A seed company’s former general manager has pleaded guilty to committing wire fraud by substituting common grass seed types for more expensive or unavailable varieties.
Chris Claypool, 52, has also pleaded guilty to wire fraud charges related to fraudulent commissions for grass seed sales and over-billing his employer for travel expenses, as well as committing money laundering involving real estate transactions.
The U.S. Attorney’s Office has agreed to recommend that a federal judge sentence Claypool to no more than four years in prison and three years probation in exchange for the guilty plea, which was entered in U.S. District Court in Oregon on March 15.
Claypool managed Jacklin Seed in Liberty Lake, Wash. — then a subsidiary of the J.R. Simplot agribusiness company — which had a processing facility in Albany, Ore., from which it shipped grass seed to buyers.
Between 2015 and 2019, Claypool directed employees to sell “readily available” grass seed varieties that were mislabeled as scarcer cultivars, charging buyers $1.1 million for product they didn’t receive, according to court documents.
The scheme came about after Claypool realized that farmers preferred to grow higher-yielding grasses, resulting in a shortage of other cultivars that didn’t generate as much seed per acre, the documents said.
Convincing farmers to produce these less common grass seed cultivars would have required paying them a premium, reducing the company’s profits to the detriment of Claypool’s career, the documents said. The dilemma prompted him to get “creative” by shipping orders with “false and misleading labels.”
Aside from the substitution scheme, Claypool diverted foreign sales from Jacklin Seed to a competing grass seed company — ProSeeds Marketing of Jefferson, Ore. — so he could earn commissions on the orders, according to court documents.
As a salaried employee, Claypool didn’t receive commissions on millions of dollars of grass seed sales to foreign entities that he negotiated, the documents said.
Claypool found a way to get about $370,000 in fraudulent commissions by selling Jacklin’s product to ProSeeds, which re-sold it at a markup to foreign customers.
ProSeeds served as “an unnecessary middleman” that paid “outsized commissions” to Claypool through Green Pyramid LLC, which had been incorporated to pose as an independent broker, the documents said.
Claypool regularly traveled internationally but instead of using Simplot’s contracted travel agency, he booked flights through a “personal acquaintance” who inflated the costs, according to court documents. The acquaintance would “create fake first-class bookings” that cost three to four times as much as Claypool’s actual flights, which were “economy or other low-cost fares.”
These overcharges amounted to more than $500,000, most of which was “kicked back” to Claypool in cash, credit card purchases and substitute travel services from his acquaintance, the documents said.
Finally, more than $12 million in rebates and commissions that were ostensibly paid out to foreign entities were actually directed to Hong Kong bank accounts that Claypool controlled, the documents said.
The fraudulent rebates and commissions accumulated between 2010 and 2016, which Claypool used to buy four properties in Hawaii. He sold the properties between 2016 and 2019, earning net proceeds of about $9.5 million, which constituted money laundering, the documents said.
The maximum sentence for these charges was 70 years in prison, $15 million in fines and five years probation.
While prosecutors agreed in the plea deal to seek only four years imprisonment and three years probation, the federal court isn’t bound by that recommendation.
Apart from accepting responsibility for the crimes, Claypool must pay nearly $8.3 million in restitution to Simplot. His sentencing is scheduled for June 21 in Portland, Ore.