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South Dakota Man Sentenced In Grain Blending Scheme With Ties To NW Iowa

Wed 2-3-2021

(Sioux City)-- A former high-level manager of a Sioux Center grain cooperative who directed subordinate employees to blend oats with soybeans has been sentenced to three months in federal prison.

60-year-old Calvin Diehl of Aberdeen, South Dakota, was sentenced Tuesday in U.S. District Court in Sioux City after pleading guilty in June of last year to one count of conspiracy to defraud the United States.

Diehl admitted in court hearings that he orchestrated the fraud that involved blending lower value oats with soybeans and then sold the mixture, claiming it was all soybeans. 

Court documents say that in March, 2017, one of Diehl's subordinates instructed a warehouse manager in Worthing, South Dakota to blend more oats with soybeans. A customer noticed the blended grain and called Diehl's attention to it. Diehl said he would discontinue the practice, but it continued. Diehl also instructed the Boyden, Iowa location manager to dump rejected loads in a bin and send the remainder to a customer who did not monitor its soybean receiving location. 

In late March 2017, shortly after the "slugged" loads incident, the USDA conducted a pre-planned inspection. During that inspection, the cooperative's Sanborn, Iowa location manager called Diehl and stated that he had oats visible because he was mixing oats with soybeans in open view. Diehl instructed the Sanborn location manager to cover up the oats by putting soybeans on top of them to hide the oats from USDA inspectors.

After learning of the conspiracy, the USDA searched the grain bins at the cooperative's various locations in Iowa and South Dakota. Of the estimated 87,996 bushels of grain in the bins at those locations, the bins actually contained only 34,354 bushels of soybeans even though all of the bins had been certified as soybeans.

In addition to the prison time, Diehl was also fined $7,500 and must serve a one year term of supervised release following the prison term.