PSC, Alvo grain customers reaching painful conclusions
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BY ART HOVEY / Lincoln Journal Star
WEEPING WATER — There may have been an element of dark humor to circumstances in which Alvo Grain filed for bankruptcy in April and one of its concrete silos fell down in June.
But nobody was laughing Wednesday as officials from the American Exchange Bank of Elmwood, Ashland farmer Jerry
Newsham and others described millions of dollars in claims against the beleaguered grain business.
What it means: When all claims are finalized, the PSC will decide how to distribute payments from the liquidation of grain inventory at Alvo and at a branch office in Ashland.
What’s next: Claimants have until July 7 to step forward with more information relevant to their claims. PSC Commissioner Gerry Vap of McCook said he and his peers are also planning to approach the Legislature about setting higher debt-protection standards for elevators to reflect rapidly rising grain prices.
The bank has a $3.6 million stake in the eventual outcome of a three-hour hearing presided over by the Nebraska Public Service Commission at the Cass County Fairgrounds. Newsham said he and his daughter haven’t been paid for about $650,000 of corn and soybeans.
The emotional grain producer arose from the audience during a closing question-and-answer session to note the apparent large discrepancies between what Alvo Grain President Gordon Ganz said he had on hand and the amount of bushels actually in the company’s bins in Alvo and in nearby Ashland.
“You would have thought somebody would let somebody know that things weren’t good,” Newsham said. “We had no idea things were this bad.”
Now, the most he can expect is to share in the disbursement of a $300,000 bond to about 50 unpaid customers.
They’re the ones who were directed by the elevator management to take grain under contract to Alvo Grain directly from their own storage to a feedlot, an ethanol plant or some other end user in the months prior to the abrupt surrender of its grain license.
“That’s worth 10 or 12 or 15 years of work. You can’t retire,” Newsham said, “when you don’t have any g--damn money.”
The outlook may be somewhat better for farmers who owned grain being stored at the elevator. There are about 40 potential claimants in that category, and the sale of the corn and soybeans after the PSC assumed ownership could add up to about $2 million.
PSC officials, who monitor for disparity between assets and liabilities, were apparently also caught by surprise.
Alvo Grain succumbed at a time when cash flows of elevators across the state were being strained by grain prices approaching or exceeding historic highs.
Despite a continuing trend toward higher prices, there have yet to be any other sudden meltdowns. That still leaves plenty of pain to go around from what happened 20 miles east of Lincoln.
Ganz, accompanied to the hearing by Lincoln attorney Jocelyn Golden, denied he done anything dishonest. But that was clearly not meant to suggest he denied any responsibility.
“The people I owe were all my friends and neighbors growing up,” he said, “and I am terribly, terribly sorry.”
John Fecht, head of the PSC’s grain warehousing division, said no one from customer ranks stepped forward beforehand either to suggest problems in getting paid or to allude to anything that might have been beyond sloppy records.
“To be able to say that we can stop these things and prevent them from happening — it just doesn’t happen,” Fecht said.
Springfield grain customer Marvin Ostransky alluded to only about 1,000 bushels of corn as he aired his concerns with the five PSC commissioners and their staff.
During a break in the hearing, Ostransky said he’s actually at risk for many more bushels than that.
But he’s hopeful he’ll get most of his money because he sees the storage payments he’s been getting as proof of ownership.
“My understanding of the law is that the bank can’t own my grain.”
Ostransky is also convinced that any mistakes Ganz made, based on his years of experience as an Alvo Grain customer, were innocent ones. He said he’s never had problems there before.
However, banking brothers Richard and Robert Clements also believe they have a solid ownership claim, because the grain was offered as collateral against money they loaned to Ganz.
No matter how things shake out, Robert Clements said as he headed for the exit, “we really do regret the loss.”
Lincoln attorney Jenny Tricker, who represented Alvo claimant Billy Schuelke at the hearing, questioned Ganz during his testimony, suggesting several times that he had misrepresented his accounting position.
Asked for clarification later, Tricker stopped short of suggesting that was done on purpose.
“It’s our contention that Mr. Ganz was not always accurate in his representations.”
In fact, Fecht said bookkeeping standards had slipped so far over a period of several years that “it got to a point where we said, ‘If you don’t get it right, the next time you’ll lose your license.’”
Reach Art Hovey at 473-7223 or ahovey@journalstar.com
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