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Former Humboldt Creamery CEO Rich Ghilarducci will plead guilty to a single federal charge filed against him of making false statements to an agricultural credit bank, according to a statement from his attorney.
”Rich has agreed to waive indictment and will plead guilty to this charge,” Ghilarducci's attorney, Elliot Peters, said in a statement sent to the Times-Standard on Tuesday. “Rich accepts responsibility for providing false financial information to Humboldt Creamery's lender in 2007.”
The charge, filed last week, alleges that between November 2007 and August 2008 Ghilarducci knowingly made a false report and willfully overvalued property and security for the purposes of influencing the action of an agricultural credit bank. Specifically, the charge states that Ghilarducci violated Title 18, United States Code, Section 1014, by providing false information and supporting documents to an accountant preparing a 2007 financial statement submitted to CoBank for the purpose of monitoring and extending an existing loan.
Ghilarducci faces a maximum fine of $1 million and a 30-year prison sentence if convicted of the charge.
A spokesman for the U.S. Attorney's Office, which filed the charge, said he could neither confirm nor deny that a plea agreement has been reached in the case.
News of the charge, and of Peters' statement, spread quickly through the Eel River Valley, whose roots have been shaken to the core as it's watched
About a month after reporting record sales in excess of $130 million in 2008, Ghilarducci resigned abruptly in February 2009, sending a letter to the creamery via his lawyer late one Friday afternoon, announcing his resignation and warning the company of potential discrepancies in its financial records. Within months, the creamery would file for Chapter 11 Bankruptcy protection, to later be sold for $19.25 million to the Modesto-based Foster Farms Dairy at auction.
Long-time creamery board member Dennis Leonardi said he often traveled with Ghilarducci while serving as chairman of the board, spent time with him and generally considered him a friend. The Wednesday before Ghilarducci's resignation, Leonardi said, the two had lunch together and Ghilarducci gave no indication things were terribly wrong.
”There was not a word. Not a nothing. Not an inkling. Then, he fled in the dead of night,” Leonardi said.
Similarly, 29-year-cooperative member Dave Renner said he recalled sitting at a January 2009 board meeting when Ghilarducci went over the company's financials, indicating a $1.3 million profit for 2008. In retrospect, Renner estimates the company's books must have been $50 million in the red at the time.
”It's unbelievable,” Renner said. “To me, he was kind of a personal friend. It hurts there, too. All of a sudden, you were betrayed. You were lied to. It's cost the families and businesses around here incredibly, and it didn't have to.”
Renner's last statement seems to underscore the feelings of many in and around Ferndale: This didn't have to happen, and all could have been fixed if Ghilarducci had just fessed up to financial problems when they first arose. Dairymen are a tenacious and creative group, they said, and could have made whatever adjustments necessary for the company to prosper.
”What he did is unforgivable,” said 35-year dairyman John Vevoda. “He should have just been honest with us, but he just left us holding the bag.”
Peters, Ghilarducci's attorney, concedes his client made “some bad decisions” but maintains he “was always motivated by a desire to help the business.”
”When Humboldt Creamery's finances deteriorated, Rich took steps to withhold that information from the creamery's lender, in the hopes of avoiding drastic financial consequences for the dairy farmers,” Peters said in the statement. “Rich was never motivated by personal profit or gain. In fact, when the creamery filed for bankruptcy, Rich and his wife lost hundreds of thousands of dollars they had loaned the creamery.”
Vevoda said the “loans” come as little consolation to the area's dairy community.
”That was all bonus money,” Vevoda said. “The better he made the books look, the more money he got. As dairymen, he was stealing from us. That's the bottom line.”
Peters continues in his statement to say he hopes Ghilarducci is judged by his “full life's work, including his many positive and significant contributions to the residents of Humboldt County and the dairy industry.”
Leonardi said he doesn't see much positive.
”I just have a hard time believing there's any benefit in running an 80-year-old company into the ground and putting the family farms that built that place in jeopardy by not being forthcoming,” Leonardi said. “Generations of effort could have been saved if someone had raised their hand and said, 'Time-out. We've got a problem that we need to fix.'”
Former creamery General Manager Len Mayer said he thinks it's positive that Ghilarducci's case is moving forward. Mayer described the confusion felt in the wake of Ghilarducci's departure, and how creamery officials were left frantically looking through the company's financial records for some inkling of the “discrepancies” Ghilarducci's ominous resignation letter had warned of.
A picture started to come into focus, Mayer said, when officials found documentation of borrowing-based certificates -- documents that a borrower provides a lender to show they have the assets to back a loan.
”Once we pulled those and looked at them and saw what the numbers said, that was my first indication,” Mayer said. “You could tell from the numbers -- they looked like they were misstated by a very material amount. At that point, we knew it was a big deal.”
Mayer, who said he will be starting a new job as the general manager of Lost Coast Brewery beginning in March, is looking forward to putting this whole deal behind him. But, Mayer said, he will keep a close eye on the Ghilarducci case as it moves forward.
”I hope that the ultimate resolution fits the impact on the community,” he said. “Obviously, there were hundreds of hundreds of people who were affected by this -- people who lost jobs and people who lost livelihoods. Hopefully, the ultimate resolution is somewhat commensurate with that.”
Some dairymen, like Leonardi, said they plan on attending Ghilarducci's yet-to-be-scheduled sentencing hearing, saying they feel it's part of the process of healing and finding closure. Others, like Jim Regli, said it would be nice if Ghilarducci simply apologized and asked for forgiveness from the community he grew up in, helped build and then sent spiraling into a year of angst and loss.
Still others say they simply have too much work to do to spend their time looking back.
”Here I am at 57, thinking that I'm going to be able to take it easy, and now I have to work harder than I ever have before,” said Vevoda. “It's a bitter pill to swallow.”
Thadeus Greenson can be reached at 441-0509 or tgreenson@times-standard.com
