A federal investigation that has been ongoing for some time has just recently uncovered a large crop insurance scheme that involved claims adjusters, farmers, insurance agents and brokers and others in North Carolina. The plan would have netted over $100 million from a government program to insurance crops. It is the largest crop insurance fraud ever uncovered in the U.S.
Forty one defendants have either pleaded guilty or reached plea agreements after false insurance claims were filed for losses of various crops, including tobacco, soybeans, wheat and corn. In the scheme, farmers were collecting insurance money while selling, for cash, the same crops that were alleged to have been destroyed.
Federal prosecutors likened the bust to that of a drug cartel. "These defendants make it harder on the honest farmer," Assistant U.S. Attorney Banumathi Rangarajan said. "The more they lie and steal the more premiums and costs go up for the farmers who play by the rules."
Bruce Babcock, an agricultural economist at Iowa State University, noted that fraud accounts for a small amount of the total payments from the system. "There's always fraud in the crop insurance system, but I've seen nothing to suggest it is pervasive," Babcock said. "Eighty percent of the program costs are supported by the federal government. Some people see defrauding taxpayers like cheating on their income taxes." Of course, there is a way around this conundrum. Simply remove the insurance altogether – it didn’t exist prior to the famous Dust Bowl of the 1930s, and since them techniques have been developed to virtually eliminate a return of similar conditions – most notably wind blocks and proper land cultivation.
Forty one defendants have either pleaded guilty or reached plea agreements after false insurance claims were filed for losses of various crops, including tobacco, soybeans, wheat and corn. In the scheme, farmers were collecting insurance money while selling, for cash, the same crops that were alleged to have been destroyed.
Federal prosecutors likened the bust to that of a drug cartel. "These defendants make it harder on the honest farmer," Assistant U.S. Attorney Banumathi Rangarajan said. "The more they lie and steal the more premiums and costs go up for the farmers who play by the rules."
Bruce Babcock, an agricultural economist at Iowa State University, noted that fraud accounts for a small amount of the total payments from the system. "There's always fraud in the crop insurance system, but I've seen nothing to suggest it is pervasive," Babcock said. "Eighty percent of the program costs are supported by the federal government. Some people see defrauding taxpayers like cheating on their income taxes." Of course, there is a way around this conundrum. Simply remove the insurance altogether – it didn’t exist prior to the famous Dust Bowl of the 1930s, and since them techniques have been developed to virtually eliminate a return of similar conditions – most notably wind blocks and proper land cultivation.
