The Alabama Farm Credit (AFC) borrower meeting scheduled for this Friday to potentially vote out the lender’s board of directors over alleged corruption has been moved to December 29 to allow for more time to address new “improprieties” that have come to light.
The meeting is being organized by Dustin Kittle, a lawyer and former AFC borrower with farming properties in Tennessee and Geraldine. Kittle has publicly accused the rural lender of corruption, conflicts of interest and extortion.
After reporting discrepancies in the appraisals of several of his and his mother’s properties, Kittle said the AFC threatened to foreclosure on his loans, though he had never missed a payment. Kittle said he was then asked to sign a non-disclosure agreement saying he would not sue AFC or its hired attorney, Chris Glenos of Bradley Arant Boult Cummings law firm in Birmingham.
SEE ALSO: Borrower accuses Alabama Farm Credit of corruption, extortion; U.S. Farm Credit Admin investigates
Since making his claims public, Kittle said he’s heard from more AFC borrowers with similar complaints. He said by postponing the borrower meeting, he hopes to better address the complaints and garner more support for his vote to oust the board.
“By moving the date, we can add other items to the meeting agenda,” Kittle said in a Facebook post. “And in recent weeks, we have learned of additional improprieties in lending practices which we believe must be addressed. Those primarily center around poultry loans and the application of assignment proceeds.”
Kittle has been outside counsel for the Alabama Contract Poultry Growers’ Association for the past seven years. He explained that borrowers in the poultry business have a percentage of their revenue automatically sent to the lender. Typically, the lender returns any funds that exceed the borrower’s loan payment, but Kittle said AFC has been keeping overages and applying the funds to future loan payments.
“If you talk to a lot of borrowers, they [AFC] even apply it to interest and not principal,” Kittle told 1819 News. “What they are doing, though, is accelerating the loans on these growers by leaving them no choice but to pay extra on their loan. We certainly believe this is in direct violation of federal law and regulations. You could make an argument even that it is lender theft.”
Kittle pointed to a section in the U.S. Farm Credit Administration’s Regulations for lenders that detailed borrower rights. According to section 617.4000, “A qualified lender may not require a borrower to reduce the outstanding principal balance of a loan by any amount that exceeds the regularly scheduled principal installment when due and payable.”
The only exceptions to the regulation apply in case of an unapproved sale of collateral or a prior agreement in writing.
“When they are applying those excess funds forward, in my opinion, they are in violation of that provision in the federal regulations,” Kittle said. “They are either taking the borrower’s excess money and just paying their future interest payments with it, which couldn’t be right, or they are requiring them to reduce the principal — or both.”
Kittle said he is drafting an amendment to the AFC by-laws to remedy the alleged lending practice.
“Poultry growers represent the largest category of borrowers within Alabama Farm Credit, and their success is paramount to the sustainability of this lending institution,” he said in a Facebook post. “Putting money back into the pockets of the growers, who have clearly earned that money, is not just the right thing to do, but it is the legal thing to do in accordance with the mandates set forth by the Farm Credit Act.”
1819 News contacted AFC and its outside attorney for comment but received no response.
To connect with the story’s author or comment, email daniel.taylor@1819news.com.
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