Trustee to take over management of troubled dairies

The Lost Valley Dairy outside Boardman, Ore., is one of three dairies owned by Greg te Velde that will be managed by a trustee.

A bankruptcy judge in California will appoint a trustee to operate Lost Valley Farm, Oregon’s second-largest dairy, after finding owner Greg te Velde is “unwilling, or unable to comply with his duties as a fiduciary.”

The ruling, handed down Sept. 12, states te Velde has continued his long-standing pattern of drug use and gambling while owing creditors $160 million — including $68 million to Rabobank, a Netherlands-based agricultural lender.

In addition to Lost Valley Farm near Boardman, te Velde will lose control of his two dairies in California — GJ te Velde Ranch in Tipton, and Pacific Rim Dairy in Corcoran — with a combined total of 53,382 cattle.

When reached Friday, te Velde said he had no comment on the ruling.

The U.S. Department of Justice asked Judge Frederick Clement to appoint a trustee for all three of te Velde’s dairies, citing his alleged drug use, gambling and lack of financial transparency. Since filing for bankruptcy, te Velde has continued to use methamphetamine two or three times per week and has gambled away $2,000 to $7,000 per month, according to court documents.

Te Velde has blamed his financial problems not on his lifestyle, but rather on market forces outside his control, such as low milk prices and construction cost overruns at Lost Valley. But creditors in court papers say they believe that “darker forces have caused his insolvency, or if not the cause, preclude te Velde from effectively resolving his debt problems.”

Te Velde also does not abide by the orders of the bankruptcy court, Clement stated in his ruling. For example, after declaring bankruptcy, te Velde borrowed $205,000 from Pasco Farms without court approval. Between May 8 and June 2, te Velde was authorized to personally withdraw $10,000, but instead took $38,420, explaining he was “unaccustomed to personal bank accounts, took the cash he needed, and authorized his bookkeeper to pay his personal bills from the dairy accounts.”

Lost Valley Farm opened in April 2017 after receiving a wastewater management permit from the Oregon Department of Environmental Quality and Department of Agriculture, which jointly manage the state’s confined animal feeding operation, or CAFO, program.

Almost immediately, the dairy began racking up permit violations, including 32 infractions related to waste storage between June 28, 2017 and May 9, 2018. The state attempted to revoke the permit in June, though a Multnomah County Circuit Court judge ruled in August that Lost Valley Farm could stay in operation while te Velde and regulators worked out an agreement to get the dairy back in compliance.

Lost Valley is within the Lower Umatilla Basin Groundwater Management Area, established by DEQ in 1990 for elevated levels of groundwater nitrates. A spokeswoman for the Oregon Department of Agriculture said regulators continue to inspect the facility routinely, and have conducted 11 inspections since June 1.

Meanwhile, te Velde also filed for Chapter 11 bankruptcy protection in April after Rabobank sought to sell the Lost Valley herd to repay debts. Lost Valley has 10,500 dry and milking cows, along with 4,000 replacement heifers. The dairy is permitted for up to 30,000 animals.

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