Crop insurance fraud is a serious federal charge that can be filed against farmers, warehousemen, crop brokers, insurance agents, and claims adjusters over allegations of fraudulent activity involving crop insurance issued or guaranteed by the federal government.
Following the Dust Bowl and agricultural ruination that followed the Great Depression, the federal government established crop insurance programs as part of the New Deal. These programs were intended to ensure that farmers and other businesspeople who depend on agriculture would not be financially devastated by drought or other natural disasters that lead to crop failure.
Federal crop insurance programs were initially issued directly by the Federal Crop Insurance Corporation, an entity overseen by the United States Department of Agriculture. During the 1980s and 1990s, however, a series of reforms and privatization efforts resulted in a group of private insurance companies offering insurance that is guaranteed by the federal government.
The federal support for the crop insurance program makes it affordable for American farmers and ranchers to protect themselves against natural disasters. But it also means that any fraud that is discovered involving claims against crop insurance is a federal crime with serious penalties, not a state one with lesser repercussions.
Crop insurance fraud typically occurs when farmers make claims on their crop insurance policies that do not reflect their actual losses. In other words, they ask a private insurer guaranteed by the government to pay them more than what they are owed.
This can take several forms. In some cases, crop insurance fraud perpetrators have made claims for losses for crops that were never planted. In others, they have claimed that crops were destroyed by a natural disaster when in fact the farmer was able to sell the crop for a profit.
In many crop insurance fraud cases, the farmer involved is just one part of a larger conspiracy. To pull off such a complex crime of defrauding an insurance company, warehouse owners and crop brokers are also involved. And in some cases, insurance agents and claims adjusters have been involved in conspiracies as well.
The Federal False Claims Act, which offers financial incentives to whistleblowers, often encourages participants with knowledge of a conspiracy to come forward and begin a prosecution. Many crop insurance fraud investigations begin in the Office of Inspector General at the United States Department of Agriculture. As the cases develop, investigators from the Federal Bureau of Investigation and prosecutors from the Department of Justice will become involved.
When the FBI and Justice Department probe a crop insurance fraud case, they may also be interested in other illegal activities committed as part of the scheme that constitute federal crimes.
Past cases have included crop insurance fraud charges as just one part of large indictments. For instance, people who have committed crop insurance fraud may have also committed perjury, wire or mail fraud, illegal bank account “structuring” – evading banking regulations by depositing money in amounts below a certain threshold – and even tax evasion. The penalties for these crimes can quickly add up.
For crop insurance fraud itself, the penalty set forth by Congress for each count is up to 30 years in prison – followed by five years of probation – and a $1,000,000 fine. In many recent cases, individuals charged with crop insurance fraud have been charged with multiple counts of the same crime. The possible effect is a sentence so long that someone convicted will almost certainly spend the rest of their life in prison.
Crop insurance fraud cases in federal court are often accompanied by a civil suit filed by the Justice Department to recover the money that was earned through the fraudulent scheme. The burden of proof is lower in these cases — a preponderance of the evidence instead of beyond a reasonable doubt — and the government has been able to recover millions through these civil suits, leaving successful farm families in near poverty.
If you or a loved one are being investigated for crop insurance fraud, it is essential that you hire a qualified criminal defense attorney to help you secure your legal rights. A competent attorney will understand agriculture regulations and be able to prepare a strong strategy to defend against criminal conviction and civil penalties.
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