by Troy Bishopp
ALBANY, NY — In the end, crime doesn’t pay, but the consequences sure are expensive. On Nov. 28, 2017 Ex-Cargill employee, Diane Backis received a 60-month prison sentence for bilking her employer and Northeast farmers out of an estimated 100 million dollars.
The ominous scheme, exactly one year ago, had Backis pleading guilty to charges of mail fraud and filing a false income tax return. Backis was responsible for accounting functions for Cargill’s grain operations in Albany, including creating customer contracts, generating and mailing invoices, and receiving and processing customer payments.
As part of her plea, Backis admitted that she stole hundreds of customer payments sent to Cargill totaling at least $3,115,610 and deposited them into her personal bank accounts. Backis also regularly created fraudulent invoices and mailed them to Cargill’s customers. The fraudulent invoices charged Cargill’s customers prices substantially less than what Cargill paid to acquire the grain products, causing Cargill significant financial losses. The fraudulent invoices also directed Cargill’s customers to send payment directly to Backis, thereby bypassing Cargill’s corporate controls.
To hide her activities, Backis made false entries into Cargill’s accounting software to make it appear that customers were paying prices higher than those in her fraudulent invoices, and that customers owed Cargill millions of dollars for delivered grain products. Backis then later reversed those false entries. As a result, Cargill lost at least $25 million.
Backis also admitted that she filed a false 2015 individual income tax return because she declared only $61,208 in total income and omitted over $450,000 in additional taxable income she received by stealing customer payments intended for Cargill in 2015.
United States District Judge Mae A. D’Agostino described the scheme as “insidious,” and Backis’ behavior as both “greedy” and “piggish.” Judge D’Agostino imposed a 2-year term of supervised release, to begin after Backis is released from prison. She also ordered Backis to pay $3.5 million in restitution to Cargill, an agricultural services conglomerate based in Minnetonka, MN.
Acting United States Attorney Grant C. Jaquith stated: “Thanks to the teamwork of federal agents who unraveled Backis’s complex and lengthy scheme, she is being held accountable for her crime.”
FBI Special Agent in Charge, Vadim D. Thomas stated: “Ms. Backis caused tens of millions in losses and did lasting damage to Cargill. The FBI will continue to work with our law enforcement partners to ensure this kind of malicious behavior is investigated and prosecuted.”
James Czub, Schaghticoke, NY grain farmer and owner of WestWind Ag, LLC, who attended the sentencing said, “The light verdict doesn’t seem fair when you realize the theft of over 3000 tons of grain equivalent from farmers within a 200-mile radius over a 10-year period with a street value of over 100 million dollars. When Cargill says they lost millions, we lost that too. It significantly impacted the whole region. That’s a lot of money taken out of farm family’s livelihoods. From a farmer’s perspective, the whole situation that happened still seems very murky to me.”
“The losses affected farmers throughout New York State as well as farmers in at least five neighboring states who lost their business to Cargill,” said Farmer and Lawyer, Arend Tensen, of Cullenburg & Tensen, P.L.L.C. in Lebanon, NH. “These losses are not the full story — they do not account for the estimated 100 million dollars that farmers throughout the region have lost as a result of her scheme and Cargill’s failure to put a stop to the practice of deflating corn prices for 10 years.”
“It is clear that during this period of time, the basis price for corn in this region was lowered substantially, in some cases as much as $1.05 per bushel. Even if Cargill’s claim to be a victim is accurate, Cargill also had a duty to the farming community to monitor its own employees and accounting practices. Even assuming Cargill was inexplicably unaware of the ongoing and massive fraud committed by Backis, in possible conjunction with others, Cargill should have had procedures and safeguards in place to prevent or to reduce such actions,” emphasized Tensen. Tensen is currently representing farmers in five States and throughout New York for these losses and is committed to seeking justice for each of them.
Cargill spokeswoman April Nelson said, “We conducted a thorough investigation of Cargill’s controls and trading systems and are confident this was an isolated incident. We are satisfied that the criminal justice process has now come to an end.”
Backis said in court, “I know that what I did was wrong and after my sentence I will continue to work to repay everyone.”
IRS-CI Special Agent in Charge, James D. Robnett stated: “Today’s sentencing demonstrates the serious consequences of financial crimes such as this, and the collective focus of IRS Criminal Investigation (CI) and our partners on holding the perpetrators of such fraudulent schemes accountable for their actions.”