A Lockport farmer who harnessed a team of active ISBA members to represent him has prevailed in a significant federal case involving the financial failure of an Illinois grain elevator operation.

Paul E. Siegel had been sued by Wells Fargo Bank, which was assigned the accounts receivable of Ty-Walk Liquid Sales Inc. when it defaulted on a $25 million loan six years ago.

After a four-day trial in U.S. District Court in Chicago, Judge Samuel Der-Yeghiayan ruled on June 8 that no binding oral contract existed for trading grain futures for Siegel's account with Ty-Walk.

Defense counsel included ISBA Agricultural Law Section Council member Greg Bowman of Princeton and vice chair John W. Damisch of Chicago, along with Robert C. “TJ” Thurston of Huntley, who like Damisch serves on the ISBA Assembly.

The verdict they achieved for Siegel may affect decisions in several similar cases still pending in federal court.

Ty-Walk pledged to Wells Fargo some 33 million bushels of farmers' grain it claimed to have stored in grain elevators in Minooka, Elwood, Joliet and Seneca. The total capacity of the elevators, and hence the amount of grain stored, was substantially less.

In addition to $25 million from Wells Fargo, Ty-Walk pledged the same grain to three other financial institutions for a total of $13 million more.

As a result, the grain elevators were closed in August 2001 and their licenses revoked by the Illinois Department of Agriculture. Two executives pleaded guilty in federal court and Kendall County Court and were sentenced to federal prison.

The $5.2 million Illinois Grain Insurance Fund was wiped out by payments to 327 farmer/producers, and $4 million from the state's general revenue fund was allocated to cover some additional losses.

Farmers such as Siegel, who delivered corn and beans to Ty-Walk elevators, were paid on delivery and had no knowledge that the firm was trading for them in the futures market.

The Wells Fargo claim against Siegel was for $450,000. Other pending cases include one against the estate of a farmer who died before the elevators closed, and another against a non-farmer from Springfield who never delivered any grain to Ty-Walk.

“A lot of farmers had grain in storage, and they made claims on the grain fund,” said John Damisch, who also serves on the Senior Lawyers Section Council, “but there were limits on the amount of each claim.”

He added that the farming community had been concerned that the Grain Insurance Fund did not have adequate funding.

Damisch pointed out that section council chair William J. Bolotin has represented other farmers in claims by Wells Fargo, and that a past chair, James R. Grebe, was an expert witness for the bank in a collateral matter.