Creditors of the former Ashby Farmers Cooperative Elevator Company will be given an opportunity to recoup $1.45 million in losses Sept. 21 at the Grant County Courthouse according to Fergus Falls attorney Erik Ahlgren.

Ahlgren, who has been serving as the “assignee” for creditors seeking reparation for their financial losses stemming from the 2018 exposure of embezzlement perpetrated by former elevator manager Jerome Hennessey, went through mediation in Fargo and reached a settlement July 21 with Travelers Insurance, which had a $1.5 million policy limit on the former Ashby Elevator’s directors and officers.

Ahlgren’s complaint, filed with the Eighth Judicial District, assigned defendants in the civil suit as Russell Dewey, Gaylan Thormodson, Dennis Week, Daryl Johnson, Darrell Franze, Brad Johnson and Tom Olson - the board which originally hired him to investigate the extent of Hennessey’s illegal financial manipulations of cooperative funds. In the complaint on behalf of the elevator creditors, Ahlgren said the former directors had failed in their “fiduciary duties” to “manage and supervise the elevator and its manager.”

Ahlgren filed a motion Aug. 11 in Grant County to get the arbitration settlement approved. The motion sets up the Sept. 21 interactive-video hearing before Judge Amy Doll. 

“If anyone has a reason to object to the motion, if any of the members has a reason to object, they have to raise that objection at that time, otherwise they will be held to having consented to the settlement,” Ahlgren said.

Ahlgren said there are 39 creditors who have filed proofs of claims in the total amount of $12,063,074.09. The largest of the creditors is the CoBank, which is seeking to recoup a debt in the neighborhood of $8 million.

The $5.4 million that Hennessey admitted to embezzling is the amount that Ahlgren and others identified as missing funds.

“At a certain point it was like ‘I am not going to spend more time trying to find more debt out there because I am never going to collect that $5.4 million,’ ” Ahlgren said.

When sentenced in federal court to 96 months in prison on June 21, 2019, Hennessey was ordered by Judge John Tunheim to begin repaying restitution of $5,338,922.21. Hennessey is currently serving his sentence in North Carolina. Ahlgren said Hennessey’s home in rural Dalton and other property he owned has been sold.

It was common knowledge among many elevator patrons that Hennessey was taking exotic hunting trips to places like New Zealand and Africa and spending great sums on taxidermy. His home was filled with mounts.

Hennessey pleaded guilty in February, 2019 to federal felony charges of mail fraud and income-tax evasion. He received a 96-month sentence on the mail-fraud charge and 60 months on the charge of tax evasion. The two sentences are running concurrently.

Ahlgren said other efforts to recoup financial losses by creditors are underway including a civil claim filed June 15 by publication against Tim Leonard, a friend and former cooperative employee who drove Hennessey to Des Moines, Iowa, after the board began to look into the fraud. Ahlgren said that Hennessey had paid approximately $11,500 in 2012 for a home where Leonard resided.

“With the Tim Leonard lawsuit, I think it’s the right thing to do because the co-op paid for this. He did not pay for the house,” Ahlgren said.

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