Cottonwood County farmer charged in $46 million organic grain fraud scheme

Federal prosecutors say a southwestern Minnesota farmer reaped up to $46 million in payments selling conventionally-grown corn and soybeans that he told buyers were organic.

The federal prosecutor's office in Minneapolis on Monday announced James Clayton Wolf, of Jeffers, has been indicted by a grand jury with felony wire fraud, saying the rural Minnesota farmer was "engaged in a scheme" that defrauded grain buyers and undermined the nation's organic labeling system.

A charging document filed in U.S. District Court for Minnesota says between 2014 and 2020 Wolf used chemical fertilizers and pesticides to grow corn and soybeans in his rural Cottonwood County farm that he later sold as falsely labeled organic grain. In other instances, Wolf — who did not possess a license to purchase grain — bought non-organic grain that he, in turn, sold to buyers as organically farmed crops.

"The fact that the grain was not organic was material to the buyers, who would not have bought grains that were not organically farmed," the grand jury said in its indictment, filed July 7.

While organic farming uses non-GMO seeds, the organic label places additional requirements on the growing practices. Organic grains are grown without synthetic chemicals or fertilizers and typically fetch higher prices at market than non-organic crops.

Certification of organic crops is controlled by the federal National Organic Program, run by the U.S. Department of Agriculture.

The grand jury's indictment says Wolf's organic farming certification was revoked in 2020. However, according to the document, Wolf continued selling non-GMO grain falsely labeled as organic through an "associate."

In one instance, court records show that Wolf corresponded via e-mail with a grain purchaser in Pennsylvania in October of 2020 to sell "organic corn."

In a brief phone call Monday, Wolf's attorney did not address the specific charges.

"Mr. Wolf is a 65-year-old career farmer, who has never been in trouble," said attorney Paul Engh. "He's led a good life and now seeks his vindication."

Wolf is scheduled to appear before a magistrate judge on July 22.

Wire fraud is a Class C felony punishable by up to 20 years in prison, according to federal sentencing guidelines. U.S. Attorney Andrew Luger's office noted in a news release that the indictment is the result of collaboration between the FBI and the inspector general's office for USDA.