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Missouri State Auditor Susan Montee said the losses from the collapse of a Martinsburg grain business would have been substantially less had state regulators done a better job of following their own examination standards two years ago.

"They should have been checking cancelled checks against the sales slips and they weren't,” Montee said.

Montee's audit said grain regulators in the Department of Agriculture could have spotted problems with the Gieseker Grain Dealership as early as September of 2008, simply by verifying the financial information supplied by Cathy Gieseker, who is now doing time for fraud.

"And what we found is had they uncovered this, which they could have done using their own procedures, the losses would have been about eleven million dollars less,” Montee said.

Authorities said Gieseker used a ponzi scheme to attract business, ultimately bilking 180 farmers out of more than $27 million.

"I think it's gone,” Cheated farmer Tim Lowrance said. “Lick your wounds and go on.”

Montee said a tradition of hand-shake deals and hands-off regulation allowed the fraud to continue much too long.

"The producers, themselves, need to be more aware of what's going on,” Montee said.

Montee said the Agriculture Department should increase the bonding requirements for dozens of Missouri grain dealers and look into the creation of an indemnity fund. In its formal response, the Agriculture Department concedes past shortcomings and points to new safeguards, including larger bonding requirements in some cases.

However, Montee said the changes instituted agriculture appears to have minimized the impact of two more grain dealership failures within the past year.

Last year, Agriculture Director Jon Hagler said assurity bonding is a delicate balance.

"On the one hand, the bonding is very low,” Hagler said. “On the other hand, if you raise that bond too high, then small warehousers go out of business and then you reduce competition and farmers are harmed that way."

 See the complete report here