FBI Working on Crop Insurance Fraud Case – DTN – AgFax

Photo: pixelbliss

The FBI sheds light on the work of investigators into a $40 million crop insurance fraud case linked to a Kentucky tobacco warehouse that led to 23 people being charged and 17 others paying fines or penalties. civil penalties.

The case dates back to a 2014 tip to the USDA Office of Inspector General’s hotline alleging fraud at Clay’s Tobacco Warehouse in Mount Sterling, Kentucky. The FBA noted, “From this advice, the investigation spread to farming communities in central Kentucky.”

The defendants were accused of defrauding the crop insurance program from less than $10,000 to several million dollars.

“Whether the theft was a few thousand dollars or millions, these individuals profited from the program,” said Tressa Whittington, an FBI forensic accountant who has been working on the case with agents since the beginning. “They were stealing taxpayers’ money and stealing money from honest farmers who are now paying a higher premium.”

Those involved used several programs, but the most common situation involved farmers who grew a good crop of tobacco but conspired with insurance agents and adjusters to claim the crop had been damaged by storms. or pests. The farmer would file an insurance claim and receive compensation. To do this, insurance agents and adjusters were taking bribes, Whittington said.

By selling to the tobacco company, the farmers “did extra sleight of hand and extra fraud to make the transaction with the tobacco company legitimate,” the FBI said. Farmers essentially had to prove they “purchased” the tobacco they ended up selling to the company when they ended up selling the allegedly low-quality tobacco they grew, the FBI said.

The farmers had help from employees of Clay’s Tobacco House, including one employee who also happened to be an insurance agent.

The employee, Debra Muse, helped the farmers obtain the false papers to show that the farmers had purchased quality tobacco from Clay’s Tobacco House. Muse also provided the farmers with documents claiming that the tobacco they brought had been given a low rating or low rating. The warehouse “would reuse the same bad bales of tobacco as sorters passed by, spinning the tickets used to label them,” the FBI said.

Muse was among the first people in the investigation to go to court, and she admitted to “urging and helping farmers file bogus tobacco insurance claims,” ​​the FBI said. Muse was sentenced to five years in prison in September 2018.

The FBI said it took another three years before Roger Wilson, the owner of Clay’s Tobacco Warehouse, was sentenced to 12 months in federal prison. Wilson, at his sentencing last September, admitted that for nearly five years he had arranged for farmers to buy shoddy tobacco to get fake grades so they could then file claims for assurance. Documents show Wilson produced fake sales receipts, shipping reports and bullet tags. These efforts resulted in more than $9 million in losses.

A crop insurance agent and claims adjuster, Michael McNew, was sentenced to 86 months in prison last September for abusing his position with crop insurance companies. McNew admitted to causing more than $23 million in losses.

Others involved in the case were sentenced to between six months and 36 months in prison.

Overall, those involved in the scheme have caused the USDA and crop insurance companies more than $40 million in losses, said Jason Williams, a special agent in charge of the Bureau of USDA Inspector General.

The case also caused the USDA’s Risk Management Agency to change its nationwide policies on NoG graded tobacco. If the tobacco is classified as “unsaleable”, the farmer is required to destroy the crop with an insurance adjuster as a witness. This is designed to prevent farmers from reusing damaged crops in the future to file insurance claims.

The FBI highlighted the case in a “Field of Fraud” on the FBI website: here.

Chris Clayton can be reached at [email protected]

Follow him on Twitter @ChrisClaytonDTN

Comments are closed.