KY farmer admits false crop-loss claims, selling leaf under his mom’s name to cover.
A Central Kentucky farmer has admitted taking part in crop-insurance fraud by claiming damage to his tobacco crop and then selling thousands of pounds of leaf under his mother’s name.
The guilty plea by Daniel Cody Arvin means more than half a dozen people have been convicted the last two years in an investigation of crop-insurance fraud in Central Kentucky.
Arvin, who farmed in Montgomery and Clark counties, pleaded guilty Dec. 19 in federal court in Lexington to a charge of conspiring to violate the laws of the U.S.
Arvin admitted he filed an insurance claim that said he produced only 17,212 pounds of tobacco in 2014 because of damage, first from too much rain and then from drought and hail.
In reality, he sold another 41,192 pounds of tobacco in his mother’s name, Arvin acknowledged.
Arvin said he also made a false claim in 2015.
In that case, an insurance adjuster certified that he had appraised Arvin’s loss, but the field covered in the claim wasn’t even cropland, according to Arvin’s plea agreement.
The document identified the adjuster only by the initials T.W.
Arvin paid him $10,000, according to his plea agreement.
Arvin faces up to five years in prison. He is scheduled to be sentenced in August.
The plea was the second in as many months in the crop-fraud case. In late November, Ruben Sauceda, who raised tobacco in Fayette, Scott, Bourbon and Jessamine counties, pleaded guilty to a conspiracy charge.
Sauceda admitted he schemed with an insurance agent and an adjuster to file false claims of losses on his crops, which included fake photographs.
The agent was identified only by the initials M.M. and the adjuster as T.S.
Sauceda received $410,959 from the claims, according to his plea agreement. The government is seeking that amount from Sauceda in addition to a potential prison sentence.
M.M. also was listed as the insurance agent in Arvin’s case.
A federal grand jury indicted an agent named Michael McNew in November for allegedly taking kickbacks to help farmers file false crop-loss claims.
McNew pleaded not guilty and is scheduled for trial in August 2020.
In one case in the investigation of crop-insurance fraud in Central Kentucky, a federal prosecutor said the case had shown abuse was “pervasive and severe.”
That was in the case against Debra Muse, who sold crop insurance and also worked at Clay’s Tobacco Warehouse in Mount Sterling.
Muse pleaded guilty in April 2018 to taking part in making false crop-loss claims and generating fake paperwork to help justify claims.
The investigation showed dozens of farmers received false documentation to support insurance claims, Assistant U.S. Attorney Kathryn M. Anderson said in the memo.
Muse’s conduct allegedly caused the government to make $5.9 million in crop-loss payments to farmers in just two years.
“Like any other government benefit program, people find a way to abuse and unjustly benefit from the system designed to help those that need it,” the prosecutor said.
U.S. District Judge Joseph M. Hood sentenced Muse to five years in prison and ordered her to pay $1.6 million in restitution.
Several others convicted in the investigation have not been sentenced.
