Japanese beef trial ongoing in Victoria federal court
May 23, 2014 at 12:23 a.m.
Updated May 24, 2014 at 12:24 a.m.
A South Texas rancher explained to jurors in federal court Friday how a multimillion dollar cattle deal fell through.
Ronald Beeman, HeartBrand Beef chairman, said when billionaire Bill Koch did not wire about $2.3 million for 524 Akaushi cattle by noon June 3, 2011, he bought the cattle instead.
Beeman wrote out a check for about $1.9 million for 458 Akaushi cattle, partly because he received a $225 discount per cow and a $350 discount per bull.
Koch, who owns the 4,200-acre Bear Ranch in Colorado, sued HeartBrand, Beeman and the American Akaushi Association in March 2012.
Koch maintains HeartBrand misled him when he signed an initial contract in 2010 for 424 Akaushi cattle because the company marketed itself as the "owner of Akaushi genetics outside of Japan."
That 2010 contract required Koch to register the cattle with the American Akaushi Association, something at least one of Koch's employees said was quite a feat and prohibited him from profiting off the animals.
Further, Akaushi, expensive and touted for its health benefits, is the same thing as a Red Wagyu, which is available worldwide, said Koch's attorney, Paul Yetter.
Beeman said during the fifth day of testimony that he thought the 2010 contract, in which Bear Ranch promised to protect HeartBrand's pre-eminent position as the owner of Akaushi genetics outside of Japan, was fair.
That's because Akaushi is its own distinct breed. And as far as he knew, the two Akaushi bulls imported from Japan in 1976 were already dead when HeartBrand obtained its 11 Akaushi in 1994.
"Whatever they crossed them (the 1976 Akaushi bulls) with had to be an American cow, so it was going to be at best 50 percent Akaushi," Beeman said.
While emails showed Koch was to pay 25 percent down and the remaining balance upon inventory confirmation, Beeman contended the remaining balance was due a week after an invoice was sent.
Beeman added he later did Koch's associate Rob Gill a personal favor when he agreed June 16, 2011, to sell to Bear Ranch more than 500 of his Akaushi cattle for a higher price than HeartBrand initially proposed.
"If he didn't want to buy them, he didn't have to. ... I was actually hoping he wouldn't buy them because I wanted them," Beeman said.
Beeman estimated he made about $148,000 profit while Yetter thought the number was close to $263,000 plus commission.
The two also sparred over marketing material HeartBrand distributed, including a unearned trademark symbol above the word "Akaushi" that was posted for a time on the HeartBrand's website.
"The minute we were notified, we took it down," Beeman said. "We are going to make mistakes; everybody does."
HeartBrand attorney Jim Reeder, of Houston, next played the deposition of a woman Koch hired to market the Akaushi beef directly to consumers under 7X Ranch, also owned by Koch.
Under the 2010 contract, if Koch were to try to sell the beef, he must not identify it as Akaushi.
The marketing professional said not identifying the breed of cattle for sale would show a lack of credibility.
Reeder also addressed HeartBrand's and Beeman's ambitions, which Yetter contended at the beginning of the trial blinded them to the difference between right and wrong.
"I have a saying I go by: 'Just do your job,'" Beeman said, tearing up. "My job was to expand the Akaushi breed. ... It is the most amazing beef you've ever seen in your life. ... I think it's a big responsibility, and I don't take it lightly."
HeartBrand Beef is based in Gonzales.
Beeman is also a former owner and now board member of Eddy Packing Co., of Yoakum.
The trial will resume at 8:30 a.m. Tuesday on the fourth floor of the Martin Luther King Jr. Federal Building, 312 S. Main St. The jury is expected to begin deliberating Wednesday.