United States District Court, D. Colorado
EDWARD B. CORDES, solely in his capacity as the court appointed receiver in the District Court of Hamilton County, Kansas, No. 10-CV-7 Plaintiff,
UNITED STATES OF AMERICA, Defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY
Richard P. Matsch Senior District Judge
First National Bank of Syracuse, Kansas (“Bank”),
on August 17, 2007, received a note in the principal amount
of $28, 000, 000 from Vreba-Hoff Genetics, LLC (“V-H
Genetics”), an Ohio entity owned by Vreba Dairy, B.V.
(“Vreba”), a Netherlands company owned by W.H.M.
“Willy” Van Bakel, a citizen of the Netherlands.
October 31, 2007, the Bank received a note in the principal
amount of $13, 000, 000 from West Kansas Dairy, LLC
(“West Kansas Dairy”), a Kansas entity owned by
Vebra, through its ownership of Vreba-Hoff Genetics.
of these notes was guaranteed by Vreba, the sole member of
Orleton Farms, LLC (“Orleton Farms”), an Ohio
entity, the owner of a 6, 000 acre farm in Ohio. As security
for Vreba's guarantee, Orleton Farms granted a third
priority mortgage on the farm.
notes went into default and the Bank seized the assets of V-H
Genetics and West Kansas Dairy. They were sold at auction
with the proceeds applied as partial payment on the notes.
Orleton Farms property was sold at public auction for $27,
100, 000, an amount insufficient to pay the Bank's
mortgage. Because the owner of Orleton Farms was Vreba, a
foreign entity, $2, 710, 000 was paid to the IRS as required
by Section 1445(a) of the Internal Revenue Code to be
withheld to pay Vreba's potential tax liability.
September 17, 2009, the Bank obtained a Security Agreement
reciting the following twenty-four entities as
“Debtors:” Vreba; Orleton Farms; Midwest Ag
Investments, LLC; V-H Genetics; West Kansas Dairy; Vreba-Hoff
Holdings, LLC; Vreba-Hoff Dairy, LLC; Blue Streams Farms,
LLC; Wild Cat Farms, LLC; Waldron Dairy, LLC; Andrews Dairy,
LLC; Four Leaf Clover Dairy, LLC; Vreba-Hoff Dairy
Development, LLC; Vreba-Hoff Dairy Leasing, LLC; Hill Dairy,
LLC; Earth Art Leasing, LLC; Springfield Dairy, LLC; Union-Go
Diary, LLC; Van Ham Dairy Leasing, LLC; Hulsbosch Dairy Farm
Leasing, LLC; Four Leaf Clover Dairy Leasing, LLC; Yellow
Hills Dairy Leasing, LLC; New Holland Dairy Leasing, LLC; and
Bekel Leasing, LLC. (Ex. 1 to Compl., doc. 1-1.) The only
loans described in the Security Agreement were the notes from
V-H Genetics and West Kansas Dairy. (Id.)
collateral was described in this language:
All Federal Income Tax Refunds of the Debtors for tax year
2009, specifically including but no [sic] limited
to, the Debtors' anticipated refund of a Foreign
Investment in Real Property Tax Act of 1980 Federal Income
Tax withholding in the amount of $2, 710, 000 arising from a
withholding from the sale of real property owned by Orleton
Farms, LLC to Midwest Farms, LLC which is the subject of IRS
Form 8288 dated August 28, 2009.
(Id.) The only signature for the
“Debtors” was that of Willy Van Bakel, as
director of Vreba, and manager or president of the other
2009, Vreba filed a consolidated income tax return reflecting
the combined activities of at least 20 other entities that it
owned (directly or indirectly) and operated in the United
States. Entities identified as “Debtors” in the
Security Agreement were among those included in the
consolidated tax return.
return was under examination by the IRS for several years.
Ten limited liability companies included on the return had
failed to pay employment taxes which they reported, in an
aggregate amount exceeding $1.6 million dollars. Those ten
entities, their states of incorporation, and their
relationship to Vreba are follows:
• V-H Genetics was an Ohio limited liability company,
with operations in Oklahoma. Vreba was its sole member.
• West Kansas Dairy was a Kansas limited liability
company, with operations in Kansas. Its sole member was V-H
Genetics, which was solely owned by Vreba.
• Vreba-Hoff Holdings, LLC (“V-H Holdings”)
was an Ohio limited liability company. Vreba owned a 50%
interest in V-H Holdings.
• Vreba-Hoff Dairy Development, LLC (“V-H
Development”) was an Ohio limited liability company,
with operations in Ohio. Its sole member was V-H Holdings,
the holding company in which Vreba had a 50% interest.
• Hill Dairy, LLC was an Indiana limited liability
company, with operations in that state. Its sole member was
V-H Development, which was solely owned by V-H Holdings, in
which Vreba had a 50% interest.
• Rock Creek Dairy Leasing, LLC was an Indiana limited
liability company. Its sole member was Midwest Dairy
Investments, LLC, which was solely owned by V-H Development.
As set forth above, V-H Development was solely owned by V-H
Holdings, the holding company in which Vreba had a 50%
• Andrews Dairy Farm, LLC was an Indiana limited
liability company. Its sole member was V-H Holdings, in which