A fraud scheme that involved cash for crops while the same farmers made insurance claims for damaged produce has resulted in at least 41 people reaching negotiated pleas or simply pleading guilty to insurance fraud charges in North Carolina. The farmers involved had made fraudulent insurance claims for allegedly damaged products that included soybeans, tobacco, corn and wheat, but none of the involved products were actually unsellable.
The U.S. Department of Agriculture conducted an audit in 2005 that eventually led to the downfall of the North Carolina crop insurance fraud scheme. Certain insurance agents tended to have clients who consistently reported extremely poor yields and required insurance payouts.
Robert Stokes of Wilson appeared to be the hub the wheel that was a sophisticated insurance fraud scheme. He led federal investigators to even more people involved in the crop insurance fraud, including adjusters and brokers. Stokes pled guilty to conspiring to make false statements and money laundering. He was sentenced to 30 months in prison. Stokes is already out on supervised release and paying $200 a month toward his $16.5 million court-ordered restitution.
Approximately 15 private insurers provide crop insurance to America's farmers. The federal program was part of the government's response to the 1930s Dust Bowl and is intended to shield farmers from poor growing seasons. Although the program is run by private insurers, U.S. taxpayers eventually foot the bill when a claim is made, along with other farmers who likely experience increased premiums.
Approximately $15.6 billion was paid out in crop insurance settlements in 2012.
Source: Foster's Daily Democrat, "Feds bust up $100M NC crop insurance fraud ring," March 17, 2013