The CFTC has obtained a permanent injunction against Mark A. Vangerploeg and his companies, Midwest Land & Livestock, Inc., SKV Farms Inc., and DVC Farms, Inc., in connection with a false reporting scheme. In late 2010, the Commission filed charges again the defendants for engaging in a false reporting scheme to defraud gain elevators and co-operatives in Kansas, Iowa, Minnesota, Illinois, and South Dakota.
In early December, a U.S. District Court Judge in Kansas ordered Vanderploeg and his firms to jointly and severally pay $70,000 in civil monetary penalties, and an additional $112,400 in restitution. The defendants also must disgorge $200,000 in ill-gotten gains, and are banned from engaging in any commodity-related activity for five years.
According to the original complaint, the defendants posed as farmers, and entered into forward contracts with grain elevators and cooperatives. The forward contracts represented more than a million bushels of grain for the 2008 harvest. In order to hedge the risk associated with these forward contracts, the grain elevators and co-ops entered into short commodity futures contracts.
Shortly before the 2008 harvest, the defendants told these grain entities that they did not have the promised crops, cancelling their forward contracts. The defendants went on to demand that the elevators and co-ops share gains made in their short positions, but did not agree to share any losses created by unprofitable short positions.