In bankruptcy court in 2004, a trustee for hundreds of farmers alleged wrongdoing by the Republican now seeking North Carolina's open Senate seat.
North Carolina Republican Rep. Ted Budd is running for the U.S. Senate as an advocate for the agriculture sector and small businesses. But in a 2004 bankruptcy court case, he was accused of participating in a fraudulent scheme that hurt hundreds of farmers.
The third-term representative is running against Democratic former North Carolina Supreme Court Chief Justice Cheri Beasley for the open seat of retiring Republican Sen. Richard Burr.
In January 2000, AgriBioTech, an agriculture company whose CEO was Budd's father, Richard Budd, filed for bankruptcy. At the time, the business owed $50 million to 1,200 farmers who grew turf, alfalfa, and other crops for the company, the Washington Post reported in August 2021.
During the bankruptcy proceedings, the farmers argued that Richard Budd and Ted Budd had fraudulently used remaining assets to pay off their own $10 million loan to the company before paying them what they were owed for their crops.
Richard Budd and a Ted Budd campaign official denied wrongdoing in the Post story.
Not mentioned in the Post's reporting, however, was an additional filing in the bankruptcy case made by Anthony H. N. Schnelling, the trustee for the growers and others owed money by AgriBioTech. The Dec. 6, 2004, amended adversary complaint alleged additional fraud on the part of both Budds.
Schnelling accused Richard Budd of creating "Budd Figure Eight LLC" and other financial entities "with the active concert and participation" of Ted Budd and other family members to transfer assets that "would have been otherwise available to satisfy the claims of his creditors."
While a "purported purpose of the creation" of the shell accounts was to enable Richard Budd and his wife to distribute gifts to their kids and grandkids, Schnelling charged that an "additional purpose for the creation of the entities was to hinder, delay, and/or defraud creditors."
The filing alleged that Richard Budd "created and/or used" the entities "as a sham to perpetrate a fraud on his creditors" and concealed the transfers to these accounts to make it look like he was insolvent.
A court exhibit documented transfers to Budd, his wife, and their two children of about $132,000 each in "membership interest" in the Budd Figure Eight LLC.
In an emailed statement to the American Independent Foundation, Budd campaign spokesperson Jonathan Felts denied any improper actions by the candidate or his father and falsely claimed that the allegations in the amendment complaint had been "clearly covered in the original Washington Post article."
"As Richard Budd noted in the original Washington Post article regarding Agribiotech (ABT), the allegations were untrue," Felts wrote. "As also noted in the original Washington Post article, ABT was a publicly-traded company, not a family business; and Ted never worked there."
The case was ultimately settled in 2005, with the Budd family entities paying $6 million to the creditors. They did not admit any liability or wrongdoing.
Budd's campaign website states, "As a small business owner who knows how hard it is to make payroll and provide for your own family, Ted has the back of every job creator in the state."
Published with permission of The American Independent Foundation.