Cheesemaker Charged With Skimming $20K From Dairy Farmers

Prosecutors: More Than 80 Farmers Victimized In Yearslong Scheme

Gavel and books on a desk
Joe Gratz (CC)

The owner of a central Wisconsin cheese plant stole more than $20,000 from dairy farmers by forging their signatures and keeping their federally required payments, according to new charges from the state Justice Department.

Michael J. Moran is charged with a single count of felony theft in a scheme state prosecutors say defrauded more than 80 farmers in Wood County. Moran is the owner of Wisconsin Dairy State Cheese Co., a cheesemaker and retailer in Rudolph.

“Wisconsin’s dairy farmers are in the midst of a crisis,” Attorney General Josh Kaul said in a release. “It’s particularly galling that theft alleged in this case resulted in money being stolen from milk producers during such a difficult time.”

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At issue are underpayment checks Dairy State Cheese owed to milk producers. Farmers are entitled to a federally regulated minimum price for their milk. But that rate is based on how much milk was produced and what it was used for in the entire region, and there’s usually a lag of a month to six weeks in determining the milk prices.

The dairy farmers who sold to Dairy State Cheese took home a check that was essentially an estimate of the expected price of milk based on the last month’s rate. But once rates were set, if they had increased at all, Moran and Dairy State owed those farmers the difference.

According to the criminal complaint, Moran accounted for the underpayments and made out the checks to the satisfaction of federal auditors. But instead of paying them to the farmers, he forged the farmers’ signatures and cashed them himself.

“Farmers don’t always know what the minimum prices were that were announced,” said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison. “They don’t sit on top of that and follow it. It’s entirely plausible that this could have happened and perhaps happened before and just wasn’t caught.”

In fact, according to the criminal complaint, a Dairy State employee told investigators in August that Moran had said, “I’ve been doing this for many years, and the (federal) auditors have never caught on.”

Moran is charged with thefts beginning around January 2012 and continuing through April 2018.

The amounts of the individual underpayment checks were relatively small, especially since most of the farms were small dairies. The criminal complaint details one victim whose signature was allegedly forged on 12 checks totaling $417.47, an average of about $35 per check.

“That would be really easy to be lost, and the farmers might never even particularly notice that,” Stephenson said.

But prosecutors say Moran was skimming from approximately 83 milk producers for years. They estimated the total losses to the producers at $21,250.97.

The DOJ noted that of the 83 alleged victims, 21 are over 60 years old.

Wisconsin lost 10 percent of its dairy farms in 2019 amid a dairy crisis that is reshaping the state’s signature industry.

Moran is scheduled to appear in court on Monday, Feb. 24. He has reportedly been removed as president of the company and from the company’s board, though he retains his ownership stake. He faces a potential maximum sentence of up to 10 years in prison and a fine of $25,000.