Former GM of Farmers Coop in Sioux Center Receives Prison Term, Fine

March 25, 2021 2:08pm

Prison Hall

Former general manager of Farmer’s Coop in Sioux Center has been sentenced to three months in federal prison for a grain blending scheme.


According to a release, 76-year-old Kenneth Ehrp of Dakota Dunes, received the prison term after pleading guilty to one count of conspiracy to commit a prohibited grain practice.


In a plea agreement, Ehrp admitted that while he was the general manager for a grain warehouse in Sioux Center, he worked with Calvin Diehl to add lower value oats to soybeans and sell the mixture as soybeans.


As part of the grain blending scheme, Diehl and other individuals, acting under Ehrp's direction, made false statements and executed false certificates to USDA inspectors. The plea agreement also states they layered soybeans on top of oats in both storage bins and trucks to deceive USDA inspectors and customers about the quality and quantity of the grain.


In addition, Ehrp and those working under his direction made false entries and adjustments in reports provided to the grain warehouse's bank.


In March 2017, one of Ehrp’s subordinate managers instructed a manager at a satellite warehouse location in Worthing, South Dakota, to blend more oats with soybeans. 



As a result, approximately 30 truckloads of soybeans were “spiked” with oats.  After the customer discovered this, one of their managers called Diehl and told him to stop blending oats into soybeans.  The manager warned Diehl that “someone can go to jail for this.” 


According to court documents, Diehl feigned surprise, apologized, and promised the practice would not happen in the future. 


However, at Ehrp’s direction, Diehl and others continued to blend oats into soybeans and sell them to the same customer. 


Ehrp himself drove to the location manager’s office in Worthing and ordered him to continue blending oats. As a result, the Worthing location manager designed a new system for blending oats into soybeans, involving an auger and a conveyer, which sprinkled oats into the semi-trucks’ hoppers and ensured the loads leaving Worthing would remain hidden.


After learning of the conspiracy, the USDA conducted a search of grain bins at the cooperative’s various locations in Iowa and South Dakota. Of the estimated 87,996 bushels of grain in the bins at these locations, the bins actually contained only 34,354 bushels of soybeans even though all of these bins had been certified as soybeans.


Ehrp was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. 


Ehrp was sentenced to three months’ imprisonment and fined $50,000. He was ordered to pay $4,089.73 in costs of prosecution, and he also must serve a one-year term of supervised release after the prison term. 


There is no parole in the federal system.  Ehrp was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set. Earlier this year, Diehl was also sentenced to three months’ imprisonment for his role in the grain blending scheme.


Courtesy of Media Partner KTIV