Former Minnesota grain elevator manager sentenced to 8 years in prison for bilking small farmers

The former manager of a western Minnesota grain elevator whose longtime embezzlement bankrupted the business and cheated its 200 member-farmers out of millions of dollars to pay for his exotic big-game hunting trips was sentenced Friday in Fergus Falls to eight years in federal prison.

Jerome "Jerry" Hennessey, 56, worked for the Ashby Farmers Cooperative Elevator Co. for nearly 30 years, rising to its general manager. His skillful options trading initially helped the co-op recover from a precarious financial position, his lawyers said in court documents. But it didn't last.

Since 2003, Hennessey had been writing checks from the business to cover his personal expenses for big-game hunting, jewelry, furniture, clothing, entertainment, travel, real estate and improvements to his home and hunting cabin. He also used the co-op's money to buy all-terrain vehicles and to pay property taxes and large balances on his credit cards.

Hennessey concealed the payments as legitimate expenses for the co-op, figuring he could cover them from his trading activities, his lawyers said. He couldn't. He eventually obtained a line of credit of about $7 million for the co-op by misrepresenting the amount of grain it had in storage and used that account to cover $5,338,922.21 that federal prosecutors say he stole from his employer before last August, when the bank called the co-op's line of credit due, exposing the fraud.

Hennessey disappeared for two months before turning himself in to federal authorities in December. He admitted the embezzlement and his failure to report $3.5 million in income between 2011 and 2017, resulting in a loss of $1.2 million in revenue to the IRS and $400,000 to the Minnesota Department of Revenue.

The advisory sentencing guidelines suggested a prison term of 78 to 97 months, supervised release of one to three years, and a fine of $25,000 to $250,000. Hennessey agreed not to appeal the prison sentence if it does not exceed 97 months and the government agreed not to appeal if it's at least 78 months.

Chief U.S. District Judge John Tunheim's 96-month sentence foreclosed any appeal of the sentence. He ordered Hennessey to pay full restitution to the co-op for the money he stole but declined to order him to repay the tax losses. Hennessey also could face additional civil penalties.

Hennessey was a regular customer of the world's top big-game guides. He paid $50,000 or more for hunting safaris in Africa, New Zealand and Alaska. He spent more than a half-million dollars to have his trophies mounted and built a barn-sized addition to display them at his home just outside Ashby, a town of 440 residents some 165 miles northwest of the Twin Cities.

Hennessey is in the process of selling his properties to help pay restitution. His home sits on about 90 acres of land and was valued at $795,000. He also had 400 acres with a cabin in Brook Park, Minn., and an 80-acre parcel in Eagle Lake Township, Minn., subject to foreclosure.

Dan Browning • 612-673-4493