Federal investigators have uncovered the largest crop insurance fraud ring in the country in eastern North Carolina. So far, the massive scheme involves dozens of agents, claims adjusters, brokers and farmers, who have stolen an estimated $100 million, according to the AP.

Forty-one defendants have either pleaded guilty or reached a plea agreement, according to the AP. False insurance claims for tobacco, soybean, wheat and corn losses were filed by farmers using aliases. In cases where crops were not damaged at all, farmers profited directly from sales of written-off harvests.

Initial prosecutions led to participants implicating still more individuals to investigate. Honest farmers are hurt by fraud because it causes premiums to go up.

The government created the federal crop insurance program during the Dust Bowl the 1930s to keep farmers from going bankrupt after a poor season. The U.S. Dept. of Agriculture pays select private insurers to manage the policies; tax payers pay most of the losses. Payouts for 2012 have topped $15.6 billion and are still growing.

Bruce A. Babcock, an agricultural economist at Iowa State University, told the AP that fraud likely accounts for a small percentage of the total claims for 2012.

Authorities discovered the ring in 2005 after years of fraudulent claims after using computer software to mine insurance claims data across the country. Investigators found an outlier in Robert Carl Stokes, a Wilson, W. Va., crop insurance agent whose clients seemed to have consistent bad luck. Stokes recruited farmers to take out large policies, claim large losses, and hide the true value of their crops by selling them to tobacco warehouse operators in on the scheme, according to the AP. During the prosecution of Stokes and his co-conspirators, dozens of other frauds were uncovered.

Stokes was charged with 14 felony counts and pled guilty in 2011. He was sentenced to 30 months in prison and agreed to pay more than $16.5 million in restitution, the AP found. Stokes is back in West Virginia and now wears an electronic ankle bracelet that allows authorities to track his movements. He also has three more years of probation to complete.

Crop insurance fraud cases continue to be heard in the Raleigh, N.C. federal courthouse. Former Rural Community Insurance Services adjuster Jimmy Thomas Sasser was sentence to four years in prison and more than $21 million in restitution on similar charges. Sasser told the AP that crop fraud is “everywhere, all across the country” due to ease of covering up fraudulent claims.

Dozens of other defendants have been sentenced to jail time and ordered to pay a total of $42 million in restitution—half of what prosecutors say taxpayers are owed, according to the AP. Thomas Walker, the U.S. attorney for the Eastern District of N.C., told the AP the investigation is still continuing, and that he will do his part to pursue perpetrators of crop insurance fraud in the same aggressive manner as mortgage fraud, health care fraud, drug dealers and other criminals.

Special Reports /

Feds Uncover Biggest Crop Fraud Ring in the Country

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