FARGO -- There should be "no excuse" for the false financial statements made by Tom Grabanski, an embattled Grafton, N.D., farmer, the attorney for the company that he allegedly lied to told the court April 19.
Roger Minch, who represents Crop Production Services Corp., said the company used those statements to extend credit to Grabanski.
DeWayne Johnston, who represents the farmer, said Grabanski had "no intent to defraud" anyone, was a victim of "larger market forces" and intended to repay creditors and, "in fact, he still will."
Minch asked bankruptcy Judge William A. Hill for a money judgment to make sure CPS always can collect its full $777,581 debt, even if the case emerges from bankruptcy.
Grabanski and his wife Mari are mired in three separate Chapter 11 bankruptcy cases and allegations of fraud in Texas and North Dakota dealings.
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Hill has threatened to throw the Grabanskis primary individual bankruptcy case out of court because they've failed to make deadlines. In separate, related lawsuits, the Grabanskis face several "adversarial" lawsuits, filed by certain creditors, including the CPS case.
CPS extended more than $1 million in credit, AgCountry Farm Credit Services $1.5 million and PHI Financial $7.4 million.
Tom Grabanski appeared in court April 19, but did not testify.
Though he said he'd like to tell Agweek his side of the story, he declined to do so at this time. "It'll all come out eventually," he said. For now, he said, he just wants to "move on and pay my bills."
The Grabanskis, whose story has attracted wide interest because of its multistate scope and the number of partners and creditors involved, moved last year to Blossom, Texas, where they farm.
What attorneys said
CPS trusted Grabanski, according to Minch, because the company had successfully extended crop input credit individually to Grabanski, his father Melvyn, and his partner John Keeley, from 2004 to 2008.
Trouble started in 2009 when Melvyn Grabanski dropped out of the picture and Tom Grabanski and Keeley started their farming and land partnerships, Minch said.
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Vance Stroebel, a CPS credit manager from Flower Mount, Texas, testified that Grabanski's financial statements showed that he and his partnerships in January 2009 owned $19 million in land and $1.4 million in equipment.
In May 2009, Grabanski said he had personal net worth of nearly $9 million. The partnerships, he said, had a positive cash position and a $4.4 million revolving line of credit from Choice Financial bank in Grafton.
Based on this, CPS extended more than $1 million in crop input credit to Grabanski's partnerships on "crop terms," or 60 days from shipment, but the payment would come after the crop was harvested.
Johnston questioned whether Stroebel phoned Grabanski to verify financial statements that were not signed, or simply "assumed" the records, which a CPS salesman told Stroebel he'd acquired from Grabanski, actually came from Grabanski.
Minch said Grabanski testified earlier that he'd provided the statements to CPS.
Stroebel said he recommended cutting off further credit on March 10, 2009, when Grabanski couldn't interest Pro Partners, a third party Farm Credit Services entity, to help finance the deal. Stroebel said he's been in the ag lending and analysis business since 1982 and the Grabanski case is the first "big loss" he's had in his career.
