Sentencing delayed in creamery fraud case

ANCHORAGE — Having tried and failed to get a clear picture of the particulars of the fraud a former Matanuska Creamery owner has admitted to committing, on Monday, a federal judge delayed sentencing for at least a month.

In September, Kyle Beus pleaded guilty to all the charges he faced — three counts of wire fraud and three of making false statements to influence the U.S. Department of Agriculture.

The charges he admitted to stem from misappropriating federal loan money to operate the creamery, which collapsed at the end of 2012/start of 2013. Beus has insisted that he never enriched himself in the fraud but only used the money to prop up the dairy.

Each count carries a potential penalty of up to six months. Federal prosecutors, the lead in the case being Retta-Rae Randall — are asking for 30 days to serve and three years of supervised release.

Beus and his attorney, John Murtagh, have asked for a single day in jail and three years of supervised release.

“I’m having trouble making sure I understand the full extent of the conduct,” U.S. District Court Judge Timothy Burgess said.

He said that he understood the government had, in the end, only lost $9,000 but the conduct alleged involved much larger sums and had to do with public funds.

Whereas a stiff sentence something like a drug case could arguably not send a message — drug dealers generally know they’re likely to get in trouble — it’s more likely to send such a message in a corruption case.

“This is precisely the kind of case where a message would be sent to those who are similarly situated not to misuse public funds,” Burgess said.

Murtagh explained the fraud using a hypothetical. For example, if Beus was buying a $30,000 piece of equipment from his supplier, Beus would ask his supplier to put in an invoice to the federal loan program for $50,000.

When the money came through, Beus would then put in a fake $20,000 bill to the supplier for work he didn’t do, thus the extra money drawn from the loan would come to the creamery.

When the music stopped and everything was accounted for under federal rules for what Beus could be liable for, that $9,000 and change was the amount still outstanding.

Asked why the supplier wasn’t indicted, Randall said that the government believed that the supplier was unaware of Beus’ actions.

“He’s very believable. He was conned by Mr. Beus,” she said.

As for Beus, he wasn’t asked to say much but, when he was, said that he was upset with implications prosecutors made that he might have been using a trust to hide his assets from the government that he had set up to hold insurance settlements for his daughter who was injured in a car crash.

“I am extremely frustrated about the prosecution’s statements about my so-called hidden assets,” Beus said, offering to give a full statement about the assets.

Burgess suggested he wait until sentencing.

But Randall defended herself, saying that Beus sang a different tune when he wasn’t in court seeking leniency.

“One of the comments Mr. Beus has made to others is, ‘you can’t touch me. I don’t own anything. It’s all in my daughter’s trust,’” Randall said.

In the end, Burgess decided to delay the matter for an evidentiary hearing when he could have all his questions answered.

Randall said she would need 30 days to prepare for that. Burgess told both attorneys to call his office to set hearing a date.

He also told the attorneys they were among the best that appear in federal court but he’d noticed they’d gotten a bit heated during the course of the day’s proceedings.

“I may not be the most perceptive guy in the world but I perceive there is some tension here and this shouldn’t be personal,” he said.

Beus is one of two owners of the creamery who wound up facing federal charges. He was charged in December of 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 Beus’ crimes. Olson, for her part, has said that she believes she didn’t do 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 the state money it had been loaned.

The operation was plagued by problems from personnel complaints to tainted products to complaints over how they 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 collect on the debt and liquidate the business’ assets.

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