Tuesday, 9 March 2010

Sarah Palin's Dairygate : Kristan Cole's Mat-Maid Christmas giveaway - UPDATE

Dairygate is a very complicated topic. When I think I have finally made sense of the whole mess and have the complete picture, another piece of the puzzle appears from somewhere. I may not have the complete picture yet, but each time I add another piece, it becomes clearer... and uglier.

Thanks to our resourceful readers, a pdf of the minutes of one of the Board of Agriculture (BAC) and Conservation was posted, among other useful information, drawing my attention to something I had not yet realized: Sarah Palin's pal Kristan Cole and her gang call the shots in approving the loans made by the Agriculture Revolving Loan Fund.

It's a very neat arrangement. Kristan Cole, Franci Havemeister, Ray Nix and a few other cronies consider and approve loans made by the ARLF, including those to the new Matanuska Creamery, owned by Valley Dairy Inc., headed by Karen Olson, Kyle Beus and Bob Wells.

Kristan Cole is assisted on the legal front by an Anchorage attorney called Jon Givens who, by sheer coincidence, is the attorney for Sarah Palin's "legal" fund, The Alaska Fund Trust. Kristan Cole is the sole trustee of the fund and has not produced a single quarterly report as promised on the AFT's website.

Kristan Cole with Jon Givens

I will attempt to put Dairygate in a nutshell, including information contained in older posts, so anybody not familiar with the story can have a quick overview without the need to click on several different links.

The Alaska Creamery Board, a sub-committee of the BAC, which oversaw the dairy, then called Matanuska Maid Dairy (Mat-Maid for short), met in May and discussed privatizing or possibly closing the dairy. It subsequently voted to close it, and on June 13 the Board rejected Sarah Palin's public request that it keep the dairy open, saying it stood by its decision to close the dairy plant as of July 7.

Sarah Palin made a big show regarding a visit to the Mat-Maid plant in Anchorage on June 13, knowing perfectly well that the management was holding a meeting in downtown Anchorage to decide the fate of the state run dairy business. Meg Stapleton was at the Westmark Hotel , monitoring the movements of the CEO, Mr Joe Van Treeck. Without his presence at Mat-Maid, the visit could not go ahead. Two of Todd Palin's cousins, Nick and Roger Voorhees, kept Meg informed about how things were developing at the dairy, where Sarah Palin and her entourage were huffing and puffing for the benefit of every TV camera in town. The media had been invited to cover the pre-planned non-event, known to just about everybody, except for the dairy's CEO. By the time Mr Van Treeck managed to leave the Westmark and headed to plant, about eight minutes away, the Palin circus had been tipped-off by Todd's cousins and left before Van Treeck could park his car upon his arrival at the dairy.

On June 18, Palin fired the entire membership of the BAC, and replaced them with an assortment of Mat-Su Valley residents, all without any experience in running a dairy, but with family or business connections with the Valley's milk producers, which then installed itself as the Creamery Board, removing a whole tier in the management chain.

The new management quickly announced profits of $60,000, showing how efficient they were in putting the business back in the black. In August, it was revealed that the dairy had in fact sustained record losses of $300,000.

On August 29, 2007, Palin announced that the business could not be made profitable and would be offered for sale. She said that the board could use $600,000 of state money to help with the transition to a private operator.

On December 7, with a required minimum bid of $3.35 million for the dairy, no bids were received and all dairy operations were scheduled to close later that month. Two of the Valley's dairy farmers came forward and offered to lease the equipment to start their own dairy and a further loan of $200,000 was made available to them, provided they started production at the now renamed Matanuska Creamery by the end of December. They only started operations in March 2008, but received the money anyway.

Matanuska Creamery is owned by one of the biggest milk farmers in the area, Kyle Beus, and Robert Wells, a Mat-Su Borough Assemblyman, who is also president of Alaska Farmers and Stockgrowers Inc. The CEO, Karen Olson, doubles as CFO, which enables her to write fat checks backed by several generous "loans" from the ARLF to herself...

Kristan Cole, forever helpful to her valley friends, offered them a nice Christmas present, worth close to $1,000,000!

kristan cole xmas pillage e-mail

Joey Austerman went to school with Sarah Palin. Donna was the Company Controller, second in command at the old Matanuska Maid, and they didn't want her to see what was going out of the door. The crates alone were worth $5 each and there were thousands of them. They wanted to appear to be thrifty by recycling the crates and yet they failed to turn a profit. This Christmas pillage happened before the equipment of the old Matanuska Maid was officially auctioned!

For the details of what exactly went missing in this "Christmas pillage", see the update 2 below!

On top of the two loans provided by the state, Ted Stevens arranged a $634,000 USDA grant for Beus and Wells' new venture, Matanuska Creamery, in March of 2008.

Between September and November 2008 Matanuska Creamery applied for a further loan from the state. After much wrangling over personal guarantees, which were removed in a meeting on November 21, the Board, which is comprised of Governor Palin's appointed friends and neighbours, ended up voting to give the Mat-Su Valley business a $630,000 loan. The BAC approved the unsecured operating loan in the full knowledge that the business did not have the cash flow to make the payments.

Matanuska Creamery didn't have a very good start. 30,000 pounds of cheese in their cold storage, which had already been sold in "cheese futures" deals without insurance, were found to be contaminated with e.coli, listeria and staph and had to be thrown away. Matanuska Creamery made a loss of $250,000.

These are some of the main characters in this farce:


Photo 1, Kristan Cole, chairwoman of the Board of Agriculture and chairwoman of the Creamery Corporation Board. Daughter of Cheryl Mosely convicted felon... caught embezzling over $700,000 from two trust funds in Canada and Iowa, Sole Trustee of the Alaska Fund Trust and best friend to Sarah Palin.

Photo 2, Franci Havemeister, Director of Agriculture, previous soccer mom, had a basket business and loved cows as a child. Her father-in-law is Bob Havemeister, who owns the largest dairy farm. Went to high school with Sarah and now makes $95,000 a year

Photo 3, Kyle Beus, co-owner of the new Matanuska Creamery, previous dairy farmer who defaulted on a $2,000,000 dairy loan with the state

Photo 4, Karen Olson, CEO and CFO, co-owner of Matanuska Creamery. Previous dairy farmer who also defaulted on a $2,000,000 dairy loan in the past. She said on KTVA that they are now selling all they produce, so if that is the case and they have not been able to pay the farmers all they are owed for the milk, how are things going to get any better?

Photo 5, Rob Wells, previous Director of Agriculture, currently wearing an ankle bracelet for hitting a young boy on a snow machine and leaving the scene of the accident. Was involved with cranking out 30,000 lbs of cheese that had listeria and e. coli.

The latest instalment
in this saga is the approval of yet another loan from the ARLF for $200,000, which Ms Olson said is going to be used to repay a previous loan and the milk suppliers.

Andrew Halcro gives us an insight into their business practices:

There is no question that the Valley Dairy is being run by people with a track record of defaulting on government loans. Between Kyle Beus and Karen Olson, they've defaulted on $4 million in loans.

This past fall, after discovering that Beus had made a draw of $15,000 from the dairy's account, Olson was heard by her former office administrator saying, "we're all f--ked...probably doing some jail time," as she paced the floor.

According to the former Milk Room Supervisor, the dairy has continued to dump milk in their septic system as well as spilling milk behind the dairy, after promising DEC that it would be cleaned up before it drains into the Wasilla Creek.

Beus has been seen by employees making cash sales to customers in the ice cream room and pocketing the money, as well as paying employees in cash.

The ARLF page on the State of Alaska website has clear rules regarding their loans:

arlf loans

Let's have a look at the total received from the state so far:

$600,000 - August 2007
$200,000 - December 2007
$630,000 - September/ November 2008
$200,000 - March 2009

The initial $600,000 loan was very likely written off as a loss when the dairy was still run by the state, so we can't officially consider it when calculating whether they are over the limit. The latest loan does take them above the limit, but all they have to do is repay $30,000 and go on their merry way, producing sub-standard over-priced products that cause food poisoning, paying the farmers twice what their milk is worth, until they have an itch to apply for another loan from their chums at the ARLF, in an endless loop.

The rules regarding ARLF loans are clearly laid out here. Pay particular attention to item (f).

item f

Whatever equipment escaped the Christmas pillage was leased to them for $1,900 a month. Halcro touches on how they met these payments:

After less than a year in business, the Valley Dairy has successfully produced 30,000 pounds of contaminated cheese, failed to pay lease and tax payments promptly, mishandled milk waste around the Wasilla Creek and obtained state loans through fraudulent information and insider dealings on behalf of the Director of Agriculture and the Chair of the Agriculture Board.

The people involved in this private enterprise obviously don't know the first thing about the dairy business. Despite the $2,264,000 poured into it, they still haven't got their act together. Their track record makes them much more suitable to run a laundry business.

Sarah Palin's proud announcement when she quit as governor puts the cherry on the cake:

"We took government out of the dairy business and put it back into private-sector hands - where it should be."

Look at her face after she finished her quitting speech:

Sarah Palin looks like the cat who got the cream...



We are grateful that our readers have posted so many additional investigative details in the comments and would like to encourage everyone to keep digging. However, today we can only add a short update. More will follow in due course.

We have created a compilation of links which are connected to Dairygate - you can download them HERE.

Note: Although this post has some new revelations, the bulk of it is simply an easy to follow overview of Dairygate. It would have been impossible to write it without referring to Andrew Halcro's blog, where a vast number of well researched, all sourced posts can be found. To read a lot more about Dairygate, please search Mat-Maid on Andrew's blog and let your heads spin!


As a nice way to close this post, I'm going to share a comment on Andrew Halcro's blog with you. Somebody had a fairly accurate idea of what Santa-Kristan Cole-Claus put under her valley friends' Christmas trees:

Why on the Division of Ag website is # 4 under "Mat Maid Disposal" been DEACTIVATED? It was the complete list of inventory. Why was that removed a week ago? They don't want anyone to know what is missing???
They can't have it both ways...either they are a State Agency or a Private Corp.......they need to pick....they go back and forth almost weekly.
Auctioneers should be interested to know that the homogenizer, pasteurizer, gallon filler, stainless steel tanks, 3,000 linear feet of stainless piping, 15,000 milk cases, forklifts, all laboratory equipment numerous trucks and trailers, all the cheese equipment are all gone. They will not be available for the auction. All this is in the hands of the new Valley Dairy in Wasilla.
No one was given the opportunity to bid on any of this. In three days flat it was all hacked out of Mat Maid and delivered to three private individuals, Kyle Beus and Karen Lee Olson (defunct dairy farmers) and Rob Wells.

Sarah Palin knows how to cover her tracks and always assigns other people to do the dirty work. But if we put the pressure on her school friends appointed to high positions in her administration, I wonder... would these people be prepared to serve time in other government institutions for her?

(Andrew Halcro's article "The Valley Dairy: Got Fraud?" also appeared on Alaska Free Press.)

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