Family Farm Fraud

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42864818 - red office folder with inscription claims on office desktop with office supplies and modern laptop.

No company is immune to fraud, including family businesses. Some common ways that fraud is carried out within a family-owned business includes: diverting company funds for personal use, skimming cash before the income is recorded, or stealing company assets. Today’s fraudster from Georgia used family members to commit disaster fraud by having them lie to the federal crop insurance program.

Today’s fraudster is a tobacco farmer who used his two sons-in-law to hide his role in a scheme that collected more crop insurance payouts than he deserved. (They submitted bogus claims for purported losses under the federal crop insurance program, collecting $675,000 in insurance reimbursements they did not qualify for.)

The farmer instructed his two sons-in-law to submit claims for crop loss under their names as if they owned the properties where the losses occurred. (It’s important to note that regulations governing the federal insurance program require that only landlords, owner-operators, or tenants are eligible for the crop insurance coverage.)

Over three years, the two men claimed all the losses even though their father-in-law paid them salaries, provided land and equipment, paid for their workers, provided a barn where they could cure their tobacco crop, financed all purchases and made all of the decisions. During the three-year period, expenses of more than $1 million were billed to the farmer or his company. (Sounds like the two apprentices had the best of both worlds with no obligations for financial risk, until their scam was uncovered.)

Court records show that over 13 years, the farmer had filed numerous claims with the federal crop insurance program, collecting more than $2.9 million in payments. Because he had such a high volume of claims, his eligibility to receive further payments was lower than that of his two sons-in-law, who were listed as new producers. (Basically, the farmer used the two men to collect more money than he deserved.)

In order to substantiate the false claims, the father-in-law fabricated bills of sale from tobacco buyers. The two sons-in-law submitted the claims through the federal program, then they were issued checks ranging from $74,121 to $262,105. (They passed the money on to their fraudulent father-in-law. I wonder if they got a kickback for their participation in the fraud or if they were afraid to question the father of their wives and just went along with the ruse.)

All three men will have to pay for their part in the disaster fraud to make up for the $675,000 received. The father will pay $350,000 through his business, the son-in-law who supposedly served as Chief Financial Officer will pay $300,000, and the other will pay $25,000 to settle the suit that accuses them of making false crop insurance claims. The farmer agreed to pay back $25,000 from his company immediately, then $40,000 a year over the next five years. (I’m guessing family get togethers may be a bit tense from now on.)

Today’s “Fraud of the Day” is based on an article entitled, 3 Bacon County farmers to pay federal crop insurance program $675,000 in false claims settlementpublished by The Florida Times-Union on June 14, 2017.

A Bacon County farmer and his two sons-in-law have agreed to pay the federal government $675,000 to settle a suit accusing them of making false crop insurance claims.

The largest portion of the pay back, will come from Julian Rigby who will pay $350,000 personally and through his business, Alma Brightleaf Blueberry Farms Inc. His son-in-law Jasper Allen will pay $300,000 and his son-in-law Benjamin Swain will pay $25,000 to settle of their roles in hiding Rigby’s role in farms they claimed to operate and in collecting crop insurance for him.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.