04/09/2014 // Justice News Flash: Featured Column (Press Release) // Kathleen Scanlan // (press release)
Last month the $1 trillion federal farm bill finally landed on President Obama’s desk, freighted with the perennial antagonisms about whether farm subsidies are pork politics or legitimate aid to hardworking growers. One thing is for sure. The ongoing debate has not whittled the funding one bit: each year the federal government provides $20 billion in farm subsidies and other support to agriculture operations big and small.
Naturally there is waste and fraud in a program so huge. The federal GAO recently released a report filled with examples of how funding can go awry – like how the USDA’s Farm Service Agency (FSA) had “improperly” paid $3.3 million in aid to dead people—that’s in addition to the $30-plus million that may or may not have been “properly” paid to dead farmers.
Two recently settled federal False Claims Act cases demonstrate that the problem isn’t just bureaucratic malfeasance. Aid recipients are actively defrauding the program.
In the first case, an Iowa couple was caught submitting 132 bogus claims to the FSA for support in their wool business—when, it turns out, they had no sheep. The federal government gave them $300,000 in aid for the fictitious lambs. After pleading guilty on related criminal charges, the couple agreed to pay the government $1.3 million for civil False Claims Act liability arising from their fleecing the program (pun intended).
In the second case, the Attorney General in the Central District of Illinois recovered $5.4 million from a family for violations of the False Claims Act after they were caught using dummy businesses— or “sham entities”—to bilk the subsidy program and exceed the agency’s annual payment caps.
Officially, agricultural subsidies are intended to bolster farmers against market price fluctuations and weather calamities, such as the drought emergency parching California and most of the West. These recent settlements (not brought forward by whistleblowers) suggest that USDA’s Inspector General and the Department of Justice could use more help to hunt down the ag fraudsters. The GAO report shows they are surely out there.
The federal government has made billion-dollar strides in fighting health care fraud, but it needs help to root out agricultural subsidy graft as much as the farmers in the Central Valley need rain right about now.
Url: False Claims News