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Crime

Missouri charmer led double life, masterminded one of the biggest frauds in farm history

 

Like all the best con artists, Randy Constant was a charmer, hard not to like.

Big hearted. Good listener. You’d never have guessed that the father of three, grandfather of five was a liar, cheat and serial philanderer who masterminded one of the biggest and longest-running frauds in the history of American agriculture.

“He was a wonderful person,” an old friend said. “He just had that other side to him.”

And then some.

“What he done shocked me to death,” said Stoutsville, Missouri, farmer John Heinecke, who did business with Constant for years. “I didn’t know he was that kind of corrupt.”

Church-going family man. School board president. Agribusiness entrepreneur. That’s the caring, accomplished Randy Constant people knew in Chillicothe, Missouri, which advertises itself on road signs as the “Home of Sliced Bread.”

Until the full story started to emerge last summer, Constant seemed like one of the best things to come out of Chillicothe since those first pre-cut loaves appeared on store shelves 90 years ago.

On the corner of Washington and Webster streets in Chillicothe, Missouri. Google

He made a good living buying and selling organic grain. He raised tilapia by the ton inside a former Walmart, shipping the farm-raised fish to Whole Foods and hundreds of other supermarkets nationwide.

His reputation earned him prominent mention in Successful Farming magazine’s June 2017 special issue as one of “10 Successful Farmers to Watch” in America.

What the magazine’s editors didn’t know was that Constant was already being closely watched. On a humid Tuesday morning later that same month, a line of black SUVs rolled down Oaklawn Drive and parked outside the four-bedroom, Cape Cod-style house that Constant shared with his wife, Pam.

“We have a search warrant,” agents from the Office of Inspector General at the U.S. Department of Agriculture said as they appeared at the couple’s front door around 9:30.

For five and a half hours, investigators sorted through records from Constant’s business and personal life. There was a lot of material to process because Constant had quite inexplicably become one of the biggest sellers of “certified organic” feed grain in the entire country.

Records showed that in 2016 he sold 7 percent of all the corn labeled organic and 8 percent of all the soybeans carrying that designation. More than $19 million worth that year, $24 million the year before and so on every year before that back to 2010 at least.

It was impossible for him to have done that legitimately. He didn’t have access to enough organic crop acres to supply so many bushels.

“Somebody who was competing with him in the organic market noticed that he was flooding the market with too much grain and at too low of a price for what organic grain should be sold for,” federal prosecutor Anthony Morfitt told The Star.

That’s what got the whole thing started. A tip rather than the government’s flawed oversight program for the organic food industry. For many years, that inspection system had failed to detect Constant’s fraudulent scheme. Now the feds were onto him.

A growing appetite for organic

There was plenty of temptation to cheat. Organic grain costs more to produce per bushel than conventionally grown crops and therefore demands a higher price. After processing, it is fed to cattle and chickens, whose meat is also sold at a premium in stores and restaurants because a growing number of consumers are willing to pay more for protein that comes from animals raised on a natural, organic diet.

There’s no proof that the meat is any better for you, but some people believe it is and others have philosophical or environmental reasons for preferring it.

To earn the National Organic Seal, the plants from which organic grain is harvested cannot have been genetically modified. And they must be grown without help from chemical fertilizers or synthetic weed or bug killers. But for decades the government’s system for ensuring that consumers get what they are paying for has been inadequate.

It largely depends on trusting that organic farmers are honest and that the private inspectors who monitor their operations are thorough in reviewing the paperwork because there is no test to determine whether an ear of field corn, say, is organic or not.

A clever and unethical seller can successfully pass off cheaper conventionally grown grain for the more expensive organic kind and make a huge profit, if they sell a lot of it.

The agents suspected Randy Constant of doing just that.

With the FBI’s assistance, the USDA would go on to prove that Constant was a swindler on a grand scale: More than $140 million in fraudulent sales between 2010 and 2017 for grain that was likely worth half that.

The Star’s subsequent reporting found that, in fact, his scheme stretched back further than that, to 2007 or 2006.

Constant scammed grain buyers, meat producers and millions of American consumers for a decade or more. The organic beef and poultry countless Americans were eating during those years wasn’t organic after all.

It was just like any other meat. All thanks to Randy Constant, who squandered the profits on a fish farm that failed, travel and a secret, double life that was shockingly at odds with his good-guy image in Chillicothe.

As his family members wept during his sentencing hearing for wire fraud in an Iowa courtroom last August, prosecutors disclosed the scandalous ways Constant had spent some of the ill-gotten profits.

Not only did he bankroll extravagant family vacations every summer — counting kids and grandkids, he’d treat a dozen to stays at luxury resorts like Hilton Head, South Carolina — Constant also admitted to using the grain sales money to pay for sex with prostitutes and wagering at casinos.

He took more than 20 trips to Las Vegas, often alone, during the seven-year period covered in his indictment. There he spent hundreds of thousands of dollars in illegal profits on gambling on the Vegas strip, hiring female escorts and providing financial support to three women with whom he had extramarital affairs.

He shared a bank account with one of them, and spent $110,000 on her car payments and other bills, a trip to Spain and surgery to enhance her breasts.

“During a roughly seven-month period in the course of the scheme,” Constant admitted in court records, “another account in my name and under my control incurred more than $250,000 in Las Vegas-related expenses.”

The revelations stunned those who had befriended the onetime high school football star and local Future Farmers of America president. They still find it hard to grasp that someone who once seemed to believe strongly in the value of growing food organically would betray that industry, not to mention business associates, friends and family.

“I knew a different Randy than what I read about in the papers,” said former Missouri organic farmer Maryann Kohl, now retired in Palm Springs, California. “Everything about him seemed good and legitimate.”

Who was Randy Constant? When did he go astray and how did he get away with his scam for so long? The Star spent more than a month finding answers to those questions by reviewing court, business and government records, as well as conducting interviews with regulators, industry officials and those who knew him.

The most intriguing question of all may never be answered. Only Randy Constant knows why he did what he did, but at age 60 he took his own life last August. Three days earlier he’d been sentenced to 10 years in prison after he pleaded guilty to one count of wire fraud. He was ordered to forfeit $128 million, a fine that he almost certainly never would have been able to pay off.

“I know Randy was deeply ashamed of his conduct,” his widow said soon after his passing.

She and other family members were unwilling to discuss with a reporter anything more about the man or his many mistakes.

Despite Constant’s faults, former business partner Glen Borgerding remains sympathetic and remembers him fondly.

“The reaction you get from people after hearing of his suicide is that he deserved what he got,” he said. “But I don’t feel that way. There was a lot of good in Randy and the real tragedy is that he went down this path.”

‘Good boy’ goes bad

While many sellers have been hit with civil penalties for engaging in organic food fraud, only a few bad actors have ever been prosecuted criminally.

One of the first was a Texas farmer sentenced in 2010 to two years in prison for fraudulently mislabeling three kinds of beans and millions of pounds of milo as organic. The next year, two California fertilizer suppliers and an Oregon grain farmer got prison time for falsely claiming their products were organic.

And more recently, Bernard Saul of Bliss, Idaho, was sentenced in 2016 to three years in federal custody and three years probation for selling far more “organic” alfalfa seed than his organic farm could have produced.

But these cases were small potatoes compared to Constant’s scheme, the disclosure of which stunned the organic food industry both for its scale and how it exposed the shortcomings in the government’s organic certification program.

“We have been sitting on a ticking time bomb for years,” Margaret Scoles, the executive director of the International Organic Inspectors Association, said in prepared remarks at an industry conference in October.

“We just didn’t know the name of it — Randy Constant. This is a failure on all of our heads. Our system of managing organic integrity proved inadequate.”

Until Constant’s crime became public knowledge at the end of 2018, greater attention had been focused on illicit foreign shipments of grain from the Black Sea region. Almost nothing was being said about the potential for fraud domestically.

“Which is interesting, isn’t it?” Scoles told The Star. “That we were all looking at the Turkish grain fraud and we were all upset because that horrible imported grain was depressing organic grain prices in this country, and really what was happening was the largest fraud of all was being perpetrated right in the Midwest heartland where everybody’s honest.”

A 90-minute drive northeast of Kansas City, Chillicothe is about the same size today — population 9,500 — as it was when Jack and JoAnn Constant welcomed into the world the third of their four children. Randall Jay Constant was born two weeks before Christmas in 1958.

When he was growing up, Chillicothe was the kind of close-knit, rural community where the local newspaper would print kids’ letters to Santa Claus every Christmas season. Randy’s first appeared in print when he was 7 and then another made the paper two years later, in December 1967.

“Santa, I have tried to be a good boy this year,” the third-grader wrote. “I want a BB gun, a ball, a catcher’s mitt, a bat and a dart game. Please remember my family. Your friend, Randy Constant, Chillicothe, Mo.”

Randy Constant wrote a letter to Santa that appeared in the Chillicothe Constitution-Tribune in 1967.

In the decade that followed, his name would appear dozens of times in the Chillicothe Constitution-Tribune. Most often it was in the high school sports report. At 6 feet, 175 pounds, he was an all-conference defensive end/linebacker his senior year on the football squad, one of two Chillicothe Hornets players selected that spring to play in Missouri’s first-ever Lions All-State Football Game in 1977.

He was a good student and a leader off the field. After attending the Boys State leadership program the summer after his junior year, he finished high school, often wearing his blue jacket as president of the local Future Farmers of America chapter.

Constant went on to study agricultural economics at Mizzou, where he was a member of Beta Theta Pi — motto: “men of principle” — the same fraternity where years earlier Kenneth Lay, founder of Enron Corp., was a member. Constant married his high school sweetheart ahead of graduation in 1981.

Over the next dozen years, they had three kids and Randy’s job assignments for his ag industry employers (Archer Daniels Midlands, then Scoular Grain Co. and Pfister Seeds) had the young family moving from town to town across the Midwest. They never stayed in one place for long, from Decatur, Illinois, to Salina, Kansas, with stops in Nebraska, Iowa and the Kansas City suburbs.

According to his obituary, “the family returned to Chillicothe in 1994 when Randy became an organic farmer…”

Growing food organically was a tiny, but fast-growing industry back then, and there was a lot of confusion over terminology. Definitions differed over what constituted “organic’’ when producing fruits, vegetables, meat, grains and the products made from them.

In 1990, Congress sought to establish clarity with the passage of the Organic Foods Production Act. It called for the USDA to define the term and lay out regulations. It took more than a decade to accomplish that, with the final rule published in the Federal Register on Dec, 21, 2000.

That was around the time Glen Borgerding met Constant. Borgerding was a crop consultant from Minnesota who specialized in organic farming methods. Constant was farming some on his own and was the farm manager for an organic soybean brokerage company that was selling soybeans to the Japanese.

“They had hired Randy to run their Missouri operations,’’ said Borgerding, who the company brought on as a consultant.

When Borgerding’s contract with the firm ended a year later, he suggested to Constant that they go into business together and Organic Land Management LLC was born in January of 2001.

“We clicked really well,” Borgerding said. “We both had skill sets that really complimented each other.”

Borgerding’s role was as the strategic thinker, focusing on soil fertility management and doing the paperwork necessary to maintain their croplands’ organic certification. Constant was out in the fields taking care of day-to-day management of the acres they owned or rented in Missouri, Iowa and Nebraska, while Borgerding oversaw operations in Minnesota and North Dakota.

Things went well those first five years, but then trouble came out of nowhere.

“We doubled our net worth every year until 2006, when we suddenly had a flat year,” Borgerding said. “This led to our operating-loan lender pulling out on us at the last minute, which left us pretty financially desperate for the 2007 crop year.”

He couldn’t figure it out. The yield estimates had been good throughout the growing season. The weather cooperated for the most part.

But without access to adequate credit, the joint operation couldn’t survive, and so they split up.

It wasn’t until several months after they parted that Borgerding’s suspicions were raised when he got a phone call from a customer who he wasn’t aware of ever doing business with. The man wanted to finish up some paperwork business with Constant.

That’s when Borgerding began to think that the down year in 2006 had nothing to do with poor yields. Rather he suspected that Constant was diverting Organic Land Management grain through a different company that Constant had formed without his knowledge.

“My gut feeling was that through OLM we were only tracking about one third of what he was actually selling as organic in 2006,” Borgerding said.

Years later he was stunned when he read about Constant’s long-running con and sordid double life in Vegas.

“When I heard that, I thought to myself, ‘damn, Randy,’ ” Borgerding said. “That would have been a helluva ride.”

He seemed honest

Maryann Kohl met Constant in the 1990s, when both were active in the Missouri Organic Association, which promoted the value of growing crops organically.

“He was a very outgoing and well-spoken person,” she said. “Anything he could do to help another person with what they were working on, he would do.”

Her family’s farm was near Vandalia, about 150 miles east of Chillicothe. They had become acquainted at association events, but a friendship grew when they, along with Constant’s youngest daughter and two other farmers, visited the United Kingdom in 2004 on a trade mission sponsored by the Missouri Department of Agriculture.

“He was fun and very much a gentleman,” Kohl said. He seemed devoted to his family and appeared to believe in the value of growing food organically.

She had no reason to doubt back then that he was complying with all the rules that a farmer must follow to maintain organic certification for his crops.

Organic farmers must hire private companies approved by the government to cross-check their books and inspect their farms annually. A few years after that trip to England, Kohl worked for Constant’s certifier, industry-leader Quality Assurance International, and by chance was chosen to inspect his operation, she said.

“I was there to make sure he was doing everything right, and as far as I could tell, he certainly was,” she said. “If he was hiding something, he was hiding it very well.”

But there are ways to cheat, such as keeping a second set of books. Tests for chemical residues were not mandatory at the time and are even now sporadic.

Was Randy Constant cheating even back then, when they drove hundreds of miles to inspect the certified organic farm ground he owned and rented in Missouri, Iowa and Colorado?

Kohl can’t help but wonder, but if so she chalks it up to his cleverness, rather than anything she did wrong.

“I wasn’t lenient on Randy because I knew him.”

She can’t be sure, but believes the year was either 2007 or 2008.

But it was around that time, in Nevada, that questions first arose about Constant’s business ethics.

Early sign of trouble

An article in the June 2007 issue of an obscure publication, The Organic and Non-GMO Report, focused on the mystery surrounding a railcar full of organic soybeans.

Constant had sold the beans to Nevada Soy Product, which turned them into soybean oil. One of Nevada Soy’s customers canceled the sale after their tests showed the soybeans had come from genetically modified plants. While there is no test to determine whether a plant was grown organically, it can be determined in a lab whether that plant’s genes have been tinkered with.

When Nevada Soy co-owner Bob Rewinkle double checked the grain samples, “sure enough it was positive,” he told The Star last month.

According to the 2007 article, one of the scientists who tested the beans said there were only two explanations. Either there was an unintentional mixup, “or someone is trying to make money quick” by mixing genetically modified soybeans with the organic variety.

Constant denied wrongdoing, but Rewinkle wanted answers. The spoiled shipment was a $100,000 hit to his bottom line.

“As soon as that happened, I went into our certifiers, which at the time happened to be the state of Nevada, and told them what had happened, and they started an investigation,” Rewinkle said.

But nothing came of it. He never heard a thing from the USDA, and a spokeswoman at the Nevada Department of Agriculture told The Star that the agency has no record of what happened. The USDA would not speak specifically to this case, but said it had more funding now to investigate complaints than it did back then.

Rewinkle is still disgusted with the lack of followup by the USDA.

“If you’re the big overseer of the organic program, why don’t you do your job?” he said of the USDA. He then told The Star’s reporter, “You’re the first person that ever contacted me about this.”

Rewinkle wasn’t the only one finding fault with the federal National Organic Program during that time for failing to uphold the integrity of the organic food certification system.

The USDA’s Office of Inspector General issued a searing 2010 audit faulting the organic program’s oversight efforts. Complaints were rarely followed up on, and when they were it sometimes took years to resolve them.

The inspection system was also inadequate, the report said. Twenty years after Congress had required that crops be tested periodically for traces of chemical residues, no strict regulations to that effect were on the books.

Out of four certifying agents the OIG reviewed, none was conducting tests on the 5,000 organic farms and other operations they were responsible for.

It was in this environment that Randy Constant thrived.

“I think he figured out that, there’s just no checks and balances to determine really whether or not a No. 2 corn was actually raised organically or not,” said Clarence Mock, a Nebraska defense attorney who represented one of Constant’s co-conspirators in the criminal case.

“They can test for GMO (genetically modified organisms) … but corn that’s not GMO, you can’t tell whether it’s been sprayed or not sprayed.”

Technically, you can, but you’re not likely to get a positive result unless the inspector hits it just right and collects a plant sample before the residues wash away.

The inspectors never hit it just right when it came to Randy Constant. And he learned from that close call with that 2007 shipment to never try passing off genetically modified grain as organic again.

Missouri allegations

During the first two thirds of the past decade, Constant sold more than 11.5 million bushels of non-GMO corn and soybeans, and almost all of it was falsely labeled as organic.

It was the paperwork, not the government’s inspection system, that finally tripped him up.

From the documents they seized, the feds were able to analyze the full scope of his operation. At a minimum, he conspired with three Nebraska farmers and one in Missouri to commingle large shipments of conventionally grown grain with the organic kind and get a higher price for all of it. The four co-conspirators all pleaded guilty to their roles and were sent to prison.

The criminal cases against Constant and those four farmers centered mostly on those transactions.

But the extent of his illegal dealings were larger than that, The Star learned from searching Missouri court records. In one lawsuit, he admitted through an attorney that he also bought millions of dollars worth of non-GMO corn from another Missouri farmer and resold it as organic. Those sales were not part of the criminal case.

John Heinecke was one of his bigger suppliers of corn and soybeans, going back to 2004. Last March, while Constant was awaiting sentencing, a judge ordered him to pay Heinecke $2.5 million that he owed him for grain.

The judge overlooked arguments from Constant’s Kansas City-area attorney that Heinecke shouldn’t be paid because he was allegedly another one of Constant’s accomplices.

In a court filing, attorney Kent Dryer said Heinecke knew what Constant was up to and did more than turn a blind eye.

“The Constant defendants will seek to prove at trial,” the court record said, “that Mr. Heinecke was well aware that the corn he was selling to Mr. Constant was being resold as organic when it was in fact not organic and that Mr. Heinecke was receiving a split — a split that he bargained hard to get — of Mr. Constant’s illegal profits.”

The case never went to trial. In an interview, Heinecke said federal agents subpoenaed his business records but he has not been charged with a crime. He denied any prior knowledge of Constant’s scheme.

“They pointed fingers at me,” he said, “but I’ve done everything by law. I didn’t do anything illegal because it (the grain sales) didn’t have nothing to do with organic stuff.”

Heinecke still hasn’t been paid and could use the money Constant owed him, he said, because he is going through a bankruptcy. Among Heinecke’s creditors are farmers that he bought grain from and resold to Constant.

But like many who Constant owed money to when his scheme collapsed, Heinecke won’t likely be made whole.

Creditors big and small will have to write off the debts, including those who supplied his aptly named aquaculture operation, Quixotic Farming LLC, which Constant called “a spectacular failure” that lost “many millions of dollars.”

There are simply no assets left to go after.

“I don’t know if these folks will ever get any money,” said Troy Dietrich, an attorney for an Arkansas farming operation that has an outstanding judgment totaling $1,025,768 against Constant and entities he controlled.

Are reforms enough?

Constant’s life ended four months shy of his 61st birthday at the duplex he’d rented for himself and his wife on the edge of Chillicothe.

They had sold the Cape Cod to pay bills. While awaiting sentencing, he had earned a living working on a disaster relief crew that took him out of state a lot. Last summer, she had felt fortunate to get her old teaching job back.

The new school term had begun that Monday. Randy was home by himself. Constant’s 93-year-old neighbor in the adjoining unit believes he waited until she was away before he pulled his pickup into the side-by-side garage, closed the door behind him and left the engine running.

The neighbor said the carbon monoxide detector in her basement was beeping when she got home later that afternoon.

“A sad situation, sad, sad, sad,” said the woman, who did not want her name published.

Three days earlier, a federal judge had handed him a stiff sentence, ignoring 70 letters from Chillicothe residents attesting to his character and the many good deeds he’d done for his church and community.

“We loved him,” one close friend told The Star last week. “He was a great guy, down to earth.”

Constant’s defense attorney had argued that no one was harmed by the fraudulent sales of $142 million worth of fake organic grain, as did Mock, who represented one of the Nebraska co-conspirators.

“One of the ironic aspects of all this is that nobody really lost any money,” Mock told The Star. “They turned around and sold their product, right?”

The grain buyers lost nothing. They got paid by the feed mills. The feed mills got theirs when the farmers bought the product. The farmers got their share from the distributors, who did business with the supermarkets and restaurants.

As for the shoppers who bought organic meat and poultry that wasn’t technically organic, it’s not like their health was harmed in any way, Mock said. They enjoyed their meals, even if they paid more than they should have for them.

He said there’s no way to tell whether a cow or chicken was fed organic grain or the regular kind.

“I mean, how do you know? Is it somewhere in their tissue, in their bloodstream?”

Judge C.J. Williams in Cedar Rapids did not agree that Constant committed a victimless crime. In sentencing him to a decade of imprisonment, Williams said Constant caused “incalculable damage” to consumers and the organic food industry.

Those who make their living farming organically say it’s important that consumers be confident that they are getting what they pay for when they buy certified organic food.

Government prosecutors said Constant’s case was meant to reassure the public and the organic food industry that fraud of this type will not be tolerated. New steps are being taken to root out corruption.

“They have tightened down even more and stepped up their inspection and audit procedures to prevent that from happening again,” said Derek Davis, president of the Missouri-based Mid-America Organic Association.

The organic certifier service that put its stamp of approval on Constant’s operation for more than a decade, Quality Assurance International, told The Star its inspectors were tripped up by Constant’s “highly-organized and sophisticated enterprise.”

Constant, said Sarah Krol at QAI’s parent company, NSF International, “went to great lengths to deceive certifiers, regulators and ultimately consumers.”

But neither she, nor government prosecutors nor the USDA will specify what those great lengths entailed. Some of the reforms that will make up a new, proposed regulation currently under review by the Office of Management and Budget provide some clues.

The rules include requiring more testing for residues, said Jennifer Tucker, deputy administrator of the federal Agricultural Marketing Service, which runs the National Organic Program.

In an interview, she said the proposed set of rules is based on a risk-based enforcement approach that will allow inspectors to focus the most attention on farms and businesses where the greatest potential for fraud exists.

“In order to really catch these bad guys, you have to understand the complete supply chain,” she said. Greater cooperation and pooled sales data will help accomplish that, she believes.

“I think we’ve seen a profound cultural shift where instead of just confirming compliance, people are really finding the fraudsters and they’re doing it through tools like trace back and information sharing during investigations,” she said.

People associated with the organic industry hope she’s right. But between the documented instances in recent years of whole shiploads of phony organic grain being unloaded at American ports and the Randy Constant scandal, there’s understandable skepticism.

The organic food business is now a $50 billion industry within the United States, more than double its size a decade ago, and it continues to grow. When there’s that much money at stake, people are sometimes willing to take a risk that they, too, can beat the system. At least for awhile.

One of Constant’s competitors, grain broker Matt Keegan at CapRock Grain, is thankful the scandal helped spur some reforms.

“Certifiers have gotten more stringent,” he said. “I think there’s movement to help resolve some of this.’’

But he’s not one who believes there aren’t other Randy Constants out there who still pose a threat to the industry.

“I’m convinced that the activity is still going on,” he said. “We need all these bad actors to get out of the marketplace.”

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