In a judgment issued recently
by the Ionia County Circuit Court, a Michigan fruit shipping company
penalized heavily for violating the state’s agricultural marketing,
or check-off law, according to Dan Wyant, director of the Michigan
Department of Agriculture (MDA) and Michigan Attorney General Mike
Cox.
Wyant said Kropf Fruit Company of Belding, Mich., was found liable
for failing to remit assessments from the state’s apple growers
over a 2-year period to the Michigan Apple Committee (MAC) as required
by Act 232 of 1965, the Michigan Agricultural Commodities Marketing
Act.
Kropf Fruit Company failed to remit nearly $108,000 in assessments
from Michigan apple growers during 2000 and 2001 crop years to MAC.
MAC asked for MDA’s assistance to enforce the collection provision
of the Act.
“This should send a strong signal that MDA and Michigan will
aggressively pursue delinquent assessments to uphold the fairness
and integrity of approved check-off programs and protect the state’s
family farmers who are paying hard-earned dollars to such programs,”
Wyant said.
Roger Kropf, the only surviving principal of Kropf Fruit Company,
could not be reached for comment. Ken Kropf, Roger’s brother
and the other principal in the business, died of melanoma cancer in
2001.
“At our board’s request, we are going after delinquent
assessments to make sure they are collected,” said Denise Yockey,
executive director of MAC. “Virtually all of our shippers and
virtually all of our farm marketers and processors are doing a good
job (paying their assessments), and because of them it’s important
we ensure the others do also.”
Yockey said this is, to her knowledge, one of the first times MDA
has taken an entity to court over payment and restitution for assessments
that were collected from the growers.
In addition to awarding the original $107,665 in grower assessments,
Judge Charles H. Miel ordered that Kropf Fruit Company pay triple
damages, court costs, audit expenses, attorney fees and interest for
another $332,163 – making the total judgment $439,839.08, said
Jim Chiodini of White, Schneider, Young and Chiodini, an outside law
firm appointed as Special Assistant Attorney General.
After the MAC complaint was made on April 26, 2001, MDA did an audit
at Kropf Fruit Company. MDA worked with Kropf’s data, as well
as MAC data, to see if there were any discrepancies, said Jeff Haarer,
producer security services section manager with MDA.
“The audits themselves are done within one day,” Haarer
said. “We did two separate audits – one for each crop
year. The first investigation was for the 2000 crop year, and at some
point in the future, they (Kropf Fruit) did not pay for the 2001 crop
year. That was when we went in to do an audit.”
Yockey said that they base remittance on a company’s history
of paying assessments.
“All we have to go by is history – like somebody who we’ve
received a payment from every quarter, then they stop coming or we
receive only a partial payment,” she said.
She said a case would not reach a full-blown audit before there is
communication between the company and MAC as well as MDA.
“Most important was the communication first with the company
(Kropf Fruit) to make sure there hadn’t been an oversight,”
Yockey said. “We certainly have been active, in my time here,
in encouraging and urging the department (MDA) to take very strong
action.”
After Kropf Fruit Company ceased doing business, Steve Kropf –
Roger’s son – entered into a financial agreement with
a bank to start Appletree Marketing, in Ada, Mich. Appletree bought
the rights to the Kropf brand label, Steve said. But, Appletree is
a separate entity from Kropf Fruit Company and is not involved in
this case.
Steve said some of this situation involves the economic slowdown,
and in the future he said he expects to see “more problems with
apple people who merge, go out of business and have bankruptcies.”
Kropf Orchards and Storage – a separate entity from Kropf Fruit
Company – filed for bankruptcy, but there was no Chapter 11
plan approved, Chiodini said.
“Kropf Fruit Company was not in bankruptcy at the time this
complaint was filed,” he said.
Conditions for the collections of the funds from Kropf Fruit have
not been decided, and both sides said they are considering their legal
options.
“We hope never to have another circumstance like we’ve
had here,” Yockey said. “We’re very vigorously now
checking our records when remittances don’t come in within a
few days of when they’re supposed to. We’re going to be
quite prompt in checking out who should be owing the program and who
should have remitted.”
