HFA has filed a lawsuit alleging a discriminatory scheme by First Guaranty Bank and M.A. Patout sugar mill, and their executives, to profit at the expense of, impair and extinguish the sugarcane farm of Wenceslaus Provost, Jr., one of the last remaining African-American sugarcane farmers in Louisiana.
Mr. Provost is an experienced and skilled sugarcane farmer. He grew up working extensively on his father’s sugarcane farm, and when he launched his own farm in 2008, he received the award for Iberia Parish Farm Bureau Farmer of the Year due to his outstanding farming practices.
Yet, the lawsuit alleges that despite Mr. Provost’s evident competency, First Guaranty Bank, which provided him with loans, and M.A. Patout, which harvested and purchased his sugarcane, engaged in multiple unlawful acts, beginning in 2007, to drive Mr. Provost out of the sugarcane farming business.
Sugarcane farmers often depend heavily on annual crop loans guaranteed by the United States Department of Agriculture (“USDA”) to finance their operations. To operate his sugarcane farm from 2008 through 2015, Mr. Provost applied for USDA-guaranteed crop loans from First Guaranty Bank. The lawsuit alleges that, from 2008 through 2015, First Guaranty Bank and its Senior Vice President Glenn Duhon committed multiple acts of misconduct to deprive Mr. Provost of timely, adequate, and fair loans to effectively farm.
Specifically, the lawsuit alleges that First Guaranty Bank and Senior Vice President Duhon:
i. routinely instructed Mr. Provost to sign blank crop loan applications;
ii. unilaterally filled out the terms of those crop loan applications without disclosing the completed applications to Mr. Provost;
iii. required Mr. Provost to unnecessarily assume unrelated, significant debt belonging to his father as a condition of receiving crop loans;
iv. required Mr. Provost to provide excessive collateral as a condition of receiving crop loans;
v. required Mr. Provost to lease equipment to M.A. Patout on highly unfavorable terms as a condition of receiving crop loans;
vi. prohibited Mr. Provost from operating through a limited liability corporation or from purchasing his father’s farmland;
vii. required Mr. Provost to reduce the acreage of his farm as a condition of receiving crop loans;
viii. repeatedly awarded Mr. Provost crop loans that were substantially smaller in value than what was requested and necessary to effectively operate his farm;
ix. modified, without disclosure, Mr. Provost’s loan applications to reduce his loan amounts by, among other actions, photocopying his signature;
x. diverted monies, without disclosure, from Mr. Provost’s crop loans to prematurely compensate M.A. Patout;
xi. repeatedly and without disclosure diverted monies from Mr. Provost’s crop loans to prematurely discharge debts from prior years’ crop loans;
xii. repeatedly and without disclosure diverted monies from Mr. Provost’s crop loans to prematurely discharge other non-guaranteed loans maintained by First Guaranty Bank;
xiii. delayed, without disclosure, the approval of Mr. Provost’s loan applications in 2012 and 2014;
xiv. routinely charged Mr. Provost unreasonably inflated interest rates on crop loans and non-guaranteed loans;
xv. facilitated M.A. Patout’s decision in 2014 to stop accepting sugarcane harvested by Mr. Provost, in clear breach of his contract with the mill;
xvi. rejected Mr. Provost’s crop loan applications in 2013 and 2015;
xvii. forced Mr. Provost alone to pay down three loans taken by his father even though Mr. Provost’s two brothers were also co-signers on those loans; and
xviii. repeatedly failed to disclose to Mr. Provost the multiple adverse credit actions and decisions made by the bank regarding the loans awarded to him.
When Mr. Provost produced the sugarcane from his farm each year, he sold it to M.A. Patout, pursuant to a written contract entered into by both parties in 2007. The lawsuit alleges that, from 2007 through 2015, M.A. Patout and its CEO Randall Romero committed multiple acts to impair and terminate Mr. Provost’s farm. Specifically, the lawsuit alleges that M.A. Patout and CEO Romero:
i. awarded Mr. Provost a crop loan in 2007 that was substantially smaller in value than what was requested and necessary to effectively operate his farm;
ii. coordinated with First Guaranty Bank to receive premature payments from Mr. Provost’s 2008 crop loan to discharge the 2007 crop loan;
iii. coordinated with First Guaranty Bank to obtain access to and possession of Mr. Provost’s equipment against his wishes at submarket rates;
iv. denied Mr. Provost access to farming equipment or services that were routinely provided to neighboring white farmers;
v. persuaded landowners to sever their ties with Mr. Provost, who had farmed their land, and instead contract with white farmers; and
vi. refused to harvest and purchase Mr. Provost’s sugarcane, in breach of the longstanding written contract, after Mr. Provost refused to sign an alternate contract providing more favorable terms to the mill.
The lawsuit alleges that to effectuate the conspiracy, First Guaranty Bank and Senior Vice President Duhon made multiple, knowing misrepresentations to USDA through crop loan applications and other communications. The lawsuit alleges that those material misrepresentations allowed First Guaranty Bank and Senior Vice President Duhon to secure valuable USDA loan guarantees while simultaneously concealing from USDA that they were saddling Mr. Provost with unwanted and unnecessary debts, diverting substantial crop loan funds to prematurely discharge other loans provided by First Guaranty Bank and M.A. Patout, and denying crop loans to Mr. Provost based on false pretenses, including pretenses fabricated by M.A. Patout.
The lawsuit alleges that the effect of Defendants’ misconduct was predictable and known to Defendants: without access to timely and sufficient crop loan monies, and subject to unfair loan terms and multiple other discriminatory acts, Mr. Provost was unable to generate a sufficient yield from his farming operations and was ultimately forced to exit the sugarcane farming business in 2015. The lawsuit alleges that the financial and emotional costs to Mr. Provost and his family as a result of Defendants’ misconduct were severe, including the loss of their business and home and the need for psychological treatment for depression and anxiety.
The lawsuit seeks to recover the damages directly caused by Defendants’ unlawful conduct. The lawsuit alleges that the misconduct engaged in by First Guaranty Bank and Senior Vice President Duhon violated the Equal Credit Opportunity Act; the misconduct engaged in by M.A. Patout constituted a breach of contract; and the misconduct engaged in by all Defendants violated the Racketeer Influenced and Corrupt Organizations Act.
A copy of the complaint can be found HERE.