Manager of grass seed company faces charges for embezzlement, fraud schemes

A manager of a Washington-based seed company was charged with laundering and wiring more than $15 million through multiple schemes to defraud the company's former owner and its customers. 

Former Jacklin Seed Company General Manager Christopher Claypool, 52, of Spokane, Washington faces charges of conspiracy to commit wire fraud and money laundering against the company's former owner, J.R. Simplot Company, U.S. Attorney Billy J. Williams said in a release Tuesday. 

Jacklin Seed Company is a producer and marketer of grass seed and turfgrass based in Liberty Lake, Washington. Claypool oversaw the company's product sales to domestic and international distributors.

U.S. attorney officilas said Claypool's alleged schemes include packaging seed varieties with false and misleading labels, embezzling more than $12 million while posing as a foreign sales partner and conspiring with a travel agency in Spokane to inflate costs of his international business travel.

If convicted, Claypool could face up to 70 years in prison, fines of more than $15 million, and five years’ supervised release, officials said. His arraignment has not been scheduled.

According to the U.S. Attorney's Office, the company contracted with independent growers for the production of proprietary grass seed varieties and fulfilled orders from a distribution facility in Albany, Oregon. Differences in grass seed yield rates resulted in the over-delivery of some varieties and underproduction of others.

At some point between 2013 and 2015, Claypool realized that growers’ preference for higher-yield grasses was creating substantial shortages of lower-yield varieties Jacklin had contracted to deliver to its customers, officials said. 

Claypool and a colleague who oversaw product fulfillment at the Albany distribution facility realized the shortages would either cause Jacklin to fail to deliver on its contracts or require Jacklin to pay a premium to growers to acquire necessary inventory, resulting in a decrease in profit.

"Claypool and his colleague anticipated that either result would negatively affect their careers," officials said. 

From January 2015 through at least the summer of 2019, Claypool and his colleague directed Jacklin employees, at the Albany facility and other locations to fulfill customer orders with different varieties of grass seed than the customers had ordered and use false and misleading labels for packaging.  

Officials said the company invoiced customers for more than $1.1 million of grass seed the company never delivered.

Claypool and his colleague referred to this scheme as “getting creative.”

In Claypool's most "lucrative" alledged fraud scheme, he embezzled more than $12 million from Simplot posing as foreign sales partners.

Coconspirators then transmitted part of their profits to accounts in Hong Kong to real estate investments in Hawaii under Claypool’s control.  Years later, Claypool sold the real estate and wired the proceeds to investment accounts in Spokane.

In another scheme, Claypool made about $369,000 in fraudulent commissions after he directed an accomplice to create a limited-liability corporation (LLC) to pose as an independent grass seed broker. 

He and the colleague allegedly conspired to route a portion of Jacklin’s overseas sales through a competing grass-seed seller based in Jefferson, Oregon. The company would, in turn, add its own mark-up to the sales and kick back outsized commissions to Claypool through his accomplice’s LLC. The alleged scheme took place between December 2018 and August 2019. 

In another suspected scheme, Claypool conspired with the owner of an independent travel agency in Spokane to inflate the costs of Claypool’s international business travel.

Instead of using Simplot’s contract travel agency, Claypool's independent travel agent booked economy fares for Claypool, but created fake first-class bookings on the most expensive itineraries in order to generate inflated invoices that were sent to Simplot.

In total, the agent overbilled more than $500,000 for international airfare, the majority of which Claypool ultimately received in kickbacks from the agent.

This case is being investigated by IRS Criminal Investigation and the U.S. Department of Agriculture Office of Inspector General. It is being prosecuted by Ryan W. Bounds, Assistant U.S. Attorney for the District of Oregon.

Virginia Barreda is the breaking news and public safety reporter for the Statesman Journal. She can be reached at 503-399-6657 or at vbarreda@statesmanjournal.com. Follow her on Twitter at @vbarreda2.