Crop insurance fraud ring bust made, worth $100 million
A North Carolina scam involved 41 people who have either pleaded guilty or reached plea agreements.
Federal investigators have now discovered the truth behind a massive crop insurance bust that involved dozens of farmers, brokers, claims adjusters, and agents in eastern North Carolina, which had intended to defraud their policies for at least $100 million.
Authorities have said that the investigation is ongoing, but it has already proved to be the largest scam ring in the U.S.
So far, there have been 41 defendants that have either pleaded guilty to their charges or they have reached a plea agreement after having profited from the fake claims that they made on their crop insurance policies. The claims stated that they had lost wheat, corn, soybeans, and tobacco. As the investigators discovered, the plants were frequently completely undamaged. The growers had been using false identities to make cash sales of the harvests that they had written off.
The crop insurance fraud case was compared to a drug cartel bust by the prosecutors.
The federal investigators employed a confidential informant in order to catch a central participant in the crop insurance fraud ring. That individual then agreed to take part in implicating the others. As each wave of prosecutions was completed, more names were revealed for investigation.
According to Assistant U.S. Attorney Banumathi Rangarajan, “These defendants make it harder on the honest farmer,” adding that “The more they lie and steal the more premiums and costs go up for the farmers who play by the rules.”
The federal crop insurance program was first created in the 1930s, during the Dust Bowl, to help to stop farmers from facing bankruptcy as a result of one or several detrimental growing seasons. Today, the U.S. Department of Agriculture is paying over a dozen private insurers for the sale and management of these policies. However, losses are primarily paid by the taxpayer. In 2012, the payouts broke the $15.6 billion mark. As claims continue to be filed that number increases.
According to Iowa State University agricultural economist, Bruce A. Babcock, fraud likely makes up only a small fraction of the total claims.