Former Grass Seed Company Director Sentenced to Federal Prison for Schemes to Defraud Simplot and His Customers | USAO-OR
PORTLAND, Oregon — The former managing director of the Jacklin Seed Company, a grower and distributor of grass and turf seeds in the Pacific Northwest, was sentenced today to federal prison for plotting to commit wire fraud and money laundering in connection with several schemes aimed at defrauding Jacklin’s former owner, the company JR Simplot, and its clients.
Christopher Claypool, 53, a resident of Spokane, Washington, was sentenced to three years in federal prison and three years on probation.
Under his plea deal, Claypool has already paid nearly $ 8.3 million in restitution and agreed to forgo nearly $ 7.8 million in proceeds of crime.
As Managing Director of Jacklin, Claypool oversaw sales of the company’s products to domestic and overseas distributors. Jacklin contracted with independent growers in Oregon for the production of proprietary grass seed varieties and fulfilled orders for a distribution facility in Albany, Oregon. Differences in grass seed yield rates have led to overproduction of some varieties and underproduction of others.
According to court documents, at some point between 2013 and 2015, Claypool and other Jacklin employees realized that growers’ preference for high-yielding grasses was creating significant shortages of low-yielding varieties that Jacklin had contracted. to deliver to its customers. Claypool and a colleague who oversaw product execution at the company’s Albany distribution facility acknowledged that these shortages would either cause Jacklin to fail to honor his existing contracts or require Jacklin to pay. a bonus to producers to acquire the necessary stocks, considerably eroding the profits of the company. Claypool and his colleague predicted that either outcome would negatively affect their careers.
From January 2015 and until at least summer 2019, Claypool and his colleague asked employees at Jacklin, the factory in Albany and elsewhere, to fulfill customer orders with different grass seed varieties from those ordered by customers, in order to conceal these customers, and to bill customers as if no substitution had taken place. Claypool and his colleague called this program “getting creative.”
To cover up the unauthorized substitutions, Claypool and his colleague asked Jacklin employees to package the substitute seed varieties with false and misleading labels. They also ordered employees to bill customers according to the original terms of their contracts, notwithstanding unauthorized substitutions. As a result of this scheme, Simplot refunded or credited more than $ 1.5 million to defrauded buyers.
In addition to undisclosed seed substitutions, Claypool engaged in several other fraudulent schemes while he was general manager of Jacklin. In a ploy, he asked an accomplice to set up a limited liability company (LLC) to pose as an independent grass seed broker. Claypool and a co-worker conspired to funnel some of Jacklin’s overseas sales through a competing grass seed seller based in Jefferson, Oregon. The company, in turn, would add its own mark-up to sales and pay out disproportionate commissions to Claypool through his accomplice’s LLC. From December 2018 to August 2019, Claypool generated over $ 369,000 in fraudulent commissions.
In a third ploy, Claypool conspired with the owner of an independent travel agency in Spokane to inflate the alleged costs of Claypool’s international business travel. Claypool traveled extensively abroad on business and had the authority to approve his own travel expenses. Instead of using Simplot’s contractual travel agency, Claypool booked its flights through the independent travel agency. The agent booked economy fares and other cheaper fares for Claypool, but created bogus first class bookings on the more expensive comparable routes in order to generate inflated invoices which he passed on to Simplot, via Claypool , for payment. In total, the agent overcharged more than $ 500,000 for international airline tickets, the majority of which Claypool eventually received bribes from the agent.
In the most lucrative fraud scheme, Claypool directed Simplot’s payment of more than $ 12 million in “rebates” and “commissions” to entities that posed as foreign business partners but were, in fact, offenders. facades for the accomplices of Claypool in the embezzlement of these funds. The accomplices then passed on some of their ill-gotten gains on accounts in Hong Kong to real estate investments in Hawaii under Claypool’s control. Years later, Claypool sold the real estate and transferred the proceeds to investment accounts in Spokane as part of an elaborate money laundering operation.
On February 24, 2021, Claypool was indicted on criminal charges of conspiring to commit electronic fraud and money laundering. On March 15, 2021, he dropped the charge and pleaded guilty to all counts.
Acting US attorney Scott Erik Asphaug of the Oregon District made the announcement.
This matter was investigated by the IRS-Criminal Investigation and the Office of the Inspector General of the United States Department of Agriculture. He was sued by Ryan W. Bounds, Assistant United States Attorney for the District of Oregon.