Former director of grass seed company charged with scheme to defraud Simplot and its customers | USAO-OR

PORTLAND, Ore.—U.S. Attorney Billy J. Williams announced today that Christopher Claypool, 52, of Spokane, Wash., the former chief executive of the Jacklin Seed Company, a grass seed and seed grower and marketer Liberty Lake, Washington-based turf has been charged by criminal intelligence with conspiracy to commit wire fraud and money laundering in connection with multiple schemes to defraud Jacklin’s former owner, JR Simplot Company , and its customers.

As general manager of Jacklin, Claypool oversaw sales of the company’s products to domestic and overseas distributors. Jacklin has contracts with independent growers in Oregon for the production of proprietary grass seed varieties and fulfills orders from a distribution facility in Albany, Oregon. Differences in grass seed yield rates have resulted in over-delivery of some varieties and under-production of others.

Sometime between 2013 and 2015, Claypool and other Jacklin employees realized that growers’ preference for high-yielding grasses was creating significant shortages of low-yielding varieties that Jacklin had pledged to deliver to its customers. . Claypool and a colleague who oversaw product fulfillment at the company’s Albany distribution plant acknowledged that these shortages would cause Jacklin to fail to meet its existing contracts or force Jacklin to pay a premium to producers. to acquire the necessary inventory, which would significantly erode the company’s profits. Claypool and his colleague anticipated that either outcome would negatively affect their careers.

Beginning in January 2015 and continuing through at least the summer of 2019, Claypool and his colleague had Jacklin employees at the Albany plant and elsewhere fill customer orders with different varieties of grass seed. that customers had ordered, to conceal such substitutions from customers and to bill customers as if no substitution had taken place. Claypool and his colleague called this program “showing creativity.”

To conceal the unauthorized substitutions, Claypool and his colleague ordered Jacklin employees to package the substitute seed varieties with false and misleading labels. They also ordered employees to bill customers according to the original terms of their contracts, notwithstanding unauthorized substitutions. As a result of this scheme, Jacklin billed customers more than $1.1 million for grass seed that the company never delivered.

In addition to undisclosed seed substitutions, Claypool engaged in several other fraudulent schemes while serving as general manager of Jacklin. In one scheme, he ordered an accomplice to set up a limited liability company (LLC) to pose as an independent grass seed broker. Claypool and a colleague conspired to route some of Jacklin’s overseas sales through a competing grass seed seller based in Jefferson, Oregon. The company, in turn, would add its own markup to the sales and pay outrageous commissions to Claypool through its accomplice’s LLC. From December 2018 to August 2019, Claypool generated over $369,000 in fraudulent commissions.

In a third scheme, Claypool conspired with the owner of an independent travel agency in Spokane to inflate Claypool’s alleged international business travel costs. Claypool traveled abroad extensively on business and had the authority to approve his own travel expenses. Instead of using Simplot’s contracted travel agency, Claypool booked his flights through the independent travel agency. The agent booked economy fares and other lower cost fares for Claypool, but created bogus first class bookings on the more expensive comparable routes to generate inflated invoices which he passed on to Simplot, via Claypool, for payment. In total, the agent overcharged over $500,000 for international airfare, the majority of which was ultimately received by Claypool in the form of kickbacks from the agent.

In the most lucrative fraud scheme, Claypool directed Simplot to pay more than twelve million dollars in “rebates” and “commissions” to entities that posed as foreign business partners but were, in fact, , fronts for Claypool’s accomplices in the embezzlement of these funds. The co-conspirators then funneled some of their ill-gotten gains from accounts in Hong Kong to real estate investments in Hawaii under Claypool’s control. Years later, Claypool sold the real estate and wired the proceeds to investment accounts in Spokane in an elaborate money laundering operation.

Claypool faces a maximum sentence of 70 years in prison, fines of more than $15 million and 5 years of probation. His appearance has not yet been scheduled.

This matter is being investigated by the IRS Criminal Investigation and the Office of the Inspector General of the United States Department of Agriculture. He is being prosecuted by Ryan W. Bounds, Assistant United States Attorney for the District of Oregon.

A criminal information is only an accusation of a crime, and an accused is presumed innocent until proven guilty.