Sam Kane Agrees to Repay Nearly $38 Million to Local Ranchers
CORPUS CHRISTI July 26, 2018 ⎯ Sam Kane Beef Processors LLC has entered into an agreement with the United States to comply with the Packers and Stockyards (P&S) Act and to begin to repay nearly $38 million currently owed to local livestock sellers, announced U.S. Attorney Ryan K. Patrick.
Following a hearing in Corpus Christi federal court today, Sam Kane has agreed to promptly pay for livestock purchases by the next business day after purchases are completed as the P&S Act requires. They have also agreed to a repayment plan which would result in full payment to local ranchers the nearly $38 million currently owed to them within the next 18 months. They must also preserve and administer the statutory trust and have agreed to the appointment of an independent chief restructuring officer to ensure compliance with all aspects of the agreement.
If Sam Kane fails to make any of the payments as agreed or abide by any terms of the agreement, the court will appoint a receiver to manage Sam Kane financial affairs.
On June 14, 2018, two complaints were filed against Sam Kane Beef Processors LLC for alleged violations of the Packers and Stockyards (P&S) Act. The complaints allege Sam Kane is failing to timely pay for livestock. Sam Kane is a fed steer and heifer slaughtering plant located in Corpus Christi and operates subject to the P&S Act.
Both complaints allege that as of June 8, 2018, Sam Kane owed approximately $34.96 million to unpaid livestock sellers at an average 38 days late with some instances up to 60 days late. The complaints allege Sam Kane’s failure to timely pay resulted in livestock sellers filing claims under the packer statutory trust totaling more than $142 million.
The U.S. Department of Agriculture (USDA) filed an administrative complaint alleging Sam Kane failed to pay the full purchase price for livestock within the time period required by the P&S Act on numerous occasions from on or about Jan. 27, 2017, through the date of the complaint. The P&S Act authorizes civil penalties of up to $11,000 per violation.
The P&S Act is a fair trade practice and payment protection law that promotes fair and competitive marketing environments for the livestock, meat and poultry industries. As it relates to livestock sales, the P&S Act requires packers to pay the full purchase price of livestock the next business day following completion of the transaction. The P&S Act authorizes the USDA to file administrative complaints to enforce violations. Concurrently, the Act also authorizes the Department of Justice to seek injunctive relief while administrative enforcement actions are pending before the USDA.
The U.S. Attorney’s Office for the Southern District of Texas subsequently filed a federal complaint seeking a preliminary injunction ordering Sam Kane to comply with the P&S Act while the administrative complaint is pending before the USDA.
Both complaints follow a prior Secretary of Agriculture order issued Jan. 17, 2017, requiring Sam Kane cease and desist from failing to pay when due the full purchase price of livestock. They also allege Sam Kane violated this order.
Assistant U.S. Attorney Chad W. Cowan is handling the matter.