PIERRE, S.D. (KELO) — An Iowa company must close its two pig-buying stations in South Dakota for 15 days as part of its punishment for defrauding livestock producers and farmers in Iowa.

Lynch Livestock must also post a $100,000 letter of credit as possible restitution for any claims that a South Dakota farmer or livestock producer might bring in the next three years regarding the company’s illegal actions.

The company agreed to the terms with the South Dakota Animal Industry Board on Tuesday in a face-to-face meeting. The state board is responsible for the health of livestock and their marketing in South Dakota.

Representing Lynch Livestock were its livestock compliance officer, Anamarie Judd-Hermesch, who joined the company in 2022, and Pierre attorney Aaron Scheibe.

On February 10, 2023, the U.S. Justice Department announced that Lynch Family Companies, Inc., of Waucoma, Iowa, was sentenced to five years of federal probation, fined $196,000 and ordered to pay more than $3 million in restitution to producers and sellers who took swine to the company’s Iowa buying stations.

The company had pled guilty on July 29, 2022, to one count of failing to comply with an order of the U.S. Secretary of Agriculture. Four men involved in the company’s purchases of pigs also pleaded guilty that summer and one was sentenced to six months in federal prison.

According to the Justice Department, the company’s second-ranking official began directing others in the company to falsely reduce and downgrade the numbers, quality and weights of swine that producers and sellers delivered to the company’s buying stations. This practice began in the early 2000s and continued through at least late March 2017, according to the Justice Department.

The company agreed to a consent order with the U.S. Department of Agriculture in 2017. Company managers and buyers however used a crowbar and similar objects in 2018 through 2021 to manipulate scales at its buying stations. That led to a second consent decision.

Scheibe emphasized Tuesday to the South Dakota board that no evidence has surfaced of such activities occurring at the company’s South Dakota buying stations, which are in Aberdeen and Alexandria. He said there’s been a series of management changes throughout the company in the past two years.

Kevin Larson of Aberdeen, who represents auction markets on the board, said he knows the company’s owner, Gary Lynch. “This just kind of blows my mind,” Larson said. He observed that Lynch was disconnected from this part of the business. “He was letting people run this thing.”

Steve Rommereim of Alcester, who represents pork producers on the board, said he knew Lynch, too. “I really feel bad this had to happen, but I’m glad it did,” he said.

The board’s lawyer, Chelsea Wenzel from the South Dakota Attorney General’s office, said Lynch Livestock applied for renewal of its South Dakota license in 2023. Because of the violation, she said, the board could either deny the license or suspend it for up to one year.

Lynch agreed to a 15-day suspension and the $100,000 letter of credit. The restitution would apply to any instance where a South Dakota producer or seller could prove damage was committed by Lynch Livestock on or before February 10, 2023.

Larson said the company’s station at Aberdeen was a busy place. “There’s trucks there every day,” he said. “They don’t really buy normal pigs. These are clean-outs.”

Rommereim said imperfect pigs produced at his operation are trucked to Iowa and sold there. He said Smithfield won’t accept pigs that aren’t perfect at its Sioux Falls processing plant. “They take them off the truck,” he said.

Dr. Beth Thompson, the state veterinarian for South Dakota, oversees inspections for the board. She said Lynch Livestock’s two buying stations were important for South Dakota swine producers but the board must keep in mind its oversight responsibility.

“This is significant for South Dakota producers,” Thompson said.