IBP, inc. yesterday filed suit in U.S. District Court against Andrew J. Zahn, former owner of the companies that came to be operated by IBP as DFG Foods, LLC. In addition to being one of the principle owners of the companies prior to their sale to IBP, Zahn also was Chief Executive Officer of DFG Foods, LLC under IBP’s ownership and an officer of IBP’s Foodbrands America, Inc. subsidiary.

In the suit filed in the Northern District of Illinois, IBP alleges that Zahn and other former executives at DFG:


  • fraudulently inflated the financial statements of DFG by more than $50 million by manipulating the company’s accounting records;
  • omitted material information from those financial statements and records;
  • made numerous false statements to conceal their fraud when questioned about those financial statements and records; and
  • engaged in self-dealing and embezzlement for personal gain in violation of fiduciary duties owed to IBP and Foodbrands.

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The suit alleges that as a result of such conduct, Zahn and other former owners of the DFG businesses received payments to which they were not entitled, and caused damages to IBP and Foodbrands in excess of $70 million. The suit seeks compensatory damages in an amount to be proven at trial, punitive damages, forfeiture (repayment) of salaries, and other relief the Court may deem just and proper.

The suit outlines in detail the ways in which Zahn and others allegedly falsified DFG’s financial statements and records, including inventory overstatements, as well as the false inflation of the company’s financial records relating to accounts receivable and prepaid expenses. In addition, the suit identifies instances of alleged self-dealing and embezzlement. IBP’s claims are based on fraud, breach of fiduciary duties, and civil conspiracy. Phillip Sexauer, former Chief Financial Officer of DFG is also named as a defendant in the suit.

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