WASHINGTON, Dec. 17, 2020 –The U.S. Department of Agriculture (USDA) entered into a stipulation agreement with Knoxville Livestock Auction Center Inc. (Knoxville) of Mascot, Tenn., on Dec. 1, 2020, for violations of the Packers and Stockyards (P&S) Act. Under the terms of the stipulation agreement, Knoxville waived its rights to a hearing and paid a penalty of $2,000.
An investigation by USDA’s Agricultural Marketing Service (AMS) revealed that Knoxville failed to maintain its custodial account, resulting in custodial shortages of $27,611on Jan. 29, 2020, and $6,638 on through Feb. 7, 2020. The custodial account shortages were partly due to Knoxville failing to reimburse the custodial account for related entity purchases and uncollected receivables.
A custodial account is a trust account designated for shippers’ proceeds from the sale of livestock in trust for sellers. Operating with custodial account shortages is a violation of the P&S Act and places livestock sellers at risk of not being paid timely or at all.
The P&S Act authorizes the Secretary of Agriculture to assess civil penalties up to $28,061 per violation against any person after the notice and opportunity for hearing on the record. USDA may offer alleged violators the option of waiving their right to a hearing and enter into a stipulation agreement to resolve alleged violations quickly.
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 Jeana Harbison, Packers and Stockyards Division, at (202) 720-7051, or by email at Jeana.M.Harbison@usda.gov.
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