Release No.: 068-19
WASHINGTON, June 12, 2019 – As part of its commitment to ensuring fair and competitive markets for the livestock, meat and poultry industries, on May 14, 2019, the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) issued an administrative complaint against Sugarcreek Livestock Auction Inc. (Sugarcreek) of Sugarcreek, Ohio and Leroy H. Baker, Jr. (Baker) of Ohio for alleged violations of the Packers and Stockyards (P&S) Act.
An investigation by AMS revealed Sugarcreek and Baker failed to properly use and maintain its custodial account, endangering the faithful and prompt accounting of shippers’ proceeds and payments due the owners or consignors of livestock. AMS’ investigation revealed custodial shortages of $116,392 on March 31, 2018, and $64,679 on April 30, 2018. The shortages in Sugarcreek’s custodial account were due, in part, to a failure to timely reimburse the account for purchases made by Sugarcreek and other buyers.
A custodial account is a trust account that is a separate bank account designated for shippers’ proceeds. Operating with shortages in the custodial account, and misusing the custodial account, are violations of the P&S Act placing livestock sellers at risk of not being paid timely or at all.
Additionally, by issuing six insufficient funds checks, Sugarcreek and Baker also failed to pay, when due, the full purchase price for livestock dealer purchases totaling $627,306. The P&S Act requires subject firms to issue payment for livestock by the close of the first business day following purchase and transfer of possession. Any attempt to delay payment is an unfair practice under the P&S Act placing livestock sellers at risk of not receiving payment.
Sugarcreek and Baker also engaged in dealer and market agency transactions on a commission basis while their current liabilities exceeded their current assets. During the period from March 31, 2018, through April 30, 2018, Sugarcreek and Baker operated while insolvent in the approximate amounts of $91,372 and $166,065, respectively. Operating while financially insolvent is a violation of the P&S Act.
Sugarcreek and Baker will have until July 15, 2019, to respond directly to the USDA Administrative Law Judge or be found in violation and subject to penalty.
The P&S Act authorizes the Secretary of Agriculture to assess civil penalties up to $28,061 per violation against any person after notice and opportunity for hearing on the record. If the allegations are admitted, or proven in an oral hearing, Sugarcreek and Baker may be ordered to cease and desist from violating the (P&S) Act and assessed a civil penalty.
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 Stuart Frank, Packers and Stockyards Division, at (515) 323-2586, or by email at firstname.lastname@example.org.
USDA is an equal opportunity provider, employer, and lender
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