A defamation lawsuit is the latest development in a long-running legal battle involving one of Iowa’s largest farm cooperatives. (Photo by Joe Raedle/Getty Images)
An eight-year, million-dollar legal battle involving stolen seed corn, fraud and claims of racketeering and bribery has resulted in a new round of litigation in Polk County District Court.
Just six weeks ago, a series of long-running court battles involving one of Iowa’s largest farm cooperatives appeared to have finally drawn to a close. Since then, however, more lawsuits have been filed, breathing new life into a dispute that stems from crimes committed 15 years ago.
The latest court action involves a Lake View farmer suing the Des Moines public relations firm of Wixted, Pope, Nora, Thompson & Associates for defamation. The firm has denied any wrongdoing is now counter-suing the farmer for allegedly reneging on a settlement agreement.
The dispute is one of many that stems from the actions of Chad Hartzler, a farm-supply salesman who was hired in 2002 by West Central Cooperative of Ralston. The following summary is based on information from court records.
Hartzler was wildly successful in his job, but as he would later admit, some of his sales were the result of fraud and theft. In one instance, Hartzler allegedly gave seed corn stolen from WCC to an Iowa farmer to settle a family member’s debt with the farmer. Eventually, the farmer began paying Hartzler for WCC product, but did so in the form of personal checks made out directly to Hartzler.
Hartzler also began selling product to Iowa Plains Farms in Sac County, a company run by Bill Wollesen and his family. According to Wollesen, some of the product he bought was what Hartzler called “rep material” — product that sales representatives are allowed to sell, and be paid for, independently of their employer. For four years, Wollesen purchased WCC-owned goods that Hartzler himself was paid for.
In 2007, Wollesen pre-paid Hartzler $46,500 for product to be delivered at a later date. According to court records, Hartzler, who was deeply in debt due to gambling losses, diverted that payment to his bookie to pay off some of those debts.
Wollesen would later allege that WCC officials discovered Hartzler’s theft in 2009, but kept him on staff and, in 2010, promoted him to director of its seed and chemical operations.
Hartzler later testified he concealed his thefts from his employer by constructing a scheme in which the money Wollesen gave him as pre-payment for goods and services was instead used to pay for previously delivered product.
It was, Hartzler later recalled, “kind of a Ponzi-like deal … I was taking — using his pre-pay money to pay off the deal I had given him the year before. So every year it got worse.”
It all ended on April 30, 2011. Hartzler had been attending a church group and, as his attorney Christopher Cooklin would later put it, he recognized “that he needed to make a number of changes. He has a compulsive gambling addiction. That’s where the money went. He doesn’t have anything to show for it … He voluntarily showed up to his employer and gave a deposed confession without counsel.”
In his written letter of letter of resignation, Hartzler told his bosses at WCC, “This is all on my hands, and my hands alone.” But he later alleged some of the payments he collected were given to him in exchange for discounts and free products, and when he was criminally charged, prosecutors described the payments made by Wollesen as bribes, although Wollesen was never charged with a crime.
Within two weeks, WCC was suing both Hartzler and Wollesen for what the company claimed was a bribery scheme that had cost the cooperative more than $2 million. Wollesen denied the allegations, saying he thought the payments he made to Hartzler were for WCC product.
At around that same time, WCC hired Wixted, Pope, Nora, Thompson & Associates, which Wollesen later claimed helped spread the false narrative that he was an active, knowing participant in a bribery scheme.
After three years of litigation, a civil jury found that Hartzler had acted illegally but the Wollesens hadn’t participated in any sort of bribery scheme. The jury awarded Bill Wollesen more than $576,000 for fraudulent misrepresentations and for losses stemming from pre-paid products he never received.
The Wollesens subsequently sued WCC, alleging the company had been so eager to conceal its failure to oversee Hartzler that it made false allegations against them and engaged in racketeering by creating false financial statements for state and federal regulators. The Wollesens also sued Wixted for defamation.
Hartzler himself, meanwhile, was convicted of wire fraud, sentenced to 51 months in prison and ordered to pay $2.5 million in restitution to his former employer. At his sentencing, U.S. District Judge Mark Bennett marveled at how long Hartzler had sustained the Ponzi scheme and noted that it had only came to light when he confessed to his superiors.
“I gotta believe that at some point a company would realize there’s two million bucks missing, but, you know, he’d already gotten by several of the (internal) audits, so maybe they wouldn’t have figured it out,” Bennett said.
Turning to Hartzler, Bennett said, “I think you’re a really good guy who made a really bad decision, and it was driven out of your gambling addiction … Just remember that when you’ve served your sentence, you’ve paid your debt to society. So you should hold your head high.”
In October 2017, Hartzler was released from prison. By that time, his former employer had merged with another company to form Landus Cooperative, now based in Ames. Eventually, most of the civil litigation between the Wollesens, the cooperative and Wixted was either dismissed or resolved with confidential settlement agreements.
But six weeks ago, the Wollesens renewed their defamation claim against Wixted, restating the allegation that the public relations company had knowingly spread false information implicating the family in Hartzler’s scheme.
In response, Wixted’s lawyers argued the claim was based on “half-truths, baseless allegations and, in many instances, known falsehoods.” They said that just eight days before the lawsuit was filed, the public relations firm had agreed to pay the Wollesens an undisclosed amount as part of a confidential settlement intended to put the matter to rest.
Citing that settlement agreement, Wixted filed a counter-claim against the Wollesens, alleging breach of contract and arguing the family had “buyer’s remorse and are attempting to back out of the agreement.”
No trial date has been set in the case.
As for Hartlzer, he appeared on stage in 2018 as part of the Des Moines Register’s Storytellers project, in which people tell personal stories before a live audience. Hartzler told the audience that while working for WCC, he was gambling up to $20,000 per day. “It was a great job,” he said. “But my income, even at six figures, couldn’t cover my losses.”
He said he hadn’t gambled since confessing his crimes in 2011.
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