GALLATIN, Mo. — Area grain farmers listened Thursday night to state officials explain a process for returning money they invested in a defunct Daviess County elevator.

The Missouri Department of Agriculture administrative hearing, held at the Gallatin High School gym, drew residents who didn’t hide their unhappiness over their lost money.

The hearing was held to propose payouts to grain farmers who invested in the Gallatin Grain Co., formerly owned by Daniel F. Froman. In early March, the state took claims from more than 100 farmers. Mr. Froman surrendered his grain dealer’s license and closed the elevator Feb. 9 due to an inability to pay debts.

A stenographer tracked evidence and questions presented at the hearing, which featured testimony from Chris Klenklen, who oversees the agriculture department’s grain regulatory services program. Mr. Klenklen said officials conducted an audit of the elevator in September.

“The audit entails a snapshot of what grain they have on hand, what their obligations are,” he said. “It’s very similar to a bank examiner making sure there’s enough money” to pay investors, he added.

According to his testimony, Mr. Froman told the state he decided to close the business and sought a way to determine how to pay the investors.

A payment plan prepared by agriculture officials was distributed at the hearing, but must still be approved by the Daviess County Circuit Court before the funds are awarded. There is no specific timetable.

Several farmers and dealers who stored grain through Mr. Froman asked Mr. Klenklen and other officials about the payment process. David Taylor wondered why mistakes in the business were not caught during the audit.

“We have found evidence that we have turned over to the (Daviess County) prosecutor that the department was misled,” Mr. Klenklen said.

Danny Heldenbrand asked why a follow-up investigation wasn’t begun immediately upon Mr. Froman’s notification to the state.

“We were told the elevator was closed,” Mr. Klenklen replied. “We generally don’t work Saturdays and Sundays.”

Officials are still attempting to secure related grain transaction records from Kansas City and St. Joseph to assist them in the matter.

“There’s over $3 million floating around out there,” said farmer Dennis Patterson.

Mr. Froman also separately faces alleged grain theft and related financing criminal counts that have been filed by the state. He is represented by attorney Harold Caskey of Butler, Mo.

In another matter filed by the state, Mr. Froman allegedly violated the state’s clean water law at the Gallatin Livestock Market he operates on the city’s west side.

Members of the Missouri State Highway Patrol, the Gallatin Police Department and Daviess County Sheriff’s Department provided security at the event.

Ray Scherer can be reached

at rscherer@npgco.com.