Cultivating Fraud

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Through the U.S. Department of Agriculture (USDA), the Farm Service Agency (FSA) provides disaster assistance and low-interest loan programs to help agricultural producers recover from qualifying natural disasters. A farmer from Bastrop, Louisiana decided to tap into the government agency’s disaster funds by illegally applying for subsidy payments. The deceptive farmer was found guilty of committing $1.6 million in disaster fraud by lying about the number of farms he owned and operated.

During a 12-day trial, evidence was presented showing that the fourth-generation farmer and owner of an agricultural company created fictitious farm operations. Normally, he would only be able to collect $40,000 per farm due to a disaster. This guy bypassed that limit by creating additional “shell” farms to illegally collect even more money from the FSA. He used the names of his relatives and employees to appear as owners of the fake farms. (This ruse went on for about three-and-a-half years before his fraud scheme got nipped in the bud.) 

The FSA’s Supplemental Revenue Assistant (SURE) and Crop Assistance Program (CAP) provides assistance to the producers of crops suffering losses due to natural disasters. To receive payments from these programs, an eligible agricultural producer must have a legitimate, qualifying loss. (This means that at least a 10 percent production loss must affect one economically significant crop on a farm in a county that has been declared a disaster area.)

Because the farmer controlled and managed all of the farm entities – even though the “shell” farms were listed under other peoples’ names – his deception enabled the collection of up to $100,000 for each farm that experienced a qualifying crop loss due to disaster. The subsidy checks were mailed to multiple post office boxes, controlled by the farmer, in a nearby town. (His fake farms brought in more than $1.3 million in illegal disaster program payments.)

A federal jury returned their verdict after a five-hour deliberation. The 33-year-old farmer was found guilty of one count of conspiracy to commit mail fraud, five counts of mail fraud, and four counts of money laundering. When sentenced this fall, he will face 20 years of prison time for the conspiracy count, an additional 20 years for the mail fraud counts, and 10 years for the money laundering counts. He may also receive five years of supervised release following his time behind bars. In addition, he will have to forfeit more than $1 million in property and pay a $250,000 fine for each count.

Fraud is like a gangly weed that overtakes a crop. It eventually spreads out and destroys healthy vegetation. (Fortunately, the USDA got to the root of this problem before it could do anymore damage.) The intent of disaster assistance farming programs is to lend a hand so famers can get back up and producing after a disaster strikes, not provide a means for a devious farmer to grow his bank account. Congratulations to the USDA for protecting law-abiding taxpayers and deserving farmers by holding this Louisiana farmer accountable for the disaster fraud scheme he illegally cultivated.

Today’s “Fraud of the Day” is based on an article entitled, Bastrop farmer bilks USDA out of $1.6 millionpublished by The News Star on July 25, 2017.

MONROE, La. – Acting U.S. Attorney Alexander C. Van Hook announced that a federal jury found a Bastrop farmer guilty last week of creating shell farms so he could receive more than $1.6 million in subsidy payments to which he was not entitled.

Brad A. McIntyre, 33, of Bastrop, La., was found guilty of one count of conspiracy to commit mail fraud, five counts of mail fraud and four counts of money laundering related to engaging in monetary transactions in property derived from specified unlawful activity.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.