Former creamery owner pleads guilty

ANCHORAGE — Though he remains at odds with the government over whether theft occurred and to what extent, a former owner of the now-defunct Matanuska Creamery pleaded guilty to six federal charges Monday.

Kyle Beus is charged with three counts of wire fraud and three of making false statements to influence the U.S. Department of Agriculture. Prosecutors say he misused federal grant money he received to help set up the creamery and converted it for his own “personal use” through fraudulent billing.

Shortly after entering his plea in federal court Sept. 16, Kyle Beus faxed a statement regarding his case to the Frontiersman.

“I do not agree with the government’s claim of any theft. All of the funds involved ultimately went to the building of Matanuska Creamery,” it read, in full.

In court, his attorney, John Murtagh, said much the same, that funds from the government to set up the creamery were ultimately used to set up the creamery. But, he said, his client was willing to admit some kind of fraud happened in the running of the business.

“There are many things we wish to say about how this happened, why this happened,” Murtagh said. But he and Beus didn’t believe a trial was necessary to put those things on the record. “If someone says, ‘Joe was a drunk driver and did all these other things’ and Joe (admits he drove drunk but) says, ‘I only did two of those things’ you don’t have a trial to figure those things out.”

At any rate, he said, a trial wasn’t a good idea.

“We would not be successful at trial was my prediction,” Murtagh said.

So Beus opted to plead guilty to all counts. He could have worked out a plea agreement with prosecutors and tried to negotiate a sentence. But, attorneys present Monday seemed to agree, negotiations there were not fruitful.

“On some important points we have agreed to disagree,” Murtagh said.

For her part, the prosecutor in the case, Retta-Rae Randall, laid out again exactly what the government things Beus did. In particular he inflated requests for funds from the government grant in various ways. He submitted some invoices for reimbursement for work the creamery never paid a contractor to perform. He inflated others. He set up a company to sell milk jugs to the creamery of which he was a part owner and which also submitted inflated invoices.

Murtagh said he believed evidence would show Beus used those funds to build up the creamery.

“All of these businesses were, unfortunately, run like they were a sole proprietorship,” Murtagh said. “The money was a mess and the government has done a good job of organizing it.”

There was a brief moment of levity in the hearing when Randall corrected judge Timothy Burgess, who had been pronouncing Beus’ name incorrectly (bay-us instead of b-yoos).

“I was hoping that it was another guy,” Beus told the judge.

Beus is scheduled for a sentencing hearing Dec. 23, which will take the form of a mini-trial with both sides presenting evidence regarding their version of events.

Beus is one of two owners of the creamery facing federal charges. He was charged in December 2012. Another owner, Karen Olson was charged in August with three counts of wire fraud, one of mail fraud, one of making false statements to influence the USDA and one of covering up for Beus’ crimes. She has been summonsed to appear in federal court on Thursday, Sept. 19.

Olson, for her part, has said she doesn’t think she did anything wrong and that she hopes the criminal prosecution will serve as a venue to tell the true story of what happened at the creamery.

The creamery was at one time seen as a savior of the Valley’s dairy industry. It was created in the wake of the collapse of the state-run Matanuska Maid dairy with a lot of the same equipment. Political opinions on the dairy slowly started to sour over widespread perceptions that the operation would never be able to pay back state money it had been loaned.

The operation was plagued by problems from personnel complaints to tainted products to complaints over how the business disposed of waste products. Eventually it was the state loans that drove the final nail into the operation’s coffin when the state board overseeing them decided to recall the loans and liquidate the business’ assets.

Contact Andrew Wellner at 352-2270 or andrew.wellner@frontiersman.com.