Source: US FBI
Charging papers show the farmers were able to pull off such scams with help from employees at Clay’s Tobacco Warehouse, including Debra Muse, who worked at the warehouse. She also happened to be a crop insurance agent.
Muse helped the farmers get fake paperwork to show they had purchased their quality tobacco from Clay’s. “More importantly,” said Whittington, “when the farmers would take their tobacco to the warehouse to have it graded, they would need a NoG rating or a not salable rating. Muse would provide that documentation.” Whittington said the warehouse would reuse the same bad bales of tobacco when the crop graders would come by, rotating out the tickets used to label them.
Whittington said Muse’s case was the first related to this investigation to reach the courts. She admitted to urging and assisting farmers to file false tobacco insurance claims and was sentenced in September 2018 to five years in prison.
It was another three years before Roger Wilson, the owner of Clay’s Tobacco Warehouse, was sentenced to 12 months in federal prison for his part. The longest sentence in the case went to Michael McNew, who was sentenced to 86 months. By misusing his role as a crop insurance adjuster, and at a different period as a crop insurance agent, McNew admitted to causing losses in excess of $23 million.
The Aftermath
“The individuals who participated in this scheme caused the United States government and insurance carriers to sustain over $40 million in losses,” said Special Agent in Charge Jason Williams of the USDA-OIG. “The outstanding work of the USDA-OIG agents, USDA staff, and our FBI partners who investigated this case along with the prosecutors of the U.S. attorney’s office made it possible to bring these fraudsters to justice. Farmers in this industry deserve an honest marketplace that is free from fraud due to false claims.”
In addition, the RMA, which is part of the USDA, changed its nationwide policy on NoG-graded tobacco based on this case. If the tobacco is graded “unsalable,” the farmer is required to destroy the crop with an insurance adjuster as a witness. This shift is designed to prevent farmers from reusing damaged crops in future insurance claims. The USDA is also assessing related program vulnerabilities in an effort to curb future fraud attempts.