From Phantom Farms To Counterfeit Crops, Usda Finds The Fraud

WASHINGTON - It took a while, but the U.S. Department of Agriculture has finally triumphed in the case of the cantaloupes that weren't.

In 1990, an Alabama farmer applied for government disaster aid, claiming drought had wiped out his 26-acre cantaloupe crop. Problem was, he hadn't planted cantaloupes. So USDA took him to court and recently won the case.

Such are the daily battles against waste, fraud and abuse in the food and farm programs of the Agriculture Department. Within USDA are 850 employees whose job is to investigate anyone trying to fleece the wool program or milk the dairy program.

Of course, USDA is big territory to patrol, with a $61 billion annual budget, 110,000 employees and tens of millions of clients. So USDA's office of the inspector general has plenty to keep it busy.

"Most of our resources go into the big programs within the department, like food stamps," said spokesman Del Thornsbury. Another official put it more bluntly: "We go where the money is."

Every six months, investigators report on the various rip-offs and abuses of your tax dollars. Its reports are, as always, a mixture of the scandalous, the scheming and the silly.

Some is high-dollar fraud, like the two Connecticut companies that rigged the price of school milk. Much is smaller stuff, such as the Indiana man who tried to bribe a government poultry inspector - with $540 and 10 dozen eggs.

Investigators say one popular farm scam is waning: the practice of inventing new "farmers," as a way to dodge the $50,000-per-person limit on collecting farm subsidies. But some old scams still exist, like farmers selling crops or livestock that aren't theirs to sell.

In all, USDA investigators collected $30 million in fines and helped indict 426 people in the past six months, including some of USDA's own employees. There's a toll-free hotline if you've got a hot tip: 1-800-424-9121.

Here are some of the more unusual cases reported in the past year:

There's no free lunch

Officials at one Texas school district treated the school-lunch program as an all-you-can-eat buffet. They overbilled the government. They tried to get free meals for their own children. And they bought hams as Christmas bonuses, then used phony invoices (listing it as "hamburger") to bill the taxpayers.

Finally, investigators put an end to the Texas dine-and-dash. The district was ordered to repay $160,000, and the government is considering further action.

The need to mind your beeswax

A Nebraska beekeeper tried to get a farm loan by offering some unusual collateral: barrels filled with honey. It worked, too, as the busy beekeeper got loans for $382,000.

Then investigators discovered the barrels were filled with gravel and beeswax. The beekeeper pleaded guilty, was sentenced to five months in jail and was ordered to pay $221,000.

The case of the phantom farmers

A woman in Georgia collected $460,000 in federal farm loans. Trouble was, she was no farmer; she worked for USDA and she was embezzling the money. Using government computers, the woman was able to issue checks, forge signatures and then deposit the money in her account.

When the feds caught her, she'd used the money to buy a house, furniture and vehicles for her family. She was sentenced to three years in prison, had her bank accounts and vehicles seized, and lost her retirement account. She's now an ex-employee of USDA.

New furrows in fraud

One dishonest USDA employee from Washington extorted not only money but farm machinery, too. And a mobile home. The employee had been asked to reduce penalties against a tobacco warehouseman, and agreed, in exchange for the unusual bribe.

The employee was indicted for extortion and filing a false income-tax report, sentenced to two years in prison and ordered to pay $15,080. The farm machinery and mobile home were seized.

Shake and fake

To help victims of the Jan. 17 Los Angeles earthquake, USDA rushed in with $68 million in emergency food stamps. That was quickly followed by complaints about food-stamp fraud, including illegal food-stamp buying and selling.

Within three weeks, 33 people had been arrested for illegal trafficking in food stamps, including 16 store employees. To date, 13 have pleaded guilty and seven sentenced to jail.

Not quite family farmers

Finally, remember the Alabama farmer who claimed drought had wiped out his phony cantaloupe crop? The man was prosecuted and recently sentenced to eight months in prison.

Strangely, his mother tried the same scheme. She was nabbed, too, and ordered to repay $15,000.