Fraud Used to Frame Farm Bill Debate

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Correction Appended

WASHINGTON -- Jimmy Thomas Sasser stood in silence in February as a federal judge sentenced him to four years in prison. For more than a decade, prosecutors said, Mr. Sasser, an insurance adjuster from Wilson, N.C., participated in a plot involving dozens of farmers, warehouse workers and insurance agents who conspired to defraud the federal crop insurance program of nearly $100 million by claiming fake losses on crops.

Prosecutors said Mr. Sasser had taken kickbacks of $400 to $2,000 to falsify claims, and he was ordered to pay more than $21 million in restitution. Federal officials said it was the largest crop insurance fraud scheme in the history of the program, with 41 people pleading guilty or reaching plea agreements so far.

But after he was sentenced, Mr. Sasser said crop insurance fraud extended well beyond North Carolina.

"I can tell you it's everywhere, all across the country," Mr. Sasser told The Associated Press. "When you let the farmers keep up with their own production, they can put that production anywhere they want to. All the adjuster does is take what the farmer gives him to work the claim. What the farmer does before the adjuster gets there, the adjuster has no idea."

When the House begins work on a farm bill this week, conservatives will target the growing food stamp program, which they complain is rife with fraud and waste. But critics say conservatives are overlooking problems in other farm programs.

Government audits and court records show hundreds of millions of dollars in losses due to fraud in a variety of farm programs, including crop insurance and subsidies that help agribusinesses promote their products abroad. The rate of food stamp fraud, on the other hand, has declined sharply in recent years, federal data shows, and now accounts for 1 percent of the $75 billion program, or about $750 million a year.

"There is the overemphasis on abuses in the food stamp program, which is bigger and more spread out among the population," said Joshua Sewell, a senior policy analyst with Taxpayers for Common Sense, a budget watchdog group in Washington. "In contrast the crop insurance program is much more concentrated. It's not as much money over all, but on a per person basis it's a much bigger program and ripe for fraud."

Congress, however, has been reluctant to make changes in the $9 billion federal crop insurance program despite the fraud case in North Carolina and similar cases in recent years in California, Colorado and Ohio. Both the House and Senate versions of the farm bill would expand crop insurance and save money by eliminating $5 billion in direct payment to farmers and landowners. The government pays 62 percent of the premiums for farmers. The bills would create a new subsidy, called the "shallow loss" program, that would cover farmers for modest crop yields or price declines.

During a House Agriculture Committee hearing recently, Representative Jim McGovern, Democrat of Massachusetts, offered an amendment to delay cuts to food stamps until the percentage of improper payments in the crop insurance program matched the error and fraud rate for food stamps. The food stamp error rate is 3.8 percent, according to Agriculture Department data, while the rate for the crop insurance program is 4.7 percent. The amendment was defeated, with some Republican lawmakers calling it an attack on farmers.

The crop insurance industry acknowledges some fraud but says the rate is low. Bertis Little, a professor of computer science at Tarleton State University in Stephenville, Tex., who analyzes claims data for fraud for the Agriculture Department, said the rate was lower than that of property and casualty insurance.

"I would put it at a little less than 5 percent, and it appears to be in a consistent decline," he said.

But audits by the Government Accountability Office, the investigative arm of Congress, show that that figure might understate crop insurance fraud. A report in August found that the Agriculture Department often failed to order field inspections to follow up on suspicious claims from farmers that adjusters had approved, "increasing the likelihood that fraud, waste or abuse occurred without detection."

The report found that in 2010, the agency failed to complete field inspections on almost 30 percent of suspect claims. The Agriculture Department did not always share with insurance companies data that they might be able to use to deny fraudulent claims, the G.A.O. found.

"We really don't know what the fraud levels are," said Thomas M. Cook, assistant director of the G.A.O.'s office of natural resources and environment in Dallas.

G.A.O. audits explain how fraud cases like the one in North Carolina happen, said John Brown, a private agriculture investigator from Columbia, Mo., who investigates crop insurance fraud cases for insurers and the government. Mr. Brown, who uses satellite images of crop damage to find fraud, said the expansion of the crop insurance program under the farm bills pending in Congress could make matters worse.

"Obviously if there's more money available, there's going to be more people out there that's looking for loopholes and schemes to take advantage of that money," Mr. Brown said. "It's going to take more people in the field and more agents. The Agriculture Department just doesn't have enough resources as it is."

Agriculture Secretary Tom Vilsack said that his department had increased efforts to root out fraud and abuse in the food stamp program, and that he had asked Congress for more money to help the department focus on problems in other programs.

At a House budget hearing in April, Mr. Vilsack testified that the Agriculture Department took crop insurance fraud "very seriously," because the percentage of error and fraud rate in the program were higher than in the food stamp program.

"Obviously those programs are different in terms of size -- but even if you reduce the error rate in crop insurance, you're talking about tens of millions, and potentially hundreds of millions of dollars in savings as well," Mr. Vilsack told lawmakers. "So it's incumbent on us to continue to be focused on integrity."

Correction: June 18, 2013, Tuesday

This article has been revised to reflect the following correction: Because editing errors, an earlier version of this article contained several errors. It misstated the annual spending for the food stamp program and the amount of fraud involved. The budget is $75 billion a year, not $760 billion. The amount of fraud is around $750 million, not $760 million.

nation

This article originally appeared in The New York Times.


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