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 documents to state regulators, a Jackson newspaper is reporting.
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 has accused Express Grain, when it applied in 2021 to the state Department of Agriculture and Commerce for renewal of its warehouse licenses, of submitting a doctored copy of an annual audit performed by an independent accounting firm.
Gipson held a hearing Thursday on whether to suspend or revoke those licenses. Although no decision was immediately rendered, Gipson told the Clarion Ledger that wrongdoing by the Greenwood-based company now in bankruptcy had been confirmed.
“There was uncontested evidence that fraud occurred,” Gipson is quoted as saying.
When contacted Saturday, Coleman declined to comment.
Although Coleman retains the title of president of Express Grain, the day-to-day operations are now managed by Dennis Gerrard, whose firm was hired to try to turn around the money-losing company or prepare it for potential sale. Late last month, the federal judge overseeing the separate bankruptcy filings of Express Grain and Coleman signed off on a plan from Gerrard to find a buyer over 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 for which they were not paid.
Meanwhile, the announcement of an attorney general’s investigation is the latest in the mounting problems for Coleman.
UMB Bank of Kansas City, Missouri, is holding Coleman and his father, Greenwood ophthalmologist Dr. Michael Coleman, personally responsible 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 John Coleman lied about the amount of grain that Express Grain owned and used those inflated numbers to borrow more from the bank than the company otherwise could have.
The bank also alleged receiving a fraudulent audit document that misrepresented Express Grain’s financial condition.
A similarly falsified audit document is at the heart of what has been apparently turned over to the Attorney General’s Office for investigation.
That audit document for the year ending June 30, 2020, showed the company posting a modest operating profit when, in fact, it had lost nearly $21 million. It showed the owners’ equity in the company, or its net worth, was a still healthy $25 million when it had actually shrunk to $2.3 million. Also the doctored document had removed the warning of the accounting firm, Horne LLP, that Express Grain appeared to be on the brink 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 Coleman submitted to the state were not the same ones he prepared, the Clarion Ledger reported.
Express Grain’s bankruptcy attorney, Craig Geno, offered no defense at the hearing for the falsified audit filings and said that his scope was limited to the bankruptcy proceedings, the Jackson paper reported.
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@example.com.