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Lehi Roller Mills seeks way out of bureaucratic, financial tangle

Stripped of ability to obtain loans, century-old business fights for survival.

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"For this local farm economy, Roller Mills has been an almost incalculable asset," said Smith. "Our feeling is if we can hunker down with him, we’ll get through this together, we’ll be here hopefully for more generations to come."

At a glance

Lehi Roller Mills

Founded » 1905 at its present site, 833 E. Main St., Lehi.

All in the family » In 1910, George Robinson purchased the mill, of which grandson Sherman is the current owner

Products » Wholesale flour, mixes for pancakes, brownies, cookies and muffins sold by grocery chains and others

Retail store hours » 9 a.m. to 6 p.m., Monday through Saturday

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A tough go • Other customers have not been so understanding and have dropped Roller Mills, including WinCo, Walmart, Costco and Winn-Dixie Stores because of delayed or unfilled orders. Yet so far, Associated Food Stores, a cooperative of 400 independent grocers that includes Harmons, has remained steadfast.

"Lehi Roller Mills has been a provider of organic flour for Harmons’ artisan breads, and we hope they can find their way through this unfortunate set of circumstances," said Lori McFarland, Harmons vice president of sales.

The mill, once a backdrop in the movie "Footloose" and a favorite among photographers and artists, annually produces about 100,000 pounds of flour for wholesale and bakery mixes.

Robinson and wife Barbara developed the mixes in the 1990s, allowing home cooks to whip up pancakes, muffins, brownies, cookies, cakes and bread. The move was one of many reinventions of the mill over the years. In the 1950s, Robinson’s late father, Sherm, was one of the first to extend credit to Peter Harman, who teamed up with Colonel Harland Sanders to open the nation’s first Kentucky Fried Chicken outlet in Salt Lake City.

Lehi Roller Mills still makes the corn bread mix and chicken coating for Harman’s franchises in the western United States.

That kind of a track record should have made it possible for Lehi Roller Mills to get a loan, even after the America West failure, said commercial loan officer Eric Wadley, who worked with Robinson in an unsuccessful effort to get other financing.

"Nobody wanted to deal with a century-old flour mill — it was just too complicated," said Wadley. "What banks want is a nice clean transaction, say a dentist in business for 20 years who wants to buy a building for his practice."

And now the window of opportunity for a USDA-backed loan has closed because the agency is accepting applications only from rural businesses, and Lehi is considered an urbanized area. Robinson could apply for an exemption, but first he has to find a lender.

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Under suspicion • So far, only venture capitalists are interested in financing Roller Mills. Robinson also isn’t willing to go into a structured bankruptcy, which would force him to pay pennies on the dollar he owes to his longtime suppliers, vendors and farmers.

"It’s a point of pride," said Robinson. "I don’t want to be the one who doesn’t pay in full what’s owed. I don’t even want to think about what would happen to the people who have stuck with me all these years. I don’t want that to happen on my watch."

Robinson’s issues with the USDA took root in 2003, when the mill was mixing and bagging nonfat dry milk for an Ogden firm, R&J Feed Co. Partners in the feed company, Jerry Goodwin and Richard Carter, were subsequently named in a USDA civil suit for alledgedly falsifying records so they could export nonfat dry milk, which the government had intended be shipped only to drought-stricken ranchers in the West as animal feed. Among other charges, the government alleges that nearly 8 million pounds of the product were shipped from the R&J warehouse to the Netherlands, Estonia, Germany and the Philippines.

In July, Missouri federal Judge Gary Fenner refused to dismiss the case, saying the beneficiaries of the government program should have been "cattle producers. The facts, however, indicate R&J Feed was a feed dealer, not a cattle producer."

Robinson had answered questions in the case, and no civil or criminal charges were filed against him. But he said he was eventually notified he also had fallen under suspicion for reasons that were never made clear. In 2007, he enlisted then-Gov. Jon Huntsman Jr. to help sort out which agency might be investigating him — the USDA, Office of Inspector General, FBI or the Justice Department.

Huntsman asked USDA Inspector General Phyllis Fong to look into conduct of USDA employees involved in the investigation — while describing the runaround his own legal counsel got when trying to gather information on behalf of Roller Mills.

The governor’s legal counsel "started with a call to the USDA Secretary’s Office," Huntsman wrote to Fong. "They would not put her call through to the Secretary or his assistant. They transferred her to another office lower in the agency, which transferred her to another lower office, and then another lower office until she was finally told by the last office that the department had no information to give her."

Fong replied there was no substantiative evidence of government misconduct, and directed the governor to the U.S. Attorney for Utah,"which has legal oversight for prosecutorial determinations."

Robinson’s attorney, Sterling Brennan, did just that. He said in a letter he was told that Roller Mills was not under investigation. But when he wrote to the U.S. Attorney for Missouri, where charges originated against R&J Feed, the office responded that "neither the USDA nor the Department of Justice has foreclosed any of the options that it may have with regard to your clients."

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