Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 1 of 17 PageID #: 1 UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA SOUTHERN DIVISION UNITED STATES OF AMERICA, Plaintiff, CR 4:20-CR-40025 REDACTED INDICTMENT Conspiracy to Commit Wire Fraud, Wire Fraud, and Money Laundering V. KENT DUANE ANDERSON, 18 U.S.C. §§ 1343, 1349, 1956(a)(l)(A)(i), 1957, and 28 U.S.C. § 2461(c) Defendant. The Grand Juiy charges: Introduction 1. From on or about between October 1, 2012, and March 14, 2018, in the District of South Dakota, and elsewhere, the Defendant, Kent Duane Anderson, aided and abetted by persons known and unknown to the grand jury, did knowingly and unlawfully devise a scheme and artifice to defraud and to obtain money by means of false and fraudulent pretenses, representations, and promises, as set forth below. The Scheme to Defraud 2. "Organic" agricultural products are grown by a natural farming process that does not utilize pesticides, syrithetic growth stimulants, or genetically modified seeds. There is a large market for such products and Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 2 of 17 PageID #: 2 corisumers are willing to pay a higher price for them compared to non-organic products. 3. The Defendant owned and operated a business enterprise that exploited this "organic" market, and did so by purchasing thousands of tons of small grain and seed products from "non-organic" suppliers and then re-sold those products to wholesale distributors, brokers, and other buyers at a markedup price, falsely representing the products were "organic". 4. Food processors, livestock owners, and consumers in the general public who ultimately purchased these products and other derivatives of them, believing them to be "organic", were defrauded. 5. As a result of this fraud, the Defendant's business enterprise generated large profits and he accumulated substantial wealth. This enabled him to live an extravagant life style, which included his purchase of an $8 million dollar yacht, a $250,000 sports boat, a $2.4 million dollar residence, over $400,000 dollars ofjewelry, and multiple expensive personal motor vehicles. THE DEFENDANT'S BUSINESS ENTITIES 6. The Defendant carried out his fraud through a group of inter-related business entities he formed in South Dakota, he directed and controlled, and that he and his wife, Aimee Anderson, jointly owned. These business entities included the Bar Two Bar Ranch LLC, formed in February 2005; Green Leaf Resources Inc., formed in September 2008; and four other business entities Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 3 of 17 PageID #: 3 formed in November 2008 ~ Green Leaf Industries LLC, Green Leaf Commodities LLC, Green Leaf Trading LLC, and Green Leaf Oils LLC. BACKGROUND OF FRAUDULENT BUSINESS OPERATIONS 7. The background of the Defendant's business operations was described in a business profile he maintained with his records: "Bar Two Bar Ranch, LLC wasformed in 2005. The company is owned by Aimee and Kent Anderson. Originally the ranch was located in Belle Fourche, South Dakota and was involved in the production of beef cattle and hay. The company owned 325Hereford and Angus cows and produced alfalfa hay on 500 acres of irrigated bottomland along the Belle Fourche River. Each year the calf crop was sold to area feedlots. Excess hay was sold on contracts to ranches in southeast Montana and northeast Wyoming. In 2006 the company began marketing other feedstuffs to ranches, feedlots and feed distributors that were purchasing hay. These products included small grains and oilseed by products. This business grew substantially during 2006-2008. 'The company was generating more revenue throughfeed sales than beef sales. At this point the decision was made to create a new set ofcompanies that became Green LeafResources, Inc. and its subsidiary companies to support the feed production and marketing business ...". FRAUDULENT USE OF USDA ORGANIC CERTIFICATIONS 8. After the Defendant formed his Green Leaf business entities, he employed his sister-in-law (referred to in this Indictment as "M.G."), and a college friend (referred to in this Indictment as "J.M."), as figurehead executives and used them to apply for and obtain from the United States Department of Agriculture (USDA) certifications as authorized "Handlers" (broker/traders) of Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 4 of 17 PageID #: 4 various "Organic" agricultural grain and seed products. They obtained these certifications by submitting paperwork and meeting with inspectors in which they, along with the Defendant, asserted that the products they handled, brokered, and traded were obtained from "organic" suppliers. The Defendant used these certifications to falsely market and sell his products as being legitimate "organic" products. NON-ORGANIC PRODUCTS PURCHASED THEN FALSELY SOLD AS BEING ORGANIC 9. The Defendant's USDA "Organic" certifications served as a cover for the true nature of his business operations, that being large-scale purchases of non-organic agricultural grain and seed products he falsely re-sold as being "organic" products. These purchases and sales were transacted through business bank accounts the Defendant maintained initially at Dacotah Bank in South Dakota and then later at JPMorgan Chase Bank. The Defendant was an authorized signer for these bank accounts and controlled the accounts. 10. From October, 2012, through December, 2017, a total of approximately $47 million, dollars was paid from these business accounts to purchase agricultural grain and seed products from suppliers. The Defendant arranged and transacted all of these purchases. Approximately $46 million or 97% of the purchases were for "non-organic" products; less than 3% of the purchases were for "organic" products. Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 5 of 17 PageID #: 5 11. The vast majority of the Defendant's purchases were from two major suppliers, Archer-Daniels-Midland Company (ADM), headquartered in Decatur, Illinois, and Cargill Inc., headquartered in Wayzata, Minnesota. These two suppliers accounted for approximately $42 million dollars, or 89%, of the Defendant's purchases, and they did not sell him any "organic" products; only non-organic products. 12. During the same time period, the Defendant's business generated / sales of agricultural grain and seed products totaling approximately $75 million doUars. These sales proceeds were deposited into his business bank accounts, and approximately $71 million dollars or 95% of those monies were from sales of non-organic products falsely represented to be "organic". Less than 5% of the deposited monies were from legitimate sales of"organic" products. FALSE INVOICES REPORTING PRODUCTS SOLD AS BEING ORGANIC 13. The Defendant employed M.G. to communicate with, and receive and process purchase orders from his customers. M.G. worked in a business office in Florida with another employee (referred to in this indictment as "R.M.") who arranged shipments to the Defendant's customers of the products they ordered through M.G. R.M. prepared bills of lading (BOLs) and invoices for the Defendant's Green Leaf businesses that reported the products shipped to the customers. All of the Green Leaf BOLs and invoices falsely reported the products were "organic". Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 6 of 17 PageID #: 6 FALSELY REPORTED SHIPMENTS OF PRODUCTS TO CUSTOMERS 14. The products that the Defendant's business purchased from suppliers were primarily shipped to a storage and loading facility he owned in Tappen, North Dakota. A small portion of products purchased by the Defendant's businesses were transported to a processing facility the Defendant leased in Rapid City, South Dakota. The products delivered to the Defendant's Tappen, North Dakota facility were accompanied by BOLs that reported the products were shipped from non-organic suppliers, and identified the shipped products as not being organic. 15. An employee at the Defendant's Tappen, North Dakota, facility (referred to in this indictment as "B.M.") would receive these supplier BOLs and would unload the products into storage bins. B.M. would then receive \ instructions from R.M. in Florida as to what products and quantities to load for shipment to the Defendant's customers. R.M. prepared Green Leaf BOLs and invoices that identified the products to be shipped, and ernailed these records to B.M. for him to print-out and provide to the truck drivers transporting the customer shipments. The Green Leaf BOLs and invoices reported that the products shipped were "organic"; whereas the products loaded onto the trucks were the same non-organic products that the Defendant had purchased and had been delivered to his facility. Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 7 of 17 PageID #: 7 16. The Defendant primarily contracted with one trucking company (referred to in this Indictment as "U.F." to perform these transports of nonorganic products from suppliers and to customers. During the five year time period from October, 2012, through December, 2017, the Defendant paid U.F. over $5 million dollars to perform these transports. PERSONAL ASSETS PURCHASED WITH FRAUD PROCEEDS 17. The sales proceeds derived from the described fraud scheme that were deposited to the Defendant's business bank accounts at Dacotah Bank and JPMorgan Chase Bank, were periodically transferred from those accounts into personal bank accounts that he and his wife jointly maintained at the same banks. A substantial portion of those transferred monies were then expended to transact purchases of personal assets. 18. During the five-year period from October 2012, through December 2017, approximately $71 million dollars of fraudulent sales proceeds were deposited into the Defendant's business bank accounts; of which a total of approximately $11 million dollars was transferred into his personal bank accounts. A large portion of transferred monies were expended to build and furnish a new home in Florida, purchase a multi-million dollar yacht and a 1/4 million dollar sports boat, purchase expensive jewelry, purchase land in South Dakota, and purchase expensive motor vehicles. 7 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 8 of 17 PageID #: 8 COUNT 1 (Conspiracy to Commit Wire Fraud) 18 U.S.C. § 1349 19. The allegations contained in paragraphs 1 through 18 of this Indictment are re-alleged as if stated in full herein. 20. From on or about October 1, 2012, and continuing until at least December 29, 2017, in the District of South Dakota and elsewhere, the Defendant, Kent Duane Anderson did unlawfully and knowingly combine, conspire, and agree with others known and unknown to the grand juiy, to commit an offense against the United States, namely, to devise a scheme and intend to devise a scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, transmitted and caused to be transmitted by means of wire communication in interstate and foreign commerce the following -writings, signs, signals, pictures, and sounds for the purpose of executing such scheme and artifice, in -violation of 18 U.S.C. § 1343. PURPOSE OF THE CONSPIRACY 21. The purpose of the conspiracy was to profit and derive financial gain by defrauding consumers who purchased agricultural grain and seed products that were falsely represented to be "organic" products. MANNER AND MEANS 22. The manner and means of the conspiracy included transacting large purchases of non-organic agricultural grain and seed products and then re8 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 9 of 17 PageID #: 9 selling those products for as much as twice the price by falsely representing the products to be "organic". 23. This fraud was accornplished by conducting interstate wire transfers to suppliers for purchases of non-organic products; applying for and obtaining U.S. Department of Agriculture certifications as dealers in "organic" products; using these "organic" certifications to conceal the , true nature of the products being sold; falsely reporting those products in shipping and billing invoices as being "organic"; and conducting financial transactions with the sales proceeds, to purchase personal assets and distribute the proceeds to persons participating and facilitating the fraud scheme; all in violation of 18 U.S.C. § 1349. COUNTS 2-13 (Wire Fraud) 18 U.S.C. § 1343 24. The allegations contained in paragraphs 1 through 23 of this Indictment are re-alleged as if stated in full herein. 25. On or about the dates listed below, in the District of South Dakota and elsewhere, the Defendant, Kent Duane Anderson, having devised a scheme and intending to devise a scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, did unlawfully and knowingly transmit and cause to be transmitted by means of wire communication in interstate commerce, the following writings, signs, signals, pictures, and sounds for the purpose of executing such scheme and artifice: 9 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 10 of 17 PageID #: 10 Count 2 Date 06/16/2015 Amount Wire eommunication $24,670 Money transferred from NGS bank aceount in Belle Fourche, SD, to Chase Bank in New York 3 07/01/2015 $23,955 Money transferred from NGS bank aceount in Belle Fourche, SD, to Chase 4 08/18/2015 $20,150 Money transferred from NGS bank Bank in New York aceount in Belle Fourche, SD, to Chase Bank in New York 5 09/21/2015 $31,880 Money transferred from NGS bank aceount in Belle Fourche, SD, to Chase Bank in New York 6 11/03/2015 $23,898.60 Money transferred from NGS bank account in Belle Fourche, SD, to Chase Bank in New York 7 11/19/2015 $27,139.20 Money transferred from NGS bank aceount in Belle Fourche, SD, to Chase Bank in New York 8 12/10/2015 $27,082.20 Money transferred from NGS bank account in Belle Fourche, SD, to Chase Bank in New York 9 08/24/2016 $27,621.94 Money transferred from NGS bank aceount in Belle Fourche, SD, to Chase Bank in New York 10 10/04/2016 $28,167.50 Money transferred from NGS bank account in Belle Fourche, SD, to Chase Bank in New York 11 01/06/2017 $24,252.80 Money transferred from ANP bank account in Dakota Dunes, SD, to Chase Bank in New York 12 03/03/2017 $30,000 Money transferred from ANP bank account in Dakota Dunes, SD, to Chase Bank in New York 13 03/20/2017 $76,467.20 Money transferred from ANP bank aceount in Dakota Dunes, SD, to Chase Bank in New York all in violation of 18 U.S.C. § 1343. 10 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 11 of 17 PageID #: 11 COUNTS 14 - 25 (Monetary Transactions to Promote Unlawful Activity) 18 U.S.C. § 1956(a)(l)(A)(i) 26. The allegations contained in paragraphs 1 through 25 of this Indictment are re-alleged as if stated in full herein. 27. On or about the dates listed below, in the District of South Dakota and elsewhere, the Defendant, Kent Duane Anderson, did knowingly conduct and attempt to conduct the following financial transactions in the approximate amounts indicated affecting interstate and foreign commerce, to wit, money payments to entities listed below, which involved the proceeds of a specified unlawful activity, that is, wire fraud, in violation of U.S.C. 18 § 1343, with the intent to promote the carrying on of specified unlawful activify, to wit, wire fraud, as charged in Counts 2-13, inclusive, and that while conducting and attempting to conduct such financial transactions knew the property involved in the financial transactions represented the proceeds of some form of unlawful activify: Date Count 14 15 16 17 Payer Wire Transfer Payee Amount 06/18/2015 07/03/2015 08/24/2015 09/21/2015 Green Leaf Plaza Makoti Commodities LLC Equify Elevator Green Leaf Northern Plains Commodities LLC Cooperative $ 13,000.00 $ 24,000.00 ADM $ 130,000.00 ADM $ 80,000.00 Green Leaf Commodities LLC Green Leaf Commodities LLC 11 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 12 of 17 PageID #: 12 18 19 20 21 22 23 24 25 11/03/2015 11/20/2015 12/14/2015 08/26/2016 10/04/2016 01/09/2017 03/06/2017 03/20/2017 Green Leaf Northern Plains Commodities LLC Cooperative $ 50,000.00 ADM $ 60,000.00 ADM $ 50,000.00 ADM $ 80,000.00 $ 30,000.00 ADM $ 50,000.00 ADM $ 50,000.00 ADM $ 50,000.00 Green Leaf Commodities LLC Green Leaf Commodities LLC Green Leaf . Commodities LLC Green Leaf Country Grain Commodities LLC Cooperative ^ Green Leaf Commodities LLC Green Leaf Commodities LLC Green Leaf Commodities LLC aU in violation of 18 U.S.C. § 1956(a)(l)(A)(i). COUNTS 26 - 42 (Monetary Transactions in Criminally Derived Property) 18 U.S.C. § 1957 28. The allegations contained in paragraphs 1 through 27 of this Indictment are re-alleged as if stated in full herein. I 29. On or about dates listed below, in the District of South Dakota'and elsewhere, the Defendant, Kent Duane Anderson, did knowingly engage and attempt to engage in the following monetary transactions affecting interstate and foreign commerce,in criminally derived property of a value greater than $10,000, derived from the scheme to defraud and conspiracy described in this indictment, knowing that the monetary transactions involved proceeds of a crirninal offense: 12 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 13 of 17 PageID #: 13 Date Count (on or about) Financial Transaction Amount Wire transfer of $131,000 from account xxx5582 of Kent 85 Aimee Anderson at Dacotah Bank in South 26 11/02/2012 $131,000 Dakota to account xxx5168 of Anchor Builders of Southwest Florida Inc. at The Northern Trust Company bank in Florida, as partial payment for construction of a house in Florida Wire transfer of $100,000 from account xxx5582 of Kent 85 Aimee Anderson at Dacotah Bank in South 27 11/09/2012 $100,000 Dakota to account xxx5168 of Anchor Builders of Southwest Florida Inc. at The Northern Trust Company bank in Florida, as partial payment for construction of a house in Florida Check in the amount of $100,000 drawn on account xxx5582 of Kent 85 Aimee Anderson at.Dacotah Bank in 28 11/20/2012 $100,000 South Dakota deposited to account xxx5168 of Anchor Builders of Southwest Florida Inc. at The Northern Trust Company bank in Florida, as partial payment for construction of a house in Florida Check in the amount of $160,000 drawn on account xxx5582 of Kent & Aimee Anderson at Dacotah Bank in 29 12/24/2012 $160,000 South Dakota deposited to account xxx5168 of Anchor Builders of Southwest Florida Inc. at The Northern Trust Company bank in Florida, as partial payment for construction of a house in Florida Check in the amount of $150,000 30 12/24/2012 $150,000 drawn on account xxx5582 of Kent 85 Aimee Anderson at Dacotah Bank in South Dakota deposited to account xxx5168 of Anchor Builders of 13 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 14 of 17 PageID #: 14 Southwest Florida Inc. at The Northern Trust Company bank in Florida, as partial payment for construction of a house in Florida Check in the amount of $189,205 drawn on account xxx2550 of Kent 85 31 03/05/2013 $189,205 Aimee Anderson at JP Morgan Chase Bank in New York deposited to Anchor Builders of Southwest Florida Inc. account xxx5168 at The Northern Trust Company bank in Florida, as partial payment for construction of a house in Florida Check in the amount of $75,972 drawn on account xxx9898 of Green 32 05/06/2013 $75,972 Leaf Industries LLC at Dacotah Bank in South Dakota paid to Wilde Maserati in Florida, as partial payment for the purchase of a 2013 Maserati Gran Turismo convertible Wire transfer of $85,089 from account xxx2828 of Kent 85 Aimee Anderson at 33 10/07/2013 $85,089 JP Morgan Chase Bank, sent via First Interstate Bank in Montana, to Lawrence Title Co, for the purchase land in South Dakota ACH payment of $73,000 from account xxx0590 of Green Leaf 34 03/21/2014 $73,000 Resources Inc. at JP Morgan Chase Bank, to Bliss Jewelers in the U.S. Virgin Islands for the purchase of Jewelry Wire transfer of $1,500,000 from account xxx2828 of Kent 85 Aimee Anderson at JP Morgan Chase Bank 35 04/29/2014 $1,500,000 to an account of Monte Carlo Yachts at Banca Popolare Friuladria Spa in Italy, as partial payment for the purchase of a 86 feet yacht manufactured in Italy 36 01/23/2015 $603,000 Wire transfer of $603,000 from account xxx2828 of Kent 85 Aimee 14 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 15 of 17 PageID #: 15 Anderson at JP Morgan Chase Bank to Robert Allen Law PA Trust Account; to transact a partial payment for the purchase of a 86 feet yacht manufactured by Monte Carlo Yachts in Italy Wire transfer of $1,500,OOO from account xxx2828 of Kent 37 01/23/2015 $1,500,000 Aimee Anderson at JP Morgan Chase Bank to Robert Allen Law PA Trust Account, to transact a partial payment for the purchase of a 86 feet yacht manufactured by Monte Carlo Yachts in Italy Wire Transfer of $70,707 from account xxxl817 of Green Leaf 38 08/24/2015 $70,707 Industries LLC, at JP Morgan Chase Bank to Southpointe Land Rover in Florida, as partial payment for the purchase of a 2015 Range Rover Autobiography Cashier's Check in the amount of $83,000 purchased with funds withdrawn from account xxxl817 of . 39 09/11/2015 $83,000 Green Leaf Industries LLC, at JP Morgan Chase Bank, paid to Southpointe Land Rover in Florida, as partial payment for the purchase of two 2015 Range Rover Sports Wire transfer of $130,000 from account xxx2828 of Kent 85 Aimee 40 12/22/2015 $130,000 Anderson at JP Morgan Chase Bank, Scintillating Imports Inc in New York, to transact a payment for the purchase ofjewelry from Bliss Jewelers in the U.S. Virgin Islands ACH payment of $126,000 from account xxx0590 of Green Leaf 41 08/15/2016 $126,000 Resources Inc at JP Morgan Chase Bank, to Bliss Jewelers in the U.S. Virgin Islands, as pa5mient for the purchase ofjewelry 15 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 16 of 17 PageID #: 16 Check in the amoimt of $23,963 drawn on account xxxl817 of Green 05/04/2017 . 42 $23,963 Leaf Industries LLC, at JP Morgan Chase Bank, paid tO'Wilde Jaguar in Florida, as partial pa5mient for the purchase of a 2017 Jaguar F-Pace SUV all in violation of 18 U.S.C. § 1957. FORFEITURE ALLEGATIONS 30. ^ Counts 1 through 42 of this Indictment are hereby re-alleged as if fully set forth herein by reference, for the purpose of alleging forfeitures pursuant to 18 U.S.C. § 981(a)(1) and 28 U.S.C. § 2461(c). 31. Upon conviction of one or more of the offenses alleged in Counts 1 through 13, the Defendant, Kent Duane Anderson, shall forfeit to the United States, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c), any such property, real or personal, which constitutes or is derived from proceeds traceable to such violations. The property subject to forfeiture includes, but is not limited to: , MONEY JUDGMENT A sum of money equal to $27,323,039 in United States currency, representing the amount of proceeds obtained as a result of the offense(s). / 32. Upon conviction of one or more of the offenses alleged in Counts 14 through 42, the Defendant, Kent Duane Anderson, shall forfeit to the United States the following property: 16 Case 4:20-cr-40025-LLP Document 1 Filed 02/04/20 Page 17 of 17 PageID #: 17 a. All right, title, and interest in any and all property involved in each offense in violation of 18, U.S.C. §§ Sections 1956 or 1957, or conspiracy to commit such offense, for which the defendant is convicted, and all property traceable to such property, including the following: 1) all money or other property that was the subject of each transaction, transportation, transmission or transfer in violation of Section 1956 or 1957; 2) all commissions, fees and other property constituting proceeds obtained as a result of those violations; and 3) all property used in any manner or part to commit or to facilitate the commission of those violations. b. A sum of money equal to the total amount of money involved in each offense, or conspiracy to commit such offense, for which the defendant is convicted. 33. If any of the above-described forfeitable property, as a result of any act or omission of the defendant: a. b. c. d. e. cannot be located upon the exercise of due diligence; has been transferred, sold to, or deposited with a third party; has been placed beyond the jurisdiction of the court; has been substantially diminished in value; or has been commingled with other property which cannot be divided without difficulty; it is the intent of the United States, pursuant to 21 U.S.C. § 853(p) as incorporated by 18 U.S.C. § 982(b), to seek forfeiture of any other property of said defendant up to the value of the forfeitable property described above. A TRUE BILL: NAME REDACTED Foreperson RONALD A. PARSONS, JR. United States Attorney 17