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Marshall, Minn. — On a recent summer day, Dan Thompson's house in Marshall, Minnesota sat empty in a suburban neighborhood a few miles from the plant. Thompson was the CEO of the farmer-owned company Minnesota Corn Processors -- until it was sold to Archer Daniels Midland last summer.
"Dan Thompson got the big money, and before the ink was dry he was out of town and in Houston," Jim Larson says bitterly.
Larson is among the more than 5,000 farmers who once owned shares in Minnesota Corn Processors. The company was the No. 2 ethanol producer in the nation behind ADM. It also made corn-based sweeteners.
Last summer, Larson and the other farmer-owners voted by a landslide to sell out to competitor ADM. Now he wishes he hadn't.
"After the vote and talking to different people and hearing some of the things that went on, I feel that we might have gotten swindled out of some money," Larson says.
The lawsuit charges that Dan Thompson and other executives at Minnesota Corn Processors acted in their own self-interest when they advised farmers to sell to ADM. It says in the spring of last year, Thompson met with ADM officials in Chicago and set a price, and afterwards got the terms of his employment agreement changed so he would receive a lump sum payment of $2 million if the sale went through.
According to the complaint, other executives also obtained agreements totaling more than $6.5 million. Then, the lawsuit says, they began advising farmers that their company's future looked bleak.
"All we ever heard from the company people was sell, sell, sell -- how rotten everything is," farmer Don DeLange recalls. "And every other time we'd go to a meeting, annual meeting, whatever, all they'd talk about is how good it was -- before last summer when they wanted to sell it."
But at the time, many in the ethanol industry thought the future had never looked better. The federal government was expected to mandate a tripling of ethanol use. In California, demand for ethanol was growing because a gasoline additive that competes with ethanol was being phased out.
Still, farm product prices typically follow an unpredictable roller coaster, and the plant had been on the brink of bankruptcy only a few years back. Many of the plant's farmer-owners were in financial trouble.
Before ADM's offer, stock in Minnesota Corn Processors was trading at around $1 per share. ADM was willing to pay nearly three times that price.
Minnesota Corn Processors CEO Dan Thompson was unavailable for comment for this report, but in an interview last summer with Minnesota Public Radio, he pushed for the sale.
"The stories I've heard back from a few of the members -- the ones that really warm my heart and touch me -- are the guys who say, 'You just saved my farm. I've got debt and mortgage, I'm 70 years old, this is going to pay it off. I'm not going to have to auction of my farm or sell my land,'" Thompson said last year.
ADM bought the plant for nearly $400 million and assumed more than $200 million of debt. Pat Williams, an attorney representing CEO Dan Thompson and other former plant executives, says the "change of control" agreements that resulted in their multi-million dollar payments were a necessary part of doing business.
"The change of control agreements actually provide a benefit to the company and the farmer-owners here, of keeping the key management in place during the critical time that the merger is being considered," Williams says.
ADM spokeswoman Karla Miller says farmers were informed about the payments beforehand.
"We felt that the agreement was disclosed in a proxy statement. It was a fair purchase price. It was approved by 80 percent of the farmers," says Miller.
Still, farmers like Dean Buesing say the sale meant the end of a dream. Buesing was one of the original farmers who built the plant more than 20 years ago. They had hoped to capture for themselves some of the profits enjoyed by huge ag companies such as as ADM and Cargill.
"I feel as if, that now it's gone, they've sold our future," Buesing says. "I have sons that want to farm and are farming -- this was their future."
Whatever it meant for farmers, the sale certainly helped ADM. Its most recent quarterly report shows its corn processing profits jumped 47 percent, due to higher sales of ethanol and higher prices for corn sweeteners.