Tales from Wasilla: Karen Olson and the Cash Cow

Matanuska Maid Dairy died an unnecessarily messy, protracted and, apparently, corrupt death. Born out of the Matanuska Colony in the depths of the Great Depression, eventually it couldn’t compete with stateside milk shipped to Alaska. Starting in the 1980s, Mat Maid entered a death spiral, operated for a while by a state corporation. By 2007, it was obvious to its board of directors that the business was dead.

But not to famous arch-conservative, Republican governor Sarah Palin. Rather than let the Valley business die a graceful death, she fired the entire board of directors, stuffed it with her cronies, and fed it upwards of $600,000 in state monies. And then, a year later and another $600,000 poorer, followed the course the old board had adopted and finally killed Matanuska Maid.

Except that it didn’t stay dead. Or, perhaps, the corpse has merely attracted some nasty kinds of flies.

Not just the unsolved arson in the Palmer plant. The vacant dairy/warehouse in Palmer, with all utility service shut off, caught fire and burnt to the ground.

And then there’s Kyle Beus, co-founder and co-owner of Valley Dairy, which did business as Matanuska Creamery. At the sale of Mat Maid’s assets, Beus was able to pick up Mat Maid’s old equipment at a deep discount. He used it to start up his new venture, Klondike Creamery and Candy. In 2008, Beus’s business morphed into Valley Dairy, owned by Beus, Robert Wells and Karen Olson.

The USDA’s Rural Development Agency had an earmark of $5 million over years 2003-2007 to expand Alaska’s dairy industry. When it didn’t all get used, Congress reverted most of the money to the general fund but left $650,000 available until expended. All that money, just sitting there…

The Feds decided Beus committed fraud in obtaining some of that $650,000. A gtrand jury agreed. He was indicted. The indictments claims that in July 2007, Beus received about $168,000 of the federal slush fund for Valley Dairy, his cheese and ice cream making facility. A month or two later, an Alaska corporation not named in the indictment received $475,000 to support a milk manufacturing facility. The indictment alleges Beus personally received more than $120,000 from those two grants.

Which takes WC to Karen Olson. The indictment against her alleges that to get another $430,000 in funds for Valley Dairy in 2008, Olson applied to the state loan fund for $430,000 to cover costs that were in bills previously submitted to and paid by the USDA. The claim is that she double-dipped, using the same bills for two different loans. The indictment also alleges the money the USDA had already given the dairy was gone because it had been “misapplied.” That would likely be a reference to the claims in Beus’s indictment that he embezzled funds.

So Olson stands accused of criminally attempting to cover up her business partner’s Beus’s alleged embezzlements. WC is loyal to his business partners but not so loyal as that.

Olson said she believed the information she put in the loan application was correct. “As far as I am aware of my own knowledge, the information remains correct today,” she said. “I also deny allegations of engaging in any cover-up, then or at any time.”

Perhaps it is a Wasilla thing?

WC would like to see Alaska agriculture gain a bigger share of the Alaska market. But if it takes federal and state subsidies to compete, then it’s not going to happen. As the economics of agriculture stand today, the transport costs to Alaska aren’t high enough to overcome Alaska’s higher costs of doing business. In the case of the dairy industry, the result is either squeezing the Alaska producers to the point where they can’t afford to sell the milk, or sucking the public teat to balance the supply/demand equation. And when you have piles of cash lying around like that, it draws crooks. And that draws in federal prosecutors.

So Matanuska Maid joins the Delta Barley Project, the Valdez Grain Elevator and the McKee Slaughterhouse in the Big Book of Agriculture Debacles in Alaska. Unlike those others, though, this time there are indictments. Stay tuned.


3 thoughts on “Tales from Wasilla: Karen Olson and the Cash Cow

  1. And don’t forget who put these fair people in the positions at MatMaid, and helped get them those federal dollars. Someone is going to talk, Sarah. And soon.

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  3. I can’t wait until the squealing starts, sallyinmi. As the indictments mount up and court dates get closer, folks will start to squirm. Is Olsen’s loyalty to the Palin’s and Beus’s going to be enough for her to keep her mouth shut? Or will she start thinking about whether it is worth going to jail for a long, long time for? Olsen hasn’t exhibited a whole lot of smarts, but even she ought to start seeing the writing on the wall. If she doesn’t start talking, well the others involved will have no problem throwing her under the bus to save their own hides.

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