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.
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.”
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.
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.
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.
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.
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.