Report: AG investigating Coleman for possible fraud
The Mississippi Attorney General’s Office is investigating whether John Coleman, the president of Express Grain Terminals LLC, committed fraud by allegedly submitting falsified financial records to state regulators, a Jackson newspaper reports.
The Clarion Ledger said in its Saturday print edition that Attorney General Lynn Fitch’s office confirmed the investigation but did not comment further.
Agriculture Commissioner Andy Gipson accused Express Grain, when it filed in 2021 with the state Department of Agriculture and Commerce to renew its warehouse licenses, of submitting a falsified copy of a annual audit carried out by an independent accounting firm.
Gipson held a hearing Thursday on whether to suspend or revoke those licenses. Although no decision was made immediately, Gipson told the Clarion Ledger that the wrongdoings of the currently bankrupt Greenwood-based company had been confirmed.
“There was undisputed evidence that a fraud had taken place,” Gipson reportedly said.
Contacted Saturday, Coleman declined to comment.
Although Coleman retains the title of president of Express Grain, day-to-day operations are now handled by Dennis Gerrard, whose company was hired to try to turn the loss-making business around or prepare it for a possible sale. Late last month, the federal judge overseeing separate Express Grain and Coleman bankruptcy filings approved a plan by Gerrard to find a buyer within the next two months.
Express Grain’s creditors include several financial institutions as well as more than 200 farmers who delivered grain to the company during last year’s harvest but have not been paid for.
Meanwhile, the announcement of an attorney general’s investigation is the latest of growing problems for Coleman.
UMB Bank of Kansas City, Missouri, holds Coleman and his father, Greenwood ophthalmologist Dr. Michael Coleman, personally liable for more than $70 million owed to the bank by Express Grain. Michael Coleman is the company’s majority shareholder. He and his son personally guaranteed the loans taken out by Express Grain, according to documents submitted by UMB Bank.
In a complaint filed with the court in early January, the bank alleged that John Coleman lied about the amount of grain held by Express Grain and used those inflated figures to borrow more from the bank than the company could otherwise have had. .
The bank also alleged that it received a fraudulent audit document that misrepresented Express Grain’s financial position.
A similarly falsified audit document is at the heart of what has apparently been turned over to the Attorney General’s office for investigation.
This audit document for the year ending June 30, 2020 showed that the company was posting a modest operating profit when, in fact, it had lost nearly $21 million. It showed that the company’s equity, or net worth, was still a healthy $25 million when it had actually fallen to $2.3 million. Moreover, the doctored document had removed the warning from the accounting firm, Horne LLP, that Express Grain appeared to be on the verge of failure.
The Horne auditor who prepared the report, Joe Green, testified at Thursday’s Department of Agriculture hearing that the 2020 audit and others that Coleman submitted to the state were not the same as those he had prepared, reported the Clarion Ledger.
Express Grain bankruptcy attorney Craig Geno offered no defense in the hearing for the falsified audit documents and said his scope was limited to bankruptcy proceedings, the newspaper reported. of Jackson.
According to the Clarion Ledger, the maximum penalty for defrauding the state is a $10,000 fine and/or five years in prison.
– Contact Tim Kalich at 662-581-7243 or [email protected]