Lenders Sue Desha County Farmer Over $10M in Crop Loans

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Two lenders have accused a Desha County farmer of fraud, alleging that he borrowed nearly $10 million in crop loans and didn’t repay them.

The creditors filed complaints in William E. Palsa Jr.’s Chapter 7 bankruptcy case in an attempt to prevent the debts from being discharged.

Simplot AB Retail Inc., which does business as Simplot Grower Solutions of Boise, Idaho, sued Palsa last month, alleging Palsa owes it $7.1 million for 2023 crop loans.

Another creditor, Agrifund LLC of Fort Worth, Texas, filed a similar lawsuit in July to block Palsa from discharging $2.6 million in debt that is also tied to 2023 crop loans.

Palsa’s actions constitute “deception and trickery involving moral turpitude or intentional wrong,” Agrifund said in its lawsuit.

Palsa filed for Chapter 7, which leads to liquidation, in April. He listed $870,000 in assets and $10.1 million in debts. The claims register in his bankruptcy case, however, lists 30 claims totaling $16.1 million.

Palsa agreed to an interview with Arkansas Business, but he didn’t answer a call at a prearranged time last week nor did he call back.

Palsa’s attorney, Frank Falkner of the Dilks Law Firm of Little Rock, also didn’t return messages.

In a deposition taken in 2023 in an unrelated case, Palsa said that he’s been farming since 2001. His farm operation comprised about 15,000 acres, and he grew cotton, rice, soybeans and corn.

In 2023, Palsa took out millions of dollars worth of crop loans from Simplot and Agrifund.

Agrifund said in its complaint that Palsa applied for a crop loan in February 2023 on behalf of Palsa Jr. Planting LLC. In the loan application, Palsa said he was a managing member of the LLC.

Also in February 2023, he applied for another crop loan for Palsa Planting Partnership, owned by Palsa and his wife, Brandi Palsa, who has her own Chapter 7 filing. The couple’s son, William Cole Palsa, also has filed Chapter 7.

In Palsa Plantation Partnership’s loan application, William Palsa provided a six-page equipment list that showed the company’s equipment had a value of $9.8 million.

Simplot said in its court filing that it also extended crop loans to Palsa and his farming entities in 2023.

Both lenders had a security interest in all the crops that Palsa and his entities grew in 2023, and the proceeds from the sale of the crops were supposed to be used to pay off the loans by March 15, 2024, according to court documents.

But none of the proceeds from the harvesting and sale of the crops was ever paid to Simplot or Agrifund, the lawsuits said.

Palsa’s bankruptcy filing shows that his gross income in 2023 was $3.2 million, followed by just $33,000 a year later.

He listed in his bankruptcy filing that crops worth several million dollars were “destroyed in Drought” in 2023. He listed he didn’t have insurance for that.

Simplot’s lawsuit said that Palsa “embezzled, converted and stole the 2023 Crop Proceeds by diverting the proceeds to other entities” he created and controlled to sell the crops and keep the money.

The lawsuit didn’t provide specific details about how the alleged scheme was carried out. Simplot’s attorney, R. Spencer Clift III of Baker Donelson Bearman Caldwell of Memphis, didn’t return a call from Arkansas Business.

During a bankruptcy proceeding on June 20, Palsa “admitted under oath” that the equipment pledged as collateral was not owned by Palsa Plantation or entities that signed the loan documents, according to Agrifund’s lawsuit.

He also testified that he allowed his father and other entities to use that equipment, the lawsuit said.

Palsa signed loan documents as “managing member” for several of his entities such as Bayou Plantation Farms LLC and William Palsa & Son LLC, the Agrifund lawsuit said. But “he would later testify under oath that he does not possess an ownership interest in these entities, in contradiction to the Loan Applications, the Loan Documents, and Palsa’s own bankruptcy petition and schedules,” the lawsuit said.

Agrifund accused Palsa of using an “intricate web of entities to sell Agrifund’s crop collateral without providing payment to Agrifund in an amount to be proven at trial,” the lawsuit said. “Palsa has committed fraud, defalcation, embezzlement, or larceny by disposing of Agrifund’s collateral by obtaining crop proceeds without remitting payment of said proceeds to Agrifund,” the suit said.

Agrifund is represented by attorney Deven Harvison of the Davidson Law Firm of Little Rock. Agrifund doesn’t comment on pending litigation, the law firm said.

Palsa denied the allegations in his answers to the Agrifund lawsuit and asked the case be dismissed. As of Tuesday afternoon, he had not filed an answer in the Simplot case.