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$46 Million Organic Grain Fraud Scheme Originated in Cottonwood County, Minnesota

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Two Minnesota men from Cottonwood County, Minnesota, have been charged with defrauding grain buyers, to the staggering amount of $46 million. James Clayton Wolf, 65, and Adam Clifford Olson, 45, have been charged with three counts of wire fraud and one count of conspiracy. As reported by The United States Attorney’s Office District of Minnesota, it is alleged Wolf and Olson defrauded grain purchasers by selling them non-GMO grains falsely labeled as “organic.” As anyone even tangentially familiar with advertising and marketing knows, the importance of labels on products cannot be overstated. The label on a product grabs the attention of the consumer. It is not just a collection of words or a catchy title, but an interaction between the buyer and seller. Labels play a huge role in customer loyalty and brand recognition, providing information that distinguishes the product from others regarding quality or other attributes.

Now let’s step back and put this case into perspective. It is likely not a surprise to any reader that food prices rocketed skyward in 2022, and continue to remain high in 2023. In the past year, the Consumer Price Index Data compiled by the Bureau of Labor Statistics revealed grocery prices rose 12%. Even more painful for consumers is the price of produce such as vegetables. The Bureau of Labor Statistics reported the cost of vegetables increased by an eye-watering 38.1% just in the last month, and the 244% price increase for eggs in the last year has created a wave of popular memes, including proposals with cartons of eggs in lieu of a diamond ring.

With the high prices at the cash register, many consumers have likely had to make different choices when purchasing groceries. One of the choices that may come up during a grocery shopping trip is “organic or not?” But what does “organic” really mean and why are we asked to pay more for organic produce?

The United States Department of Agriculture, known as the USDA, certifies organic food. The USDA certification of “organic” means the food is grown and processed adhering to federal guidelines, which set standards for pest and weed control, soil quality, and animal raising practices, to name just a few. Organic farming is centered around natural principles, utilizing only natural substances and only certain physical, mechanical, and biological methods from seed to shelf. Organic certification requires farmers document their processes and undergo yearly on-site inspections.

Let’s turn back to the case at hand. What do we know so far about this alleged organic grain fraud? Court documents allege between 2014 and 2021, Wolf grew grains using chemical fertilizers and pesticides, violating organic standards. However, instead of selling them as conventionally grown grain, it is alleged he provided grain purchasers with copies of his National Organic Program certification, omitting the information that the grains themselves did not meet organic farming standards.

I was unfamiliar with the National Organic Program, so I did some digging into this aspect of the case. The National Organic Program (“NOP”) is a dual-pronged federal regulatory program that not only sets the standards for what is considered organic in the U.S. but also enforces these standards. To achieve this, the NOP accredits third parties to assist with the certification process, certifying farms and businesses that meet the criteria to be sold as “organic.” When the third party certifies a farm or business, the produce from that location can be labeled “USDA Organic” so consumers know what is grown organically. The label “USDA Organic” is the only federally regulated organic label on the shelves. This certification means the product has 95% or more organic content.

Wolf’s organic farming certification was revoked in 2020. After the revocation, it is alleged Olson used his own organic farming certification to assist Wolf to sell traditionally farmed crops as organic.

This case is still in the early stages, as Wolf made his initial appearance in the Minnesota U.S. District Court in July 2022, while Olson’s initial appearance was in January 2023. We will continue to follow this case as it progresses, and I am interested to see what else we may learn.

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