $30,313, which was returned unpaid by the bank. The financial institution returned the check because Lenz did not have sufficient funds in the account.

Under the consent decision, Lenz agreed to cease and desist from failing to pay, when due, the full purchase price of livestock and issuing insufficient checks for his livestock purchases. Lenz is suspended as a registrant under the act for two years. However, Lenz is permitted to engage in salaried employment by another registrant or packer properly and adequately bonded.

The P&S Act requires subject entities to issue the full payment for livestock by the close of the first business day following purchase and transfer of possession. Failure to timely pay for livestock purchases and failure to deliver livestock for which payment has been accepted are unfair trade practices and are violations of the P&S Act.

SMBL Cattle Company LLC, dba J&J Livestock

The USDA entered into a stipulation agreement with SMBL Cattle Co. LLC (SMBL), doing business as J&J Livestock of Texarkana, Texas, on Nov. 5, 2022, for alleged violations of the Packers and Stockyards (P&S) Act. Under the terms of the stipulation, SMBL waived its rights to a hearing and paid a penalty of $2,500.

An investigation by USDA’s Agricultural Marketing Service revealed that SMBL had custodial account shortages on May 17, 2022, and June 24, 2022, of $57,041 and $31,355, respectively. Both custodial account shortages occurred because SMLB failed to reimburse the custodial account timely for receivables.

A custodial account is a trust account designated for shippers’ proceeds from the sale of livestock in trust for sellers. Failure to reimburse the custodial account timely is a violation of the Packers & Stockyards Act and regulations.

Miller Livestock Inc.

The USDA reached a consent decision with Miller Livestock Inc. (Miller), Eric Miller (E. Miller) and Melissa Miller (M. Miller) of Mina, South Dakota, for alleged violations of the Packers and Stockyards (P&S) Act.

An investigation by USDA’s Agricultural Marketing Service revealed that from June 2021 through November 2021, Miller failed to pay when due for livestock transactions totaling $548,382. At the time of the consent decision, a total of $368,087 remained unpaid. In addition, the investigation revealed that in five transactions, Miller issued checks for livestock that were returned unpaid or denied by the bank because Miller failed to maintain sufficient funds to cover the checks.

Under the consent decision, Miller, E. Miller and M. Miller are suspended as registrants under the act for five years. The suspension can be modified if payments are made in full to the unpaid sellers.

M&L Farms LLC, Jallaq Farms LLC and Othman Jallaq

The USDA reached a consent decision with M&L Farms LLC, Jallaq Farms LLC and Othman Jallaq (Respondents) of Grove City, Ohio, on Dec. 15, 2022, for alleged violations of the Packers and Stockyards (P&S) Act.

An investigation by USDA’s Agricultural Marketing Service revealed that M&L Farms operated while insolvent between December 2017 and January 2018. M&L Farms and Mr. Jallaq purchased approximately $993,568 of livestock between January 2017 and March 2018 and another $75,017 of livestock between May and October 2018, and failed to pay, when due, the full purchase price. They also issued nine insufficient funds checks and failed to keep and maintain adequate records. A related company, Jallaq Farms and Mr. Jallaq purchased approximately $351,104 of livestock between May 2019 and August 2010, and failed to pay, when due, the full purchase price.

Under the consent decision issued on Jan. 12, 2023, Respondents agreed to cease and desist from failing to pay and failing to pay, when due, the full purchase price of livestock, issuing insufficient funds checks for livestock, operating while insolvent and failing to maintain adequate records. Until they demonstrate correction of their insolvency to AMS’ satisfaction, Respondents must pay for livestock purchases with cash, cashier’s check or wire transfer at the time of exchange of possession. They must maintain and keep specific written records. Also, Respondents are jointly assessed a $26,000 civil penalty, of which $3,900 will be paid in monthly installments of $195 each, starting immediately upon execution of the consent decision, and the remaining $22,000 will be held in abeyance for 20 months, provided Respondents satisfy the other terms of the order.

The P&S Act requires subject entities to issue the full payment for livestock by the close of the first business day following purchase and transfer of possession. Failure to timely pay for livestock purchases and failure to issue the full payment for purchases is an unfair trade practice and a violation of the P&S Act. Operating while insolvent is also a violation of the P&S Act since it places livestock sellers at risk of not being paid fully or promptly.

The P&S Act is a fair-trade practice and payment-protection law that promotes fair and competitive marketing environments for the livestock, meat and poultry industries.

For further information about the Packers and Stockyards Act, contact Kraig Roesch, Packers and Stockyards Division, at 303-375-4291 or by email at kraig.roesch@usda.gov.

Source: USDA's AMS