USDA penalizes Barnesville Livestock Auction; closed for three sales

BARNESVILLE, Ohio — The Barnesville Livestock Auction will be closed for three weeks — March 17, March 24 and March 31 — to fulfill a court order by the USDA’s Packers and Stockyards Program.

Money problems

A complaint was filed by the USDA’s Packers and Stockyards Program against Barnesville Livestock in 2009, after finding problems with the account set up to hold buyers’ funds for payment to consignors, resulting in numerous checks being returned for non-sufficient funds.

However, auction owner Darryl Watson said it is a case of some buyers not paying for their livestock, leaving him to pay the sellers.

“The United States government came after me and not the guy who did the wrong,” said Watson. “I didn’t know I had to be a millionaire to operate a business.”

Original complaint

The original complaint filed alleged that Barnesville Livestock LLC violated the Packers and Stockyards Act of 1921 by failing to maintain a custodial account.

Watson admits that the custodial account was in the negative.

“I was fined and penalized because I wasn’t a millionaire to pay for those cattle,” he said.

The custodial account is a trust account that protects funds that are owed to livestock producers and owners who consign livestock for sale at an auction market.

The Packers and Stockyards Program notified Barnesville Livestock, and Watson, of New Concord, Ohio, that operating the auction market with a custodial account shortage is unfair practice and it violates the act. However, Watson continued to operate the auction with the custodial account shortage, and by December, 2008, the account was short $266,748.

From Sept. 12, 2008, through Aug. 15, 2009, according to the complaint filed by the USDA, more than 350 checks bounced to consignors.

Reassurance

Watson admits the bad check issues began in 2008, but says now all those issues have been taken care of.

“Those checks were all taken care of and I also paid the bank fees for many,” said Watson.

Watson is blaming one buyer in particular.

He claims a buyer from Missouri purchased 200 head of cattle valued at more than $100,000 over a few weeks in September and October 2008, but that buyer didn’t have the funds to cover the checks.

Court records

According to Muskingum County Court records, the Barnesville Livestock Auction did file a lawsuit against Donald K. Garrett, 57, of New Town, Mo., in 2010. He is also found to own a farm in Knox County, Ohio, which has been foreclosed.

The lawsuit filed by Barnesville Livestock Auction sought $234,000, but lawyers settled for $100,000 in 2010.

According to court records, Garrett has so far paid $7,000 of that total, but has fallen behind on payments.

Garrett was arrested in February 2012 in a similar incident at the Perkins Livestock Sales in Oklahoma.

Moving on

Watson said he feels he has eliminated the problems and is working toward making Barnesville Livestock a successful livestock auction again.

“We fought hard and we fought long, but we’re back. I think we are stronger than we have ever been,” he said.

Learning experience. He admits the ordeal has been a learning experience.

“It’s made me grow up. You can’t trust anyone,” said Watson. “You don’t try and deal with these type of people, you go after them.”

Watson said the large buyers and sellers at the Barnesville Livestock Auction are licensed and bonded, which should stop this type of thing from happening again.

“It helps protect me,” said Watson.

He added it also ensures that the livestock auction barn remains a fair market for large buyers and local farmers just trying to get a fair price and get paid for the goods.

“People think I’m the bank. I’ve eliminated the slow-paying buyers and the people that have bought and then refused to pay. We are now working with a great clientele and we are doing everything we can so that this never happens again,” Watson said.

Business practices

Watson added that he has changed his business practices and is more cautious about who writes a check to the business. One of the changes made is that anyone who writes a check is required to show a driver’s license and a Social Security number. A copy of this is made at the sale to keep on record in case the check is not good.

Watson said he feels that by the court ordering the close of the auction for three weeks, they are hurting his employees and not the guy responsible for the mess.

However, he is hopeful that once the auction obeys the court order, the auction will move on and be successful.

About the Author

Kristy Foster Seachrist lives in Columbiana County raising sheep and horses. She earned her degree from Youngstown State University and has worked in both print and broadcast journalism. You can follow her on Twitter at http://twitter.com/fosterk96. More Stories by Kristy Foster Seachrist

6 Comments

  1. Kim says:

    http://www.facebook.com/pages/Barnesville-Livestock/118637284827044

    Please go to FB for the latest updates on Barnesville Livestock. We are family owned and operated business. We would love to hear from our supporters. Thank you for your kindness and generosity as we work through this last bump in the road.

  2. okiestorm1 says:

    i have had nothing but GOOD results from this auction,,it seems they have goten things taken cared of. this is a very good place to sell and buy animals,,family oriented,nice people and i for one trust them.

  3. exchanter says:

    It is a shame that the government goes after the good guy in this story. I knew the guy from Missouri that caused all of this to happen and he has hurt many livestock producers. The Watson Family have done everything that they can do to prevent this from happening again, but sadly there will be another Garrett trying to make a fast buck. Barnesville Livestock is needed in southeastern Ohio, it’s our turn to help the Watson Family make it in belmont County!

  4. Tom T says:

    It is a shame that the Grain Inspection Packers and Stockyards Administration (GIPSA) has been so neutered that they have to go after the small players in this manner while the big fish swim safely. Custodial Accounts have been a big problem in the past but in this case GIPSA should help small barns in how to avoid that problem with their customer checks clearing than regulatory punishment. Leave that for the big fish. It will never happen as the big fish have the elite paid off to leave them alone.

    If the only deceptive practice GIPSA can enforce is custodial account problems then on the little players then the this regulatory agency will not live up to the law it is supposed to be enforcing so families are treated fairly in the market place.

    What a shame, elite politicians, for castrating an agency such as GIPSA to be another non effective government bureaucracy. It is just another fake for the public’s eye while the larger economic issues of market power abuse go unchallenged.

    I guess we have the best Congress money for selling out yet another government agency.

    Tom T.

  5. Brian W says:

    Southeast Ohio is very lucky to have the Watson Family running Barnesville Livestock. There have been many improvements to the sale since they took over and it is a quality operation. It is a tremendous asset for the majority of area farmers that work off farm jobs to be able to market livestock locally, and on a Saturday, close to home. The Watsons are honest hardworking people who have provided a community service for not just Barnseville, but the surrounding counties. I look forward to the sale re-opening April 7. I wish the best of luck to B.L.

  6. Barn Owner says:

    I am sorry but none of you know what you are talking about. We have gone through the same problem and the Packers and Stockyards act is there to protect the customers. If you don’t know how to manage your accounts properly they should fine you and you never allow people that are not bonded and have not paid for the animals to take the animals from place. Use your common sense, especially when its several hundred thousand dollars and your butt on the line. You know the laws, follow them.

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