The Washington PostDemocracy Dies in Darkness

Trump’s pick in a key Senate race touts his agriculture ties. He doesn’t mention his role in a bankruptcy that cost farmers millions.

President Donald Trump appears onstage with Rep. Ted Budd (R-N.C.), right, as Republican candidate Mark Harris watches during a GOP fundraiser at the Carmel Country Club in Charlotte in 2018. (Pablo Martinez Monsivais/AP)

As Rep. Ted Budd launched his campaign for a pivotal U.S. Senate seat earlier this year, the North Carolina Republican pitched himself as a staunch ally of farmers. He recalled growing up on a family farm and described working in the agriculture business with his father.

Budd’s life story has helped him win two crucial pillars of support in a race that could determine which party controls the Senate after the 2022 midterms: Former president Donald Trump unexpectedly endorsed him minutes after daughter-in-law Lara Trump told him she wouldn’t enter her home-state race, and the Club for Growth, a conservative political committee, has vowed to spend a record $10 million on his campaign.

But as Budd has told his narrative in a state where agriculture is the largest business, he omitted a key chapter. He made no mention of his role in his family’s calamitous involvement in a company called AgriBioTech, which ended in a bankruptcy case that cost farmers millions of dollars in losses.

Court documents reviewed by The Washington Post show that a trustee for farmers and other creditors alleged that his father, Richard Budd, improperly transferred millions of dollars in assets to his family, including Ted Budd. That occurred before Richard Budd and a family company faced a $15 million judgment in the case.

Moreover, the trustee alleged, Ted Budd “acted in concert” with his father “in connection with the fraudulent transfers.” As a result, Ted Budd was named as a defendant in a civil case filed by the trustee.

In the end, a settlement negated the need for a trial and specified that there was no admission of wrongdoing. The “Budd entities” agreed to pay less than half of the amount initially earmarked for the farmers and other creditors — some of whom remain angry they only received a portion of their lost earnings.

“We got screwed and there was not a freaking thing we could do about it. There was no way to fight multimillionaires,” said Scott Scheuerman, a Wyoming farmer who had urged fellow growers to send their crop to the company, which had bought up dozens of processing plants. “We were the little guy. We were just a number, and they could care less about us.”

Ted Budd’s untold role in the case illustrates the risk that Trump, still the most powerful figure in the GOP, has taken in impulsively backing a low-profile candidate who is loyal to him and has spoken dismissively about the Jan. 6 insurrection. By elevating Budd into a top primary contender in a key midterm race, Trump has created extraordinarily high stakes for his party.

Ted Budd, 49, declined an interview request or to make any written statement to The Post. Instead, his campaign sent written responses from an adviser and his father, who took responsibility for the bankruptcy.

Richard Budd said “there were no so-called fraudulent transfers” between him and Ted Budd and accused the trustee of making “untrue allegations” about him and his family.

Asked if Ted Budd believes his family owes an apology to farmers who suffered losses in the AgriBioTech bankruptcy, Richard Budd responded, “Your attempts to tie my son to this business are dishonest and offensive. I wish my personal efforts to save ABT had been successful, but they were not. I did my best, but in this case, my best was not enough to save ABT.”

Asked whether Ted Budd ever disclosed the bankruptcy case to Trump or other key supporters, campaign adviser Jonathan Felts said that “Ted played no role at ABT and there is nothing to ‘disclose.’ ” He said the claims by the trustee were “untrue allegations that are typical in that sort of litigation.”

Felts acknowledged that Ted Budd was one of 11 people who signed as “co-makers” of a $10 million loan to AgriBioTech that later became the subject of the trustee’s lawsuit and declined to say whether any of Budd’s personal fortune of up to nearly $11 million was attributable to the funds allegedly transferred to him by his father.

Now, as he seeks a Senate seat, Ted Budd touts his work in family companies and as the owner of a shooting range, saying “I’ve spent my whole life in the business world.”

***

Before Ted Budd went from long-shot candidate to three-term congressman who earned Trump’s favor, he grew up a son of privilege in a North Carolina family that made its fortune after acquiring a janitorial business. When Richard Budd bought the cleaning company in 1963, he created the Budd Group, which expanded into maintenance and landscaping.

Ted Budd, born in 1971, became a major shareholder of another family company, Budd Seed. That firm was purchased in 1998 by AgriBioTech. As a result, Ted Budd became a significant shareholder of AgriBioTech but was not an official of the company, according to financial filings. His father was given a seat on the board of directors.

But AgriBioTech was in financial trouble, and Richard Budd agreed to take over as chief executive in March 1999. As the company’s problems worsened, Richard Budd decided he and his family would provide it with a $10 million loan, according to court filings.

The family said in court documents that Ted Budd, who had just returned home after years in college, signed as a “co-maker” of the $10 million loan in May 1999. The amount of Ted Budd’s income is blacked out of court documents, but it includes this note:

“Ted Budd is 27 years old and has spent the last nine years in college, four years at Appalachian State and five years at Dallas Theological [Seminary] … He joined the Budd Group in January 1999 as director of community and employee relations.”

The loan was approved with Ted Budd among the signatories.

The farmers who depended on AgriBioTech to pay for their crops, meanwhile, were growing nervous about its finances.

Richard Budd arrived on June 10, 1999, in Powell, Wyo., to reassure alfalfa growers that the company was on solid financial ground. Speaking to farmers at the small town’s Fraternal Order of Eagles lodge, Budd told them to send their seed to the company’s facilities and said they would be paid, according to Tod Stutzman, a farmer who attended the meeting.

Richard Budd said in a statement to The Post that he didn’t remember specifics of the meeting, but said at the time the company had received a line of credit that made him feel “optimistic about our chances.”

Stutzman said he sent his seed to AgriBioTech and awaited his payment of $135,000.

AgriBioTech around this time had repaid the Budds for the $10 million loan, with $25,234 in interest, according to court filings.

As rumors swelled that payments to farmers might not be forthcoming, Budd in September 1999 sent a letter to growers — which Stutzman provided to The Post — filled with assurances. “The record needs to be set straight … ABT’s ability to pay growers is improving.”

But payments were not forthcoming for many growers.

AgriBioTech declared bankruptcy on Jan. 25, 2000 — seven months after the Budd loan was repaid.

An estimated 1,200 growers in 39 states, most of whom specialized in alfalfa and turf, had delivered their production to the company’s facilities and based their business on AgriBioTech’s promise to pay them. When bankruptcy was declared, more than $50 million in payments were not delivered, according to an analysis in the Federal Register, the government’s compilation of regulatory actions.  

It became a major story across the region. “The odds remain long that farmers will receive more than a few cents on the dollar,” said a story in the Columbian of Vancouver, Wash. An Associated Press story quoted government and farming officials saying the bankruptcy was a “major disaster” that could put many growers out of business.

Ford Elsaesser, an attorney who represented some of the affected farmers, said about the AgriBioTech bankruptcy, “You not only had the impact you would imagine of growers not being paid for that year, it threw the whole marketplace in complete turmoil and confusion. It took years for that whole structure to recover.”

Stutzman said that he learned he would not receive the $135,000 that he was owed by the company. That was a major shortfall for the fourth-generation farmer with a 2,000-acre spread near Yellowstone National Park, whose business grossed about $1.5 million annually at the time.

“We had to pull resources out of our families and companies to pay back” a loan to cover the losses, said Stutzman, who worked with members of the Wyoming Alfalfa Seed Growers Association who were affected by the bankruptcy.

Stutzman said he did not know at the time that the Budds had been paid back their $10 million before the farmers. That would become an issue in the case. A court-approved trustee for the creditors would later argue that the company should not have been allowed to repay this loan before other creditors. A federal bankruptcy judge agreed, meaning that Richard Budd would have to return the $10 million that he had been repaid.

Ted Budd became a defendant in the case when the trustee alleged in a filing that “Theodore Budd has acted in concert with Defendant Richard P. Budd in connection with the fraudulent transfers that are the subject of this proceeding, and has been the recipient of such transfers.”

 The trustee then alleged in the filing that, a year after the corporate bankruptcy, Richard Budd transferred 20 percent of the shares in the family business to Ted Budd. That resulted in Ted Budd signing promissory notes for about $1 million to his father, but the amount was “never paid to Richard P. Budd in accordance with their terms,” the filings said. (Richard Budd said in his statement to The Post that he was paid for the shares. )

Richard and Sylvia Budd, his wife, also transferred $4.3 million in real estate to limited liability corporations that were given to family members, including Ted Budd, according to the trustee’s filing.

The trustee said in the court filing that while the “purported purpose” of the transfers was to provide gifts to Richard Budd’s family, “an additional purpose for the creation of the entities was to hinder, delay and/or defraud creditors,” including the farmers.

U.S. Bankruptcy Court Judge Linda Riegle ruled in January 2005 that Richard Budd and a family-owned business should pay nearly $15 million to the creditors, accounting for the $10 million loan, interest and related funds. Richard Budd declared personal bankruptcy, which complicated the effort to get the $15 million.

At the time, the family fought the ruling and denied any improper transfers. Richard Budd, in his statement to The Post, said that “the trustee made allegations that were untrue. I started my estate planning in the 1980s and, working with an estate planning attorney, I have been giving my assets to my family since then.”

The trustee who acted on behalf of the creditors, Anthony Schnelling, is deceased. David Bryant, the attorney who acted on Schnelling’s behalf and signed the filing, said in an interview that the wording in the case demonstrates that the trustee believed Ted Budd knew he was “getting the transfer and took actions to make that happen and had some understanding of where the property transferred was coming from.”

Ted Budd was among a number of defendants sued by the trustee. Ted Budd and other family members fought the suit, offering a series of 21 defenses, including lack of jurisdiction, the statutes of limitation and improper venue.

In the end, a settlement was reached in 2005 in which the “Budd entities” paid about $6 million of the original $15 million judgment, with a law firm paying $1.1 million.

In agreeing to the payment, the parties agreed that they were doing so “without admitting liability for, or the validity of, any allegation, claim or defense raised or asserted in the Litigation.”

Ted Budd was among the family members who signed the settlement. Due to the confidentiality agreement, it is not clear whether Ted Budd was allowed to keep assets that otherwise might have gone to farmers.

The campaign did not dispute the possibility that Ted Budd kept a significant portion of such assets. Instead, it responded: “Please find details of his assets on the attached financial disclosure report.” That report says that Ted Budd is worth between $3 million to nearly $11 million, much of it from investments, family businesses and properties, but it does not specify whether any of it could have come from the assets that Ted Budd could have retained after the bankruptcy settlement.

Felts said via email that it would be “silly” to try to make a conjecture about how much Ted Budd kept as a result of the settlement because he said it was based on “untrue allegations” by the trustee.

But the fact that the Budds didn’t have to pay most of the $15 million of the original judgment angers Stutzman, who said that he got back only 58 percent of what he was owed by the company.

Stutzman, who said he is a lifelong registered Republican, said he did not know until much later about the allegation that Richard Budd transferred millions of dollars of assets to family members before settling the case.

“He shifted assets into debt to me,” Stutzman said. “It became a liability on a loan that I needed to pay back, and did.”

The case led Congress in 2000 to create a $35 million no-interest loan fund to help farmers affected by the AgriBioTech bankruptcy. The farmers were allowed to borrow up to 65 percent of what they were owed by the company, with repayment to come from a settlement in the case. That meant that millions of dollars in losses still were not covered.

Scheuerman, meanwhile, recalled how he urged fellow growers to sell seed to AgriBioTech.

“I pushed hard to get everybody going on this, and then they pulled out and made me look like an idiot,” he said. He said that while a Wyoming program offset some of his losses, a series of hailstorms compounded the problems on his farm, and he filed for bankruptcy.

Bryant, the trustee’s lawyer, said the settlement was in the best interest of creditors because of the risk of what would happen if the matter went to trial.

“It certainly is correct that the Budds did not have to pay back the full amount and in a perfect world the creditors certainly would have wanted him to do that,” Bryant said.

***

In 2010, after earning an M.B.A. from Wake Forest University, Budd bought a shooting range out of bankruptcy. According to his financial disclosure, the business now known as ProShots has an annual income between $100,000 to $1 million.

Budd soon eyed a political career and, bypassing the usual route of a local or legislative race, sought a seat in Congress. His rise hardly seemed likely when he was part of a 17-person field seeking the Republican nomination in North Carolina’s 13th District in 2016.

But he had a crucial advantage: a $500,000 infusion by the Club for Growth Action, which ran commercials hailing him for having “never run for office before.” David McIntosh, the Club’s president, said he was impressed by Budd’s “business background.” At the time, it was one of the largest amounts the Club had spent on a House race.

Richard Budd contributed $25,000 to Club for Growth Action around the same time the group waged its pro-Ted Budd campaign.

With so many candidates in the field, Budd needed only 6,340 votes, or 20 percent of the total, to become the GOP nominee. After winning the primary, Budd won 56 percent of the general election vote to beat a Democratic opponent in the reliably Republican district, which includes the Greensboro suburbs.

After winning reelection in 2018 and 2020, Budd launched his Senate campaign in April. He is challenging two other well-known Republicans for the nomination, former governor Pat McCrory and former Rep. Mark Walker.

The Jan. 6 insurrection has already played a central role in the race.

The seat opened up because GOP Sen. Richard Burr, 65, said during his last campaign that he would not seek reelection. Burr voted to convict Trump in the impeachment trial earlier this year, which led the state Republican Party to censure Burr. He called that move a “truly sad day for North Carolina Republicans.”

Budd, meanwhile, repeatedly demonstrated his loyalty to Trump. He supported efforts to overturn the election results and then voted not to certify the outcome in Pennsylvania.

Budd was on the House floor on Jan. 6 when a mob sought to storm the chamber, and he returned later to deliver a speech in which he stoked the claim that Pennsylvania officials acted “illegally” and “violated” the state and federal constitutions.

“I cannot consent to accepting Pennsylvania’s electoral votes,” he said.

Budd went to Mar-a-Lago on April 23 to speak with Trump about the North Carolina Senate race, according to Felts, his campaign adviser. Budd announced his candidacy five days later.

As the North Carolina Republican Party convention got underway in June, Lara Trump informed her father-in-law that she would not seek the seat. Trump and Budd were both attending the convention, and the former president informed Budd that he intended to back him, according to news accounts about the convention. Fifteen minutes later, to the shock of Budd’s competitors and many in the audience, Trump invited Budd onstage for an endorsement.

 “A lot of you don’t know him that well,” Trump said. “We’re going to work with him, we’re going to campaign with him.”

A spokeswoman for Trump did not respond to a request for comment.

McIntosh said that the Club for Growth quickly raised $5 million for Budd and is in the process of raising another $5 million. A $10 million campaign would be the most the group has ever spent on any House or Senate race, according to McIntosh.

Budd, meanwhile, has tied himself as closely as any candidate to Trump, featuring the former president in his Senate campaign ad. He voted against creating a bipartisan commission to investigate the Jan. 6 insurrection, although his adviser, Felts, said the congressman “has consistently criticized those who broke the law that day and encouraged full investigations and prosecutions of the rioters.”

While saying it was a “bad day” for the country, Budd said there was no organized plot and sounded dismissive of the event during an Aug. 21 appearance on conservative commentator Todd Starnes’s radio show.

Americans should “take a real look at what happened on Jan. 6,” Budd said. “It was nothing. And it was just patriots standing up.”

Julie Tate contributed to this report.

Loading...