As an auctioneer, I was appalled when Mr. Jeffrey Straley of Campbellsville, Kentucky, personally shared with me his story of fraud and misrepresentation in the livestock auction marketplace. I just couldn’t believe my ears.
 
Though the auction market place might not be as conventional as most of us are familiar with, nevertheless, it is dealing livestock in interstate commerce; the exact definition of a livestock market agency as defined by the Federal Packers and Stockyards Act (PSA).

The market agency in this case was LiveAuctions.TV, which is neither licensed nor bonded as required by the PSA for anyone engaged in the marketing of livestock. It would seem that what they’re doing is illegal. Yet, not the Kentucky Secretary of Agriculture, Attorney General, Farm Bureau, nor the office of the Packers and Stockyards have been willing to address this issue.

In a state of desperation, Mr. Straley even contacted the local politicians that represent his district, but no one seemingly had jurisdiction nor an interest in hearing his case. He even wrote a compelling letter to the CBS television show, 60 Minutes, but the story has not yet been aired.

The only story of Mr. Straley’s battle for justice in the market place was rst addressed by the Progressive Farmer magazine in the June/July 2013 issue. The article entitled “Going, Going, Gone”, written by Victoria Myers accurately and descriptively lays out in definitive terms exactly what happened to Mr. Straley in his attempt to participate in an online auction.

The Progressive Farmer has granted the Farm And Livestock Directory permission to reprint the story as means of corroborating our mutual attempt to bring attention to a very unfair, if not illegal, livestock marketing transaction which has gone unnoticed by our justice system.

The article reads as follows:
 

Going, Going, Gone

One cattleman is pushing back against online auction sites, demanding more transparency and new regulations.

By Victoria G. Myers | THE PROGRESSIVE FARMER | June/July 2013
(reprinted with permission from the Progressive Farmer)

 

All Jeffrey Straley wanted was a heifer from 44 Farms, out of Texas. Nearly a year  later, he’s convinced he had a bid run up on him and distrusts online cattle auctions.

It was Straley’s rst time to venture into the world of online bidding. He spent days before the auction wondering if he could even afford a heifer from 44 Farms.

He considers their cattle to be some of the top bloodlines in the Angus breed.

“I’m just a middle-class guy with about 50 head,” says Straley, who ranches in Campbellsville, Ky. “I don’t get an opportunity to buy a heifer like this very often.”

Straley saw an announcement for a 44 Farms heifer sale that was going to be online at www.liveauctions.tv. The site is owned by Brad Fahrmeier. This was the rst time he had considered buying online, so Straley did his homework, even calling 44 Farms about shipping rates.

“That was what really helped me make my mind up,” he says. “Texas is a long way from Kentucky. When the ranch told me they would charge $350 to ship one heifer all the way up here, I thought to myself, ‘There’s no way I could drive there and bring a heifer back for less than that’. So I decided to try to buy a heifer in the sale.”

Straley started the bidding process May 16, 2012. He says the clock showed 20 minutes left in the sale. The heifer he wanted, Lot 11B, was at $2,750. “These were 7- to 8-month-old heifers,” he says. “This was a lot to pay for my operation, but I really felt the bloodlines were so good they would add a lot to my herd.”

So Straley jumped in and bid $3,000. Then he says another bidder came back with $3,250. In a couple of minutes, Straley was at $4,000. “A bid came in at $4,250, and the computer ashed, right below my bid that I was out,” the cattleman says. “I knew this meant the heifer was gone. I had been outbid on her.”

GETTING A BAD FEELING
Straley started watching another heifer, adding he never went back to 11B to look at her again. He bought that other heifer, the “3” heifer, he calls her, in the nal bid portion of the auction for $3,300.

“I thought I was done. I was watching to see the end of the auction, and they bring 11B up again. She was the last one. When they do this the auctioneer tells you what bidder has the high bid, and they’ve got my bidder number. Whoa! She was still showing at $4,000, not $4,250. Now I’ve bought two heifers.”

Straley called the farm and explained the problem, but they said they never saw he was out on the rst heifer. They did not insist he take both heifers and let him decide which one he wanted. He took the 3 heifer.

“I’ll just tell you, I was embarrassed. I felt like a moron. I wondered if the guy at 44 Farms thought I was trying to pull something. I just did not understand this at all.”

Straley became consumed with guring out what had happened. He called Brad Fahrmeier, owner of the web site where the auction took place. He hoped Fahrmeier could explain what happened. The relationship did not get off to a good start when, Straley explains, Fahrmeier told him he was the other bidder on 11B.

“He said he decided he didn’t need her, so he pushed the bid back to me and told me that since he owns the web site, he could do that. He said 44 Farms was taking care of the other heifer and asked me what my problem was,” Straley recalls.

WORKING FOR CHANGE
Since that day, Straley has talked to 44 Farms management, people at the American Angus Association, the Kentucky office of the attorney general, representatives for the Packers and Stockyards Administration  to name a few. He insists something wrong took place that day and says if it happened to him, it has, and will, happen to other producers who try to buy cattle in online auctions. He wants to see these sites better regulated to protect buyers who have no idea who is bidding against them or how an auction is being run.

Fahrmeier, who responded to a request for an interview, says he is just the guy who provides software for the site. He sees no conflict of interest in bidding on cattle being sold over his own auction site. And he says he isn’t governed by the rules of the Packers and Stockyards Act.

“I am not governed by Packers and Stockyards. I don’t handle transactions. The owners handle the money. When we sell for 44 Farms, they collect the money. I get a at fee. I do not invoice,” he says.

Fahrmeier, who is also a Kansas rancher, adds, “I’m just another cattle producer who built a software program to bring Internet auctions to people who can’t attend in person. In this case, we wanted the same heifer. It’s just that simple. I was by no means pushing the bid up on him.”

OLD REGULATIONS
Since Fahrmeier operates on a at fee, he may be right that the Packers and Stockyards Act doesn’t apply to him. When it comes to which businesses are under the authority of Packers and Stockyards, and which are not, it gets murky.

Brett Offutt, director of policy and litigation for USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA), says there are currently no rules or regulations speci c to Internet auctions. He explains, “The Packers and Stockyards Act regulates people or companies who meet the definition of a market agency. Someone selling on a commission.”

Asked if charging a flat fee is enough to exempt an Internet sales company from being regulated under the Packers and Stockyards Act, Offutt says at this point, there is no clear answer and “there is no definition of ‘commission.’ ” He says the authority to write regulation is delegated by the Secretary of Agriculture. Ultimately, that’s where the decision must be made as to when to update or implement regulations.

The Livestock Marketing Association (LMA), based in Kansas City, Mo., is the principal trade organization for the livestock marketing sector. The LMA provides bonding for marketing agencies. LMA’s leadership is aware of the growing number of Internet sales sites.

Kristen Parman, vice president of membership services, says: “We represent about 70% of the local brick-and-mortar livestock auctions, also dealers and order buyers. Part of what we find is that there is an assumption it’s all the same. Producers are used to their local auction, and they assume that just because something looks like an auction, it’s the same. It’s not always.”

Parman explains auctioneers and weigh masters aren’t allowed to bid on livestock if they are actively running that auction. If they aren’t active in that auction, or are part of management or ownership, they are allowed to bid. “But this should be done in an open, well-informed manner,” she says. “Producers should know who they are bidding against.”

CONFLICT OF INTEREST?
In Straley’s case, he says he had no idea he was bidding against the owner of the web site. Fahrmeier says he often bids on cattle on his site, sometimes for his own operation, sometimes in the role of buyer for others. He considers this a common practice in the industry and insists he’s done nothing wrong or, for that matter, unusual.

But Straley’s confusion is easy to understand. Fahrmeier says he doesn’t invoice for cattle sold on his site, yet the invoice Straley received gave him two options for where to remit payment for the heifer he bought: One was directly to 44 Farms; the other was to “LiveAuctions.tv,” at a P.O. Box in Howell, Mich.

In addition, in a response to the Office of the Attorney General of Kentucky, Fahrmeier wrote, “The only reason I sold it [the heifer] to him [Straley] for $4,000 instead of buying the heifer myself for $4,250 was that I knew he had already purchased one heifer in the auction. This way he could ship two heifers from Texas instead of one.”

Straley believes this proves Fahrmeier “pushed the bid over to him” after he was out. Fahrmeier says it never happened, adding it could have been a slow Internet connection that caused the misunderstanding. He adds, “Bidding online will never be perfect.” Whatever the case, Straley has had a year of frustration and doors slammed in his face as he’s tried to figure out the rules for buyers on Internet sales sites.

“I know I’m not the first guy this happened to, and I won’t be the last. I’ll never buy on another timed Internet auction. It seems like a good way to buy cattle, and I like the convenience of it. But I won’t do it again until there is some clear regulation in place to protect guys like me.”

 

In the heat of battle, it seems that his clearest insight may have come in the form of a quote from his monthly church newsletter, “Help us Lord to know when to speak up and when to hold our tongue. Make us truly wise that we may do your will in every circumstance of life — not seeking our glory, but your will in things that matter.”

In so doing, he hasn’t left a stone unturned. He even has an attorney that has taken up his case in the form of a memorandum that represents the presentation of facts — a very well documented dissertation that should be very hard to ignore by those of legislative policy and power. Even the Director of National Agriculture Law Center at the University of Arkansas has acknowledged a willingness to take up his case, nobody has yet come to his defense in a court of law.

They all seem to skirt around the jurisdiction of malfeasance, as if it were nothing more than a nuisance complaint by someone who was just slightly wronged — not worth their time and effort. Nothing could be further from the truth, if allowed to perpetuate it can be equated to that of theft by swindle, which is punishable by law.

During the years I held positions of livestock market management, you can be assured that the letter of the law was adhered to, both in spirit and in fact. The Packers and Stockyards administration was respected and held in high regard for every aspect of compliance. So why do they turn a blind eye to what’s going on within the internet or television?

As a dues-paying member of the Kentucky Cattlemen’s Association and the American Angus Association, he is extremely disappointed that not even his peers will step up to the plate in support of his plea for due diligence and compliance of rules and regulations that have been in place since 1921 — the year the Packers and Stockyards Act was enacted.

This act specifically prohibits any stockyard owner, market agency, or dealer to engage in or use any unfair, unjustly discriminatory, or deceptive practice or device.

The law seems to be clear about who should be regulated, not withholding that of online auctions or any other version of internet marketing. So what will it take to bring justice and enforcement of the laws that are already in place? Does the law protect only the rich and famous, big companies and special interest groups, or does it apply to everyone?

This man has been unfairly treated and ignored for far too long. Who will be the next victim, and how high a price will have to be paid before this one lowly voice is heard?

But it’s not about him anymore. He’s paid the price – not an unsurmountable price, but maybe that’s why it hasn’t drawn the attention and scrutiny that it deserves. But if left unabated the cost will eventually be catastrophic, which is exactly the purpose of Mr. Straley’s vendetta — to protect others from such underhanded skullduggery.

Because there are no rules or regulations governing an online auction, the proprietor of the sale simply took it upon himself to run up the bidding, hoping not to get caught. In this case he pushed the bid up one time too many, and then decided to renege — pushing the bid back to the runner-up bidder.

The runner-up bidder was Mr. Straley, who by now realized that he had been conned. Though there were attempts to make things right, the crime had already been done and Mr. Straley wasn’t about to turn the other cheek as though he had not been wronged, or they were held accountable for their transgressions. He even went on to say that his action to keep going forward with this case was the will of God.

Here at Knightro, we stand on the premise of being your voice in the market place, and we’ve never stood taller than that of speaking out in defense of the Mr. Straley. It is my personal plea that someone with a backbone will stand up with conviction and the authority to make sure this never happens again to some unsuspecting soul.

Mr. Straley stands for all that is good and right about the livestock industry, and deserves the respect of all for whom justice, fairness, and equality in the market place is expected. As a loyal reader of The Knightro Report, I’m proud Mr. Straley chose me as his con dent to address the important issues of fairness, transparency, and compliance in the marketplace of  his choice.


(Editor's Note: For more in-depth information regarding the topics that have been touched upon in this report, Knightro conducts livestock marketing seminars on a regular basis. To schedule a seminar, auction, judging, or speaking engagement, please contact Ken Knight, Knightro, call or fax 715-262-8480; e-mail [email protected], or write him at: Ken Knight, Knightro Report, 136 Hillridge CT, Prescott, WI 54021.)

 

For more insightful stories written by Ken Knight read 

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