Indicted Former Creamery CEO Defends Funding

ANCHORAGE, Alaska (AP) — The former CEO of a Mat-Su Valley creamery said she hopes a federal grand jury indictment against her ultimately will set the record straight on the company she helped create.

Karen Olson is charged with defrauding the state to illegally obtain a $430,000 loan for Valley Dairy Inc., the parent company of the now-defunct Matanuska Creamery.

The 57-year-old Olson also is charged in the indictment with making false statements to the U. S. Department of Agriculture and lying to protect the dairy's former president and co-owner, Kyle Beus, who was indicted on similar charges last year. He awaits trial.

Olson defends the loan applications she put together for the creamery in late 2008, the Anchorage Daily News reported. Neither Beus nor his attorney could immediately be reached for comment Tuesday.

Olson said she believed the information she provided 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."

Olson headed the USDA's Alaska Farm Service Agency between 1993 and 2001. She was a Clinton appointee.

Dairy operations in Alaska were once plentiful, but have struggled for years against less expensive supplies from outside the state, as well as rising costs.

A state-operated dairy called Matanuska Maid closed in 2007. It was buying most of its milk from Washington state.

A board selected by former Gov. Sarah Palin oversaw the end of that dairy and the creation of Matanuska Creamery, which struggled from the start.

The company took on more than $1 million in debt to renovate a plant, Olson said at the time. Old equipment from the state dairy proved faulty. The company lost another $166,000 after bacterial contamination was discovered on cheese made from raw milk. The dairy added equipment to pasteurize milk and the contaminated cheese was destroyed.

The company obtained $630,000 in state grants to rescue the business. At the time, Beus said he invested about $200,000 in family money.

After failing to repay $800,000 in state loans, the creamery shut down last December.

Point MacKenzie farmer Wayne Brost said he was owed almost $500,000 at the end. He said he's bitter about the fate of the region's dairy industry, but is not angry with Olson and Beus.


Information from: Anchorage (Alaska) Daily News,

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