BARNESVILLE, Ohio — A complaint has been filed by the USDA’s Packers and Stockyards Program against Barnesville Livestock, after finding problems with the account set up to hold buyers’ funds for payment to consignors, resulting in numerous checks being returned for nonsufficient funds.
However, auction owner Darryl Watson said it is a case of some buyers not paying for their livestock, leaving him to pay the buyers.
The complaint, filed in December, 2009, alleges that Barnesville Livestock LLC violated the Packers and Stockyards Act of 1921 by failing to maintain a custodial account.
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.
A note on the complaint states that the Packers and Stockyards Program has no information about the current status of some of the checks.
A court date to hear the case has not been set yet.
However, Watson says all of the consignors have been paid, whether it was by a cashier’s check, another company check or cash.
“Everybody has been paid for their livestock. I’ve driven all over this state and West Virginia to pay them for their livestock,” Watson said.
He said the negative balance in the custodial account started because people owed him for livestock bought and then refused to pay for it.
Watson said the shortage began in the fall of 2008. Records show the shortfall began Sept. 13, 2008.
“Some people have bought livestock out of my facilities and have never paid for it,” Watson said.
Watson said he sold his home to help replenish the account and has sold some of the cattle his family owns to pay consignors for their livestock.
However, Watson said he feels he has eliminated the problems and is working toward making Barnesville Livestock a success again.
“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.
He admitted there were one or two issues in January 2010 but those individuals have also been paid.
“Whatever it took for a customer to be satisfied, I’ve done,” Watson said.
He added the Barnesville Livestock auction continues in operation.
In 2000, the previous owner of the Barnesville Livestock auction, Gary W. Fogle, was found to have also found to have come up short in the custodial account.
Fogle was suspended as a registered auction under the Packers and Stockyards Act for 49 days or until the custodial account shortage and insolvency were eliminated.
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