SIOUX CITY, Iowa (KCAU) – Two former co-op officers in Sioux Center were indicted on federal charges of conspiracy to commit fraud for blending oats and soybeans, then making false statements to USDA officials.

According to an indictment filed on December 19 in the U.S. District Court in Sioux City, Kenneth Ehrp and Calvin Diehl both worked at a cooperative in Sioux Center, with Ehrp serving as the general manager and Diehl as the assistant general manager.

The two are accused of knowingly blending oats into soybeans and then hiding the fact from USDA inspectors from 2011 to April 2017. The practice of mixing grains is prohibited unless the grain is marked as “mixed grain” or unless the administrator of the Grain Inspection, Packers, and Stockyards Administration grants an exemption. During the times relevant to the indictment, soybeans were more valuable than oats, with soybeans worth $9.69 and oats worth $2.39 on March 31, 2017, as an example.

Documents said the two would instruct employees to layer soybeans on top of oats in storage bins and in trucks. Furthermore, Diehl reportedly told a worker on April 10, 2017, to “blend oats at all times.” He also said to a warehouse examiner that he didn’t know why a pile of oats was next to a pile of soybeans at a satellite facility.

Around March 22, 2017, Ehrp and Diehl supervised workers who buried oats at the bottom of delivered truckloads only for the customer to discover and then reject the grain, according to the indictment.

Around March 30, 2017, Diehl is also said to have said the co-op only had 5,007 bushels of oats when they actually had more.

On two separate occasions around April 25, 2017, and March 31, 2017, Ehrp caused the cooperative’s controller to make a false statement, reporting that the property was overvalued. The indictments said this was done to influence the actions of a lender on a revolving operating loan.

Ehrp was charged with conspiracy to defraud the U.S. and two counts of making false statements. Diehl was charged with conspiracy to defraud the U.S. and one count of making false statements.

Ehrp served as the CEO and general manager of Farmer’s Cooperative Society of Sioux Center until April 28, 2017. He then sued the co-op on in March 2019 for $634,458.41 in past wages and to maintain his life insurance policies. The lawsuit is ongoing.