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Brett Lillemoe and his company, GTR, LLC, were former participants in the Export Guarantee Program (GSM-102) administered by the Foreign Agricultural Service (FAS), a division of the United States Department of Agriculture (USDA). The GSM-102 program was developed with the stated purpose of “financ[ing] the commercial export of U.S. agricultural products, particularly to developing countries.”

The relationship between Lillemoe and FAS changed, however, when FAS inquired as to 15 anticipated GSM-102 transactions to be facilitated by Lillemoe’s company in October 2012. FAS was concerned with applications showing that “the Consignee listed on the bills of lading differed from the importer identified on the GSM-102 guarantee, and [FAS] requested additional information about the role each entity played in the transaction.” In practice, however, Lillemoe alleged that FAS had long been aware that the program facilitated “rented trade flows” wherein GSM exporters and importers played “no role in the actual export of physical goods” but instead “use[d] photocopies of shipping documents” for the purpose of obtaining “synthetic LCs”.

As previously reported (Nov/Dec 2016 DCW3), Lillemoe and several affiliates ultimately came under federal investigation for wire fraud and conspiracy culminating in a guilty verdict against Lillemoe largely based on altering bills of lading. Prior to the conviction, however, Lillemoe and GTR sued the USDA in a multi-count complaint that was dismissed in part in 2018 (Lillemoe v. USDA, 344 F. Supp. 3d 215 (D.D.C. 2018). What remained, however, was a claim under the Administrative Procedure Act (ACA) based on FAS’s alleged decision to selectively prohibit Lillemoe and GTR from using rented trade flows while simultaneously approving applications from other participants using the same structure.

Thereafter, Lillemoe and GTR filed motions seeking specific documents as well as leave to pursue limited discovery. In Lillemoe v. USDA (No. 15-cv-2047 (DLF), 2019 WL 4750241 (D.D.C. Sept. 30, 2019)), the Judge denied both motions but ordered the USDA (specifically FAS) “to clarify, with citations to the record - and, if necessary, supplement the record with evidence, including declarations - (1) whether FAS treated GTR’s applications differently from other program participants that submitted similar applications, and (2) if so, whether it had a legitimate reason or reasons for treating GTR differently.” Although FAS argued that its decision to prohibit Lillemoe and GTR from utilizing rented trade structures was based on the federal investigation, the Judge concluded that FAS’s position was not supported by the agency record, thus preventing adequate judicial review.

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