WASHINGTON, June 15, 2021 – The U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) issued an administrative complaint on May 4, 2021, against Barnesville Livestock LLC (Barnesville) and Darryl Watson (Watson) of Ohio, for alleged violations of the Packers and Stockyards (P&S) Act.
An investigation by USDA’s Agricultural Marketing Service (AMS) revealed that from Dec. 31, 2018, through Dec. 31, 2019, Watson failed to properly maintain his custodial account, resulting in custodial shortages of $49,059 and $123,571 on July 31 and Nov. 29, 2019. A second analysis as of Dec. 31, 2019, disclosed a custodial account shortage of $54,519.
A custodial account is a trust account designated for shippers’ proceeds from the sale of livestock in trust for sellers. The custodial account shortages were due, in part, to Watson’s misuse of custodial account funds by failing to deposit funds equal to the proceeds received from livestock sales.
The investigation also found that Watson was operating while insolvent. Under the P&S Act, the principal test of insolvency is whether a person’s current liabilities exceed their current assets. Barnesville self-reported a $15,711 insolvency in its Dec. 31, 2018, Annual Report submission to AMS.
Operating with custodial account shortages and operating while insolvent are violations of the P&S Act. These practices place livestock sellers at risk of not being paid fully or promptly. 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, Barnesville 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 (202) 720-7051, or by email at Stuart.Frank@usda.gov.
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