USDA again sanctions powerful hog buyer for cheating sellers

For the second time in four years, an influential nationwide pork dealer has been sanctioned by federal regulators for illegal buying practices that cheated hog sellers out of hundreds of thousands of dollars.

Lynch Livestock, based in Waucoma, Iowa, has been ordered to stop recording false weights for hogs delivered to its buying stations, to stop altering classifications of hogs delivered, and to stop creating false scale tickets. Those practices violate federal law and result in underpayments to producers.

In a consent order signed this month, the U.S. Department of Agriculture also ordered Lynch Livestock to pay a civil penalty of $445,626, which will be reduced for restitution paid to affected livestock sellers.

The USDA had ordered Lynch Livestock to cease and desist from the same improper buying and weighing practices in October 2017 and to pay a $15,000 fine and restitution to two companies that were the primary targets.

The company promised then to overhaul its practices by adopting digital-only scales, replacing its software to ensure animal weights were properly recorded, and hiring a chief operating officer, according to documents obtained by The Associated Press under the Freedom of Information Act.

But the problems did not stop, in at least one of its buying stations.

The USDA said that its investigation found that from January 2018 through December 2020, Lynch falsified its purchases from sellers by “manually manipulating the scale” at its Waucoma buying station, causing it to record a lower weight for hogs they delivered.

Lynch Livestock is owned by Gary Lynch, who is a longtime financial supporter of Iowa State University athletics and Republican politicians in Iowa, including Gov. Kim Reynolds and U.S. Sen. Joni Ernst. His foundation’s annual banquet in June featured Minnesota Vikings head coach Mike Zimmer and Iowa State's football and basketball coaches.

Lynch Livestock is a USDA-licensed livestock dealer that operates 39 buying stations in Iowa, Minnesota, Illinois and five other states. The company purchases hogs from a range of producers and markets those animals to packing plants around the country for companies such as Johnsonville Sausage and Bob Evans. Gary Lynch also owns packing plants in Iowa and Minnesota and a roasting plant in Decorah.

In both enforcement actions, Lynch Livestock cooperated with investigators and agreed to settle the alleged violations without admitting or contesting them. The USDA said that the company “immediately took corrective action” even before agreeing to the latest consent order.

Gary Lynch, 74, hasn't responded to a phone message and an email seeking comment.

His brother, John Lynch, has alleged in a lawsuit that he discovered illegal transactions, including inaccurate weight tickets and sorting irregularities, reported them to company officials in April 2017 and was fired for doing so. His lawsuit was put on hold while John Lynch, who suffered a devastating stroke hours after his firing, pursues a workers' compensation claim.

Shortly after his brother's firing, Gary Lynch in May 2017 self-reported irregularities in his company’s weighing practices to USDA and asked for an audit, records show. The agency enforces the Packers and Stockyards Act, which is intended to protect farmers and ranchers against unfair practices in the livestock industry.

That investigation found Lynch Livestock “willfully violated” the law by arbitrarily lowering weights for hogs delivered to its stations, downgrading the classification of hogs, fictitiously claiming dead hogs to lower the price and creating false scale tickets to back up the altered weights, records show.

The USDA documents identified Iowa Select Farms, the state's largest pork producer, as one of the victims. The USDA redacted the name of others and the amount of restitution sellers were to be paid. An Iowa Select Farms spokeswoman declined comment.

The 2017 case didn’t erode Lynch’s standing in the industry, philanthropy or politics. The Iowa Pork Producers Association named him an honorary master producer the next year.

Gary Lynch has given at least $115,000 to Reynolds’ campaigns since 2016 and tens of thousands more to the Republican Party of Iowa, state legislative leaders and members of Congress, disclosure records show. At a 2019 event for Iowa Select Farms owner Jeff Hansen's charity, Lynch paid $4,350 to win an auction for an afternoon with the governor, including lunch at her mansion and a Capitol tour.

After the pandemic began in April 2020, Lynch Livestock was one of the first Iowa companies that received on-site COVID-19 testing by a strike team deployed by the Reynolds' administration. Critics have argued that well-connected companies were given special treatment, while Reynolds has denied that politics were a factor.