State Dairy Farmers Contend U.S. Bank Milked Them Dry

Did we read it in Mother Jones? Seattle Weekly? Guess again. The Seattle Times dropped the ball on it long ago. No, it was in that paragon of money-grubbing, free-marketeering whose reporters care more than you may think when the little guy gets the shaft. Yes folks, The Wall Street Journal.
David Rogers reported in the June 1 issue that a 35-year old dairy farmer named Michael Yeager in Deer Park, Wash. is calling on legislators to protect dairy farmers when poorly run processing plants go under without paying their bills. Yeager is asking why U.S. Bancorp and accounting giant Price Waterhouse & Co. allowed an alleged fly-by-night shamster to run Foremost Dairies Northwest Inc. into the ground in 1990. Foremost's bankruptcy left 120 Washington state diary farmers in the lurch for $2.7 million.
"Entrepreneur" Michael Cameron took over the Foremost Dairies from Carnation Co. in 1989. Price Waterhouse gave the thumbs up on the deal and U.S. Bancorp cut Cameron a loan of $18 million in cash plus an additional $7 million in credit. But court records show that Cameron left behind a string of bad deals in Florida in the mid-1980s. U.S. Bancorp admits it never checked him out. Cameron brought an additional $2 million of his own to the deal, but borrowed it separately.
Cameron soon began to play fast and loose with Foremost's funds, allegedly writing corporate checks for his own unrelated business expenses. The bank later tallied $1.1 million in misappropriated funds. Hopeful that it could salvage the business, U.S. Bancorp began running the business and waived credit restrictions in the hopes of keeping it afloat long enough to sell, the Journal reported.
But U.S. Bancorp moved secretly under a court seal to secure its financial position and did not notify Foremost's milk suppliers about the dairy's financial problems. Dairy farmers are guaranteed a minimum price set by the government for their milk, but must wait 30 days or more for payment after delivery. When the bank finally foreclosed and put the dairy into bankruptcy, the bank-backed receiver cut off payments to the dairy farmers. The reason? A U.S. Bancorp official told the Journal, "There wasn't enough money to pay the bank and the farmers. The bank was the secured party and the bank got payed."
The Journal cites a number of Washington dairy farmers who lost their herds or their farms entirely because they didn't get paid for their milk. Joe DeHoog in Ephrata keeps a check on his wall for $29,904. It's stamped "NSF" for non-sufficient funds.
Dairy farmer Michael Yeager, a high school dropout, got on the phone to Washington. Receptionists in Congress and the Department of Agriculture asked him who he was with. "I'd say, 'Well, I'm with myself.'... those people can't conceive that an American (citizen) might call them." Any help from House Speaker Tom Foley's office? After all, Foley does represent Yeager and other farmers in Eastern Washington. The Journal speculates that U.S. Bancorp's $17,000 in Foley campaign contributions since 1990 is making his mouth dry. Foley told the Journal that he didn't have the ability to intervene. Yeager is still working for a law that protects dairy farmers when independent milk processors collapse.

-Eric Nelson

To e-mail Eric Nelson:
WAfreepress@gmail.com


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Contents on this page were published in the August/September, 1994 edition of the Washington Free Press.
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