Investigators find fraud in farm aid program

October 03, 1994|By New York Times News Service

Federal investigators have uncovered far-reaching fraud and mismanagement in the Agriculture Department aid program that provides billions of dollars to farmers who suffer crop losses in disasters such as the Midwest floods of 1993 and Hurricane Andrew in 1992.

Many farmers have collected excessive payments by inflating crop losses, misstating the acreage they planted or failing to harvest crops when market prices fell below the amount paid in disaster assistance, according to sweeping new reports by the Agriculture Department and Senate investigators.

The inquiry by the Senate Agriculture Committee was limited to just eight crops in nine states. Still, the investigators found $92.5 million in questionable payments from 1988 to 1993.

A draft of an unreleased committee report prepared in August, which was provided to the New York Times, said $80 million of the total represented excess payments appeared to be unrelated to disasters.

In one striking example, the owners of a farm received $200,000 in federal money for crop losses resulting from last year's Midwest floods, although three weeks before the damage they had paid only $138,000 for the property, including land, a house and equipment.

The head of the aid program, Grant B. Buntrock, acknowledged in an interview that he and other Agriculture Department officials were aware that serious problems existed in the program and were trying to clean them up.

He estimated that total potential overpayments in 1992 and 1993 nationwide were $200 million to $300 million, or about 8 percent to 16 percent of the $2.4 billion paid out during that period.

Mr. Buntrock said the problems were not always just with the structure of the program.

"Unfortunately, we have identified instances of complicity on the local level in our offices," he said. "It was not the system itself, but the people at the local level in these cases."

A confidential draft of a separate report by the Office of the Inspector General at the Agriculture Department concluded that the agency did not analyze payment data to determine where abuses were occurring and that it did not spot-check the program to find fraud.

The report also said that penalties were too light to deter fraud. The only penalty for abuse is the loss of payments for the crop year, which the report said often represented only money to which the farmers were not entitled in the first place.

Since Congress expanded the disaster aid program in 1988, U.S. farmers have received more than $8 billion.

After the 1993 flooding damaged 20 million acres of Midwestern farmland, Congress appropriated $1.6 billion to pay for crop damage from the flood and other disasters.

Fraud reduces disaster payments to the many farmers who actually suffered losses because a limited amount of aid is available each year. From 1990 to 1992, payments on disaster claims were cut in half because there was not enough money to go around, according to a congressional study, but fraud was only one factor in that move.

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