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Former head of failed Alaska dairy indicted for fraud

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - The head of a defunct Alaska dairy that was created partly with the assets of a public dairy under the oversight of former Gov. Sarah Palin has been indicted for allegedly bilking the state for $430,000 in fraudulent agricultural loans.

Karen Olson of Wasilla, former chief executive of the now-defunct Matanuska Creamery, was indicted on Friday by a federal grand jury on three counts of wire fraud, plus mail fraud and making false statements to influence the U.S. Department of Agriculture.

Olson's indictment came eight months after her former business partner, Kyle Beus, was accused in a federal court indictment of defrauding the Agriculture Department of $643,000 in agricultural grants that prosecutors said in part went to personal purposes rather than the faltering dairy.

The Matanuska Creamery in Palmer, Alaska, opened in 2008, in large part from assets of the state-owned Matanuska Maid dairy that went out of business in 2007. The private creamery received several government loans and grants before shutting down at the end of 2012.

Although Olson and Beus were business partners and the , charges against the two are similar, the cases are separate, Assistant U.S. Attorney Retta Randall said. Beus is scheduled to go to trial in September in Anchorage federal court.

If convicted, Olson faces up to 30 years in prison and a $1 million fine, Randall said.

Palin was not implicated in the criminal case, Randall said, although the collapse of the Matanuska Creamery is considered a blot on her gubernatorial record.

Palin was governor when the dairy, which was then owned by the state, announced plans to go out of business in 2007 and she fired its board and replaced it with a new one. Palin approved state grants to keep the dairy in business but it failed and many of its assets went to create a new private dairy. That dairy failed last year.

Palin's Alaska critics accused her of botched management and of favoring her Wasilla-area friends over experienced business people. Palin said at the time her goal was to ensure a smooth privatization to keep local dairy farmers in business.

Beus' attorney could not be reached immediately for comment and public court documents did not list an attorney for Olson.

(Editing by David Bailey, Mary Wisniewski and Bill Trott)

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