Whitgro grain theft trial begins

A superior court jury Monday and Tuesday listened to testimony on harvest practices and grain storage shortages as Whitman County Prosector Denis Tracy called witnesses to present the state’s grain rustling case against James Hughes, Endicott trucking contractor and farmer. Hughes has been charged with 19 counts of theft invovling truckloads of grain which the state contends he took from grain elevators in the Whitgro system, the four-year-old cooperative which was formed by the merger of Wheatgrowers of Endicott and St. John Grain Growers.

In his opening statement Monday after the jury was selected, the prosecutor explained the state’s case against Hughes actually involved allegations that 164 loads of grain were hauled by Hughes from the Whitgro storage system to Snake River terminals at Almota and Central Ferry and sold by Hughes in his own name.

Tracy told the jury he trimmed the case to 19 charges to reduce the amount of evidence and testimony which would have to be presented during trial.

Steven Graham of Republic, who is defending Hughes, told the jury in his opening statement that Whitgro was making the charges against Hughes to cover up what the defense contends was mismanagement in the Whitgro system. He told the jury Hughes was being used as a scapegoat.

Tuesday afternoon, Tim Siler, general manager of Whitgro, testified how he began to realize the company was losing large amounts of grain. Under questioning by Tracy, Siler said he became suspicious when he received a report that the company’s teepee grain storage site at Winona was essentially empty before the start of the 2011 harvest season. He said the empty status of the Winona facility, one of nine places in the Whitgro operation which receives grain from farmers, conflicted with what should have been in the elevator according to the company’s records of loads which went in the teepee tanks and a smaller conventional storage tank at the site.

Siler said much of the hauling work done by Hughes, who was a member of Whitgro, was to shuttle grain from the teepee site at Winona to Endicott where it could be loaded on 25-car unit trains for shipping. He said the teepee storage site, one of two in Winona, lacked railroad loadout facilities. Hughes also made hauls from other parts of the system to the rail loadout sites, he added.

Siler said the cooperative generally ships out 85 percent of their grain by rail and 15 percent by truck to river terminals. He added the truck loading facilities at the teepee site, which was projected on a screen before the jury, could be loaded in a matter of five minutes.

Hughes was allowed a key and could load grain at Winona on his own. Tracy asked Siler why Hughes was allowed keys to the facility and allowed to load trucks on his own.

“I ask myself that a lot here in the last number of months,” Siler said. “I trusted him.”

He later testified about a September 2011 meeting when Hughes was asked about the management’s discovery of the loss of grain. Siler said at that time the company had become aware of grain loads which were hauled by Hughes to the Almota Elevator Company terminal on the river. David Hamilton, president of the Whitgro board of directors, Undersheriff Ron Rockness and Colfax accountant Jon Webber were also present at the session.

Siler said Hughes at that time explained the grain loads which were hauled to Almota and delivered in his name were from home storage at his Endicott family farm.

Hamilton, who farms in the St. John area, was the first witness called by the state. He testified on the Whitgro operation and the various methods farmers, landlords and family members use when they deliver grain and decide how to receive payment.

Tracy in his opening statement said after the meeting in September of 2011, Whitgro officials became aware that Hughes had also hauled a much larger number of loads to the Columbia Grain terminal at Central Ferry. That total was 141 loads the prosecutor contended.

Tracy began his statement to the jury by describing one haul, Sept. 23, 2009, when Hughes took grain to Columbia and received $4,961 in eventual payment.

Whitgro hauls all its river loads to the Central Ferry Terminal Association which is located next to Columbia Grain on the north side of the river at the Central Ferry Port, Siler testified.

Siler near the end of his testimony detailed how the company took a series of write downs in May of last year and ending in June of this year. The total was 175,000 bushels.

An indication of the case for the defense surfaced when Graham cross examined Siler Tuesday afternoon.

“This whole thing is to cover up for your mismanagement. Isn’t that true?” Graham asked the general manager.

“I don’t think so,” Siler responded.

Graham also asked Siler about his salary and the relative cut in bonus pay for the last year.

“How come your bonus was small this year?” Graham asked.

“It’s because we had a lot of wheat stolen,” Siler responded, noting that the bonus pay was linked to company profits.

Graham also asked if Siler recalled a series of findings when state audits determined stocks in the bins were over or under what was showing on the company books. Siler in most cases said he did not recall the specific instances. He did recall a wheat shipping mistake last year in which the cooperative was ordered to pay a $600 fine for being “out of position” on its stock of red wheat.

Graham also questioned Siler about his contention that drinking was involved in the Whitgro operation.

Siler answered that consumption of alcohol is banned during work hours and that he personally followed that policy.

When asked by Graham, he denied supplying beer to crew members and said if staffers at the elevators were in possession of beer they might have received it as gifts from the farmers.

Tracy in rebuttal testimony with Siler determined the industry standard for shrinkage, the loss of grain stock normally sustained, was .25 percent. Siler added the state regulators normally don’t require grain companies to take a loss until the shrinkage gets in the one percent to 1.5 percent range.

The prosecutor last Tuesday also called David McTaggart of Spokane who described how the USDA warehouse audit crews measure the amount of grain in a bin. McTaggart said the inspectors make their determination by measuring the space created as the wheat stocks drop in an elevator.

The determination of what is in the elevator is compared to an examination of bills of lading and other records of what was loaded into it, McTaggart explained to the jury. He also noted the teepee facility at Winona, which has eight foot sidewalls and then a conical shape, was very difficult to measure because of its unique configuration.

McTaggart testified a one-foot miscalculation of the space inside of a storage tank can throw the determination of contents off by several thousand bushels, depending on the size of the tank.

He said the measurements for Whitgro for the past year were pushing a shortage of 200,000 bushels. He termed it a “disappearance for undetermined causes.”

Other witnesses called at the start of the state’s case included staff members from Almota and Columbia who detailed forms used for receiving grain and making payments. Enlargements of forms said to be deliveries by Hughes were projected on a screen in front of the jury.

Notebooks of the company records, which were obtained through the results of warrants issued by the sheriff’s office, were submitted as evidence.

A Missoula crop insurance agent was called to certify records for the Hughes family farm. In papers filed before the trial, Tracy explained the state will show that farm, which the defendant operates under a tenant arrangement with family members, was unable to produce the volumes of grain that Hughes said came out of home storage at their farm.

The prosecutor also called a Seattle Bank of America executive who certified three notebooks of financial records from the Hughes accounts. The records were also obtained as the result of search warrants and presented as evidence for the state’s case.