Aid to Ranchers Was Diverted For Big Profits

Flory Eutzy walks past bags upon bags of powdered milk, part of the federal government's stockpile, stacked in her company's warehouse in Chambersburg, Pa. (By Bill O'leary -- The Washington Post)

That same week, a series of anonymous phone calls were made to the Utah officials describing alleged abuses in the program. One caller "indicated that he suspected the product . . . was being shipped to foreign markets," according to an Oct. 31 e-mail written by Utah Deputy Commissioner of Agriculture Kyle R. Stephens.

The e-mail was among thousands of pages of investigative files and government records that The Post obtained from state and federal agencies under the Freedom of Information Act. Those records, as well as interviews with more than 50 government officials, traders, brokers, mill operators and feed companies, show that the Utah shipment was part of a chain of transactions that stretched from Wyoming to Idaho to Utah to Mexico.

The chain began in June 2003 when Randy Schreiber, the Utah broker, decided to get into the powdered-milk market. Schreiber's tiny company, Impression Foods, specialized in buying and selling food internationally. He said he had never sold animal feed before.

According to Schreiber, he didn't have to look very hard to find the government's powdered milk. "Traders found me," he said. "I never contacted anyone. People just called."

One call came from Walton Feed, based in Montpelier, Idaho. The firm had access to tons of powdered milk, which it had traded or purchased from ranchers and brokers.

Greg Kunz, one of the owners of Walton Feed, said his company handled 200 to 300 truckloads. Each truck held about 22 tons. Kunz said he was paid up to $160 a ton by some brokers. "I made $40 on top," he said. "But remember, I had to store and reload it."

Kunz said he had an agreement with Schreiber that the broker would use the powdered milk "within the prescribed guidelines of the program." But he added that Walton officials didn't track the milk once it left their possession and "didn't know how Randy used the product."

Schreiber arranged to have the powdered milk remixed and repackaged at two mills in the Salt Lake City area. Sherman Robinson, the owner of Lehi Roller Mills near Provo, said Schreiber paid him 9 or 10 cents to repack each 55-pound bag.

"They ran a lot of product through here . . . probably 5 or 6 million pounds," Robinson said.

Shipping records show that of the 11 million pounds of powdered milk handled by Schreiber, half went to Mexico.

"I would guess if it was going overseas it would be lumped into a [cargo] container. We loaded some containers here, too," Robinson said. "The only reason I had to suspect that it was going to Mexico was the Spanish on the labels."

Schreiber declined to identify his Mexican customers. Records show that one was Monte Roble S.A. de C.V., a small food company near Mexico City. A Nov. 19, 2003, export certificate shows that Impression Foods shipped 765 bags to Monte Roble. The description was "animal products."