Managing the Risk of Fraud

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34944208 - insurance claim form and assorted money

Farmers buy crop insurance to help manage the multitude of risks involved in crop production. Weather and pests are hard to control, so farmers buy an insurance policy to reduce the risk of damage to approved commodities and the potential revenue loss. An article posted on WRAL.com tells about a North Carolina tobacco farmer who used his crop insurance policy to illegally double his profits.

The story states that the tobacco farmer sold his crop for cash to a tobacco warehouseman, who later resold it to other parties for a profit. (I guess the farmer figured the cash transaction would not be traceable.) At the same time, the farmer submitted a false crop insurance claim. Consequently, the farmer was compensated twice – once through the cash sale to the tobacco warehouseman and again after the fake crop insurance claim was approved.

The 74-year-old farmer was convicted of federal crop insurance fraud and was sentenced to six months in prison to be followed by three years of supervised release. He was ordered to pay $233,559 to the U.S. Department of Agriculture (USDA) Risk Management Agency and $64,856 to the USDA Farm Service Agency. He must also pay an additional $10,000 fine. (Perhaps he should have settled for the cash proceeds in the first place. It would have been a lot less costly.)

Because farmers assume huge risks when they plant their crops, the federal crop insurance program is supposed to serve as a safety net when disaster strikes, not a second source of income. It looks like this man’s scheme to take advantage of other farmers who deserved to be compensated for their failed crops backfired. In the end, the farmer got smoked by the government and will have to pay for his greed.

 

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Nash Farmer, 74, Imprisoned for Crop Insurance Fraud,” written by Angie Basiouny and posted on WRAL.com on April 9, 2015.

SPRING HOPE, N.C. — A 74-year-old Nash County tobacco farmer will spend six months in prison after being convicted of federal crop insurance fraud, U.S. Attorney Thomas G. Walker announced Thursday.

Clay Taylor Strickland, of Spring Hope, was sentenced Monday and ordered to pay nearly $300,000 in restitution to two federal agencies, along with a $10,000 fine. He will face three years of supervised release following his prison term.

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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.