Improper transfer of $1 million imputed to two former DFA leaders

Two former leaders of Dairy Farmers of America, the nation's largest milk cooperative, were allegedly involved in an improper transfer of money.
     At a press conference Friday morning, current DFA president and CEO Rick Smith said that former CEO Gary Hanman played a role in arranging for the unauthorized transfer of $1 million to former board chairman Herman Brubaker. The transaction was not approved by DFA's board of directors, he added. The transaction occurred in 2001.
     When DFA learned of the transaction, it moved quickly to get the money back, plus interest. Hanman and Brubaker returned the money within the past few weeks, Smith said.
     "This news is disturbing to us," Smith said. "We regret having to report it, but we felt for the sake of transparency" it needed to be done, he added.
     Asked why it took seven years to discover this, Smith said the original transaction was concealed and in the course of doing due diligence and research into other matters, the issue came to light.
     Smith said the DFA board has appointed a special committee to look into the matter further and also to check whether there were any similar transactions in the past.
     Hanman was the original CEO of DFA when it formed in 1998. He held that position until his retirement in December 2005. Brubaker stepped down as board chairman in 2003.
     Click here to see a letter (PDF format) that was mailed to DFA members on Wednesday.