OGDEN -- The federal government is accusing two men who operated an Ogden livestock feed company of fraud for obtaining $5.8 million by exporting nonfat dry milk overseas that was supposed to help drought- stricken ranchers.
The civil suit filed recently says Jerry Goodwin, of Ogden, and Richard Carter, of Ten Sleep, Wyo., who are partners in R&J Feed Co. along with Carter Livestock Inc., obtained millions of pounds of nonfat dry milk through a U.S. Department of Agriculture program in 2002 and 2003 that was supposed to be incorporated into pelletized feed and then provided to ranchers in 10 Western states.
However, R&J Feed instead exported the milk to the Netherlands, Estonia, Germany and the Philippines, says the 26-page complaint.
Goodwin, in a phone interview Monday, denied that R&J Feed sold milk overseas obtained from the USDA as part of the drought-relief program.
"We never exported a pound," he said. "Never."
Carter could not be reached for comment.
Tony West, assistant attorney general for the Civil Division of the U.S. Department of Justice, said the allegations against Goodwin and Carter are extremely serious.
"The USDA's livestock feed-assistance initiatives were intended to help ranchers in the United States," he said in a prepared statement.
"We will pursue those who are suspected of seeking to gain financially by ignoring the program's rules and not honoring the certifications they make."
Goodwin said the complaint is in retaliation for a lawsuit that he and Carter filed against the federal government in 2008. The complaint that alleged the USDA deprived R&J Feed from participating in the nonfat dry milk program was voluntarily withdrawn by Goodwin and Carter in June 2009.
The USDA suit says the drought-relief program sold milk to feed dealers for $1 per 42,000-pound truckload and that the federal government footed the bill for freight charges.
Between September 2002 and January 2003, the USDA paid about $810,000 to ship 20 million pounds of milk to R&J Feed, says the lawsuit.
Feed dealers who participated in the program were required to certify that nonfat dry milk they received would only be used to produce feed for livestock in specific drought-stricken states.
Goodwin and Carter falsely certified they would abide by those restrictions but instead exported the milk, according to the complaint.
In January 2004, federal officials inspected R&J Feed's warehouse near Ogden and found a feed-pellet machine that was not operational.
"It was clear ... that there had been no recent activity at the warehouse," says the lawsuit.
"There was not even a forklift to unload nonfat dry milk, which was inconsistent with USDA records showing frequent deliveries to R&J."
Federal officials determined through their investigation that R&J Feed had an undisclosed warehouse at Business Depot Ogden.
They went to the warehouse and found an active operation involving about 10 employees, who were placing milk on pallets, shrink- wrapping it and preparing it for shipment, the lawsuit says.
The suit says Shane Smith, an R&J Feed manager, told federal officials the milk was being exported and provided spreadsheets showing the quantities and destination of shipments.