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Hemp Growers File Lawsuit Against Owensboro Hemp Company Alleging Fraud, Racketeering

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Liam Niemeyer
/
Ohio Valley Resource

Hemp growers who allegedly didn’t get paid hundreds of thousands of dollars for contracts with an Owensboro hemp company have filed a class-action lawsuit against the company alleging breach of contract, fraud, and racketeering, among other claims.

 

The lawsuit, filed Friday in the U.S. District Court of Western Kentucky Owensboro Division, said Bluegrass Bioextracts misled hundreds of growers, saying contracts would be paid for their hemp that would then be processed into CBD oil. The Ohio Valley Resource reported in January some of these contracted growers said they were losing hundreds of thousands of dollars because of the alleged breach of contract. 

 

Defendants in the lawsuit include Gerald Edds and Bruce Peters, co-founders of Bluegrass Bioextracts, and DTEC Ventures, a Nevada-based limited liability company that bought Bluegrass Bioextracts last year. Gerald Edds and representation for DTEC Ventures declined to comment. Bruce Peters did not immediately respond for comment.
 

The lawsuit alleges Gerald Edds and Bruce Peters told hemp farmers they would honor negotiated contracts “regardless of what was occurring in the market...to develop long-term relationships and good will with growers.” 

 

The lawsuit also states many of the company’s contracts listed farmers would be paid four dollars per percent CBD per pound of hemp. As of January, the price of CBD-enriched hemp had tanked by more than 75 percent since last summer. 

 

The plaintiffs also allege Bluegrass Bioextracts rejected some contracted hemp, claiming the hemp tested for unacceptable levels of heavy metals and pesticides. Yet, the lawsuit states, independent testing of that hemp showed heavy metals and pesticides were not present or were at acceptable levels.

 

The lawsuit states the founders of Bluegrass Bioextracts and DTEC Ventures also violated the Racketeer Influenced Corrupt Organizations (RICO) Act, through misleading hemp farmers about the company’s ability to pay out contracts and the company’s ability to create CBD products without THC, an intoxicating compound of cannabis.

 

“These deceptive acts were taken with the express intention of getting growers to change their contracts for the Defendants’ benefit and otherwise increasing the Defendants’ profitability and revenue, thereby causing financial gain to each of the Enterprise’s constituents,” the suit stated.

 

Representation for the plaintiffs did not immediately respond for comment. 

 

This lawsuit follows a settlement of a seperate $69 million dollar lawsuit over control of Bluegrass Bioextracts, between the former owners and founders Bruce Peters and Gerald Edds, and DTEC Ventures.

 

Gerald Edds and other former owners sued DTEC Ventures in January for control of Bluegrass Bioextracts, citing multiple reasons including the failure to pay out hemp farmers’ contracts. Edds and other owners sold the company to DTEC Ventures in November.

 

WKMS previously reported Edds said the settlement allowed Edds and other former owners to receive hemp-processing equipment from Bluegrass Bioextracts, with the intent to start a seperate hemp processing company,  Precision Biotech, LLC. 

 

This article may be updated.

 

Find the lawsuit documents below:

4-10-2020 Bluegrass Bioextracts Lawsuit by Liam Niemeyer on Scribd

 

 

 

"Liam Niemeyer is a reporter for the Ohio Valley Resource covering agriculture and infrastructure in Ohio, Kentucky and West Virginia and also serves Assistant News Director at WKMS. He has reported for public radio stations across the country from Appalachia to Alaska, most recently as a reporter for WOUB Public Media in Athens, Ohio. He is a recent alumnus of Ohio University and enjoys playing tenor saxophone in various jazz groups."
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