Greed at root of $100 million farm fraud in Eastern NC - WFLA News Channel 8

Greed at root of $100 million farm fraud in Eastern NC

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A federal probe found a farm scandal focused in Wilson, N.C. A federal probe found a farm scandal focused in Wilson, N.C.
Federal officials say an insurance program was cheated Federal officials say an insurance program was cheated

With spring arriving, farmers across Eastern North Carolina feel a sense of hope as crops begin to rise from the soil.

"Springtime for me, it makes your heart pump a little faster -- the excitement of getting over winter, starting a crop," said John Weaver, a farmer in the Johnston County community of Kenly.

His hope is his green tobacco leaves provide a different kind of green -- cash. Weaver has worked toward being successful the honest way -- something not all of his fellow farmers can say.

A federal probe discovered dozens of farmers in Eastern North Carolina, primarily in Wilson County, defrauded the federal crop insurance program for a staggering $100 million.

The federal program is intended to protect farmers against the loss of crops due to natural disasters. But a number of Eastern North Carolina farmers, insurance agents, claims adjusters and brokers have cheated the system. Essentially, some filed claims of false losses to get insurance money and then sold the crops they had "hidden" from the government for more cash.

It took advantage of an insurance program that farmers find essential to balance their risk. Weaver, for example, said he pays about $40,000 a year in crop insurance.

"We can't afford to farm without crop insurance," Weaver said.

Weaver called the fraud "greed."

"I mean, that's all it is," he said.

The federal government has convicted more than 40 people in what's been called the biggest crop insurance fraud ring in the country.

"You have the loss adjusters and the crop insurance agent and the farmers and the brokers working together in some instances, and they would produce a tobacco crop and kind of harvest that tobacco crop and sell it and claim a loss," said Brandon Willis, the administrator of the federal Risk Management Agency in Washington, D.C.

"And so, they would get an insurance indemnity when they actually harvested a full crop and hid that crop."

Hints of the fraud began to surface around 2005. Willis said the government looks at data for behavior that is not typical, and red flags started popping up in the Wilson area about eight years ago.

"We call it data mining," Willis said. "We noticed some peculiar behavior, an outlier, a crop insurance agent whose behavior of all these farmers, they all seemed to suffer losses. They went in and kind of investigated that crop insurance agent and that was the start of discovering this crop insurance fraud ring," he said.

The ongoing investigation has jarred Wilson, a tight-knit, and proud, county of only 81,000 people, with a county seat in the town of Wilson and an agricultural heritage in the surrounding rural area. Many in the county know people associated with the fraud cases and are reluctant to say much about their neighbors.

One local man spoke to WNCN outside a local farm supply company, but he didn't want to share his name. He said he knew two people involved in the federal investigation.

"I think they're really nice guys" he said. "I think the penalties were too heavy. I don't think the crime serves the penalty they got. They might have stepped over the line a little bit, but they're not really bad guys."

But the stakes were high for the farmers, and the cost to taxpayers ran deep into the millions. One crop insurance adjuster, Jimmy Sasser, was accused of making repeated threats and phone call to Mark Pridgen, who bought and sold hidden tobacco.

Documents show Sasser said he would "whip Pridgen's [expletive]" because Pridgen was cooperating with the government and "telling on everybody."

The records also say Sasser told one person that he carried a bat and knife in his truck and that he would "get" Pridgen.

Sasser could not be reached for comment.

Pridgen, in a telephone interview, declined to comment.

Pridgen was ordered to pay more than $10 million in restitution in addition to his prison time. Sasser also went to prison and was ordered to pay more than $21 million in restitution.

One Rocky Mount farmer, who was convicted but wouldn't go on the record with his name, told WNCN that he simply asked his insurance agent for the best deal.

He shared a picture of his farm and said only a portion of his farm had crop loss. But he said he could not get money for it because the majority of his fields were fine and all were insured together.

But Willis, the federal program's administrator, said the field could have been insured individually as well. Willis said it sounds like in that case, the farmer decided to take a lower-cost premium and insure all his land together.

"Certainly farmers have their choices and they can make that choice, whatever works best in their individual farm situation," he said. "This is a business decision for them. They'll make that choice."

The criminal choices some people made could have an impact on honest farmers like Johnston County's Weaver.

"I don't know any of the people personally," said Weaver, who is just over the line from Wilson County in Kenly. "It upsets me for our industry. It upsets me personally because I know two, three, four years down the road, what it's going to mean. It's going to mean more rules, more regulations."

And it could mean higher premiums because of the way the system works. Last year, farmers paid $4 billion into the program.

The government -- meaning taxpayers -- also pay part of the program.

And then there's the trickle-down effect of farmers having more costs.

"It's really hard on low-budget people who can't afford to go out and buy these things now because they're so high," said Renee Robinson, who works at a restaurant inside a convenience store near the Johnston and Wilson County line. "That's what's hard on me and families everywhere."

Meanwhile, those convicted continue to pay. One of the players in this ring, Wilson crop insurance agent Robert Carl Stokes, owes more than $16 million in restitution. He's paying it off at $200 a month -- a rate that will take nearly 7,000 years to pay off.

In all, dozens of defendants have agreed to pay a total of $42 million in restitution and more than $900,000 in fines.

Meanwhile, the government is continuing to investigate and prosecute more cases.

"It's a mess," Robinson said.

Justin Quesinberry

Justin is a reporter for WNCN and a North Carolina native. He has spent the better part of the last decade covering the news in central North Carolina.  More>>

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